What is 'Marital Property'
Marital property is a U.S. state-level legal distinction of a married individual's assets. Property acquired by either spouse during the course of a marriage is considered marital property. For example, an IRA in the name of an individual with a spouse that is accumulated during the course of the marriage would be considered marital property.
Marital property is also known as "community property."
BREAKING DOWN 'Marital Property'
This legal definition of marital property primarily exists to protect spousal rights. The laws that govern marital property depends on whether a couple lives in a common law property state or a community property state.
Common Law Marital Property States
Most states are common law property states. The common law system provides that property acquired by one member of a married couple is owned completely and solely by that person. Under this legal framework, if the title or deed to a piece of property is put in the names of both spouses, the property would belong to both spouses. If both spouses' names are on the title, each owns a one-half interest. For example, if the wife buys a car and puts it only in her name, that car belongs to her only. However, if she buys the car and puts it in her name and her husband's name, the car belongs to both of them.
Under common law, when one spouse passes away, their separate property is distributed according to his or her will or according to probate, if there is no will in effect. How this distribution pans out depends on how the spouse's share of ownership. If they own property in "joint tenancy with the right of survivorship" or "tenancy by the entirety," the property goes to the surviving spouse. This right is independent of what the deceased spouse's will says. However, if the property was owned as "tenancy in common", then the property can go to someone other than the surviving spouse, per the deceased spouse's will. Not all property has a title or deed. In this case, generally, whoever paid for the property or received it as a gift owns it.
If the couple divorces or obtains a legal separation, the court decides how to divide marital property. Of course, the couple can enter into an agreement before the marriage, explaining how to distribute the marital property upon divorce.
Community Marital Property States
Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico and Wisconsin are all community marital property states. These states follow the rule that all assets acquired during a marriage are considered "community property." Marital property in community property states are owned by both spouses equally. This marital property includes earnings, all property bought with those earnings and all debts accrued during the marriage. Community property begins at the marriage and ends when the couple physically separates with the intention of not continuing the marriage. Therefore, any earnings or debts originating after separation are considered separate property.