Three-minute legal tips: Community Property vs Equitable Distribution

How the courts will divide a couple’s marital assets during a divorce depends largely on whether the couple lives in a community property or equitable distribution state. Most states are equitable distribution states, which means the court considers an individual’s assets to be their own personal property unless the couple has decided to share them.

However, Washington is one of a handful of community property states, which means couples usually hold assets jointly. There are a few exceptions and considerations, though.

Terry Price, a family law expert at UW Law, discusses the steps the court uses to split up assets and how it determines what are community property or separate property assets. Learn more about what it means to have a just and equitable distribution.

Read the Transcript

Terry Price: Hi my name is Terry Price and I'm the executive director of the graduate programs at the University of Washington law school. I'm also a family law professor and a former family law practitioner.

Three-Minute Legal Tips: What's the difference between a community property state and an equitable distribution state?

TP: In an equitable distribution state the assets of the parties from their earnings are considered their separate property unless they choose to share them and then at divorce is when the court puts them into a common pot in order to distribute the assets in an equitable fair fashion. In a community property state the assets from earnings are considered jointly held, there is no concept of the person who earned it gets to keep it.

Three-Minute Legal Tips: Which states are community property states?

TP: Community property states are a minority of the country. There are nine of them and they're mostly on the west coast. So, starting with Washington, go to Idaho, weirdly skip Oregon, and then go down to California, Nevada, New Mexico, Arizona, Texas and Louisiana and then interestingly, or weirdly, or randomly, Wisconsin.

Three-Minute Legal Tips: What are considered marital assets?

Terry Price: So, in Washington marital assets are made up of the community property, the property and assets that are purchased with the earnings—the revenue of the parties—during the marriage. And then also Washington acknowledges that there are separate property assets. Generally, separate property are property acquired by gift. If somebody, if your great aunt gives you a gift of something to you in particular, even if you're married, that's a separate property asset. Gifts by inheritance, as long as, you know, your great uncle didn't say "To x and y," but, you know, "To my nephew, Terry, I leave…" And then property owned prior to the marriage. And remember also when we talk about property we always have to mention there's this concept of debt because communities can run up debt like credit card debt or mortgages and people can enter their marriage with separate debt.

TMLT: When splitting up assets, how does the Washington court system decide who gets what?

Terry Price: In all states, regardless of whether they're community property states or not, you still have the same four steps to go through. First is the identification of all property. Where is it? Is it tangible? Can you touch it? Is it an intellectual property like frequent flyer miles or computer games? Something that's not touchable. So the first is identification of all the property. The second is classification. When was that property acquired? In Washington, property gets its status at the time it is acquired not later on down the road. The third is valuation. And if the parties can't value it then there are certainly experts, think of like a real estate agent who would value a piece of land or a house. And fourth is distribution. The court will distribute the property based on the statute, the law that governs distribution. In Washington, the court has great discretion, it just has to make a just and equitable distribution of the property. And that is not 50-50, that is just and equitable, so the court could decide that because of the needs of one party a just and equitable division would be 60-40 and that would be difficult to win on an appeal because the Superior Court does have such great discretion.