FAQs About Property Division in Louisiana
Louisiana is a community property state as opposed to an equitable (not equal) distribution state. That means that all real and personal property purchased during the marriage is community property, and in the event of a divorce, the spouses divide it equally. For example, if a couple purchases a home, even with separate funds, the home is marital property and will be divided equally during a divorce.
If you signed a prenuptial agreement, any property listed in the prenup is separate property. However, the court could order you to reimburse your spouse for any community money spent on separate property.
What kinds of assets are included in a marital estate?
The marital estate includes any property purchased during the marriage and any property that, even if purchased separately, becomes community property because both spouses contribute to the upkeep of the property.
For example, a woman owns a home and then gets married. Her husband moves in. Both spouses work and contribute to the mortgage and upkeep of the home. The home becomes community property.
However, if the wife keeps her bank accounts separate and pays the mortgage with only her money,and pays for the upkeep of the home, including lawn maintenance and home repairs, with her separate money kept in her separate bank account, she has a good argument that the home is not community property.
Even personal property, such as clothing, is considered community property. Other examples of marital assets include furnishings, vehicles, housewares, jewelry, and more.
How does Louisiana classify assets in a marital estate?
Louisiana classifies assets as marital or non-marital assets (separate property). Non-marital assets include:
- Property purchased by someone prior to a marriage, as long as the funds to maintain the property are not commingled.
- Property purchased by one spouse during the marriage using separate funds. For example, one spouse purchases a truck with money from an inheritance, registers and insures it in his name only, and pays for maintenance with separate funds.
- An inheritance or a donation given to one individual spouse instead of both as a couple. For example, the wife’s mother dies and leaves her, along with her siblings, a share of the estate. The assets, including cash, in the estate, only belong to the wife.
If one spouse sues another for bad faith or fraud because of mismanagement of community property, those damages are the separate property of the spouse that won the lawsuit.
Additionally, if one spouse receives damages related to his separate property, the compensation also remains separate. For example, the husband owns a rental home. The rent receipts get deposited in an account owned only by the husband. Rental repairs also come out of that account, so the wife does not have a monetary interest in the rental. If the husband deposits that compensation from that lawsuit into the separate account, the funds remain separate.
Finally, if the couple separates and each purchases property during the separation, that property remains separate, non-marital property. For example, the wife keeps the house, so the husband purchases a new house. The new house is his separate property, though the wife owes the husband 50 percent of the value of the marital home.
Another example is if the parties have only one vehicle. The husband takes the vehicle because he works too far to get a ride to work, while the wife can hitch a ride. The wife purchases a vehicle for herself. The husband still owes the wife 50 percent of the value of the marital vehicle, but the wife’s new vehicle is her separate property.
Who gets what when the marriage ends?
When a couple decides to divorce, all marital property is divided equally between the couple, except for separate property. The spouse claiming that certain property is separate must be able to prove the property is separate and that commingled funds were not used to maintain the property.
If the parties decide they don’t want to sell assets and divide the cash, they can opt to trade something of equal value. For example, if they both want to keep their respective retirement accounts: The husband’s account has a value of $500,000. However, the wife’s account only has a value of $100,000. They would each get $300,000 if they were to close the accounts and divide the money, which means the husband has to pay the wife $200,000 out of the account.
However, neither spouse wants to pay the penalties for closing the retirement accounts, and they don’t want to do a qualified domestic relations order (QDRO).
Instead, the husband could give his share of a savings account to make up for the difference. For example, if the savings account has $400,000 in it, they would split it, with each getting $200,000. Instead of taking his $200,000, the husband would give it to the wife to make up for keeping the retirement account.
What are the valuation methods for assets and debts?
Before the property can be divided between the spouses, it must be appraised to obtain the current value. A real estate appraiser can value real property. For other items, such as a vehicle, the court or spouses, if they are dividing the property without court intervention, can use the Kelley Blue Book valuation tool.
Personal property can be valued by finding out what a reasonable person would pay for it used.
For debts, the value is the amount owed plus any interest owed. For example, when determining the value of a house, the spouses should add the payoff amount, interest due, and closing costs.
Even dividing property in a community property state becomes complex, especially when assets are harder to value or when the spouses have a large estate and want to keep specific property. Whether you have a few assets and liabilities or many, a Louisiana divorce lawyer can help you with valuation to ensure the marital property is divided evenly and with proving that separate property should remain separate property.If you are dealing with property division, please seek an attorney in Louisiana by calling at 504-780-8232 or contact us online.