Is My Inheritance Protected from Community Property Laws During a Divorce in Louisiana?

Many newly married couples do not give much thought to property division in case of a divorce. A couple may earn money during a marriage, buy real estate, or invest for retirement. But sometimes they also acquire money through an inheritance, which tends to be an emotionally charged issue.

Divorce happens for all kinds of reasons. However, money issues are among the top three reasons for divorce. Divorce rates in Louisiana are 12% per 1,000. Most of those couples face some property division issues. Therefore, it is essential to understand how property division works in a Louisiana divorce.

What is property division in a Louisiana divorce?

One of the main issues in a divorce is the division of property and debts between the parties. Sometimes the spouses agree on property division as part of a property settlement. If they cannot reach an agreement, the court may settle property issues. State law affects property division. 

Louisiana is a community property state. Therefore, according to Louisiana divorce laws, all assets and debts that are marital property are divided equally between the parties.

What is a community property state?

Because Louisiana is a community property state, property acquired during a marriage is jointly owned by both parties. It does not matter who bought it or whose name is on the title to the property. Typically, community property is divided evenly between the spouses. In some cases, the court considers other factors regarding dividing property. These include:

• Economic misconduct. The court may consider the economic misconduct of a spouse when determining a fair property division. Economic misconduct refers to actions by one spouse that causes financial harm to the other spouse. Common examples are dissipation of assets or hiding assets, excessive spending, or gambling. If a spouse has committed acts of economic misconduct, the court may award a higher percentage of the divided property to the injured spouse.
• Educational contributions. The court may consider a spouse’s contribution to the other spouse’s education during the course of the marriage.

What is community property?

Defining community property is a critical issue in a community property state. Marriage affects the property rights of both spouses. Property includes,
but is not limited to real estate, bank accounts, investments, income, and other assets. The way an asset is titled does not always determine whether the asset is separate or community property. It is essential to establish the source of the funds used to buy the asset. Therefore, even if an asset is in only one person’s name, if community resources supply the necessary funds, it is usually community property. Most assets accumulated during the marriage are marital property. Separate property goes to the person who owns it unless the non-marital assets have been mixed with community property during the marriage. Louisiana’s law governing the property of married persons is the Matrimonial Regimes. If a couple marries in Louisiana or moves to Louisiana, they are subject to Louisiana’s community property law. A married couple’s property is either community or separate. 

Community Property. Community property includes, but is not limited to:

• Property acquired during the existence of the marriage through the efforts of one or both spouses;
• Property acquired with community things;
• Property donated to the spouses jointly;
• Natural, industrial and civil fruits of community property;
• Damages for loss or injury to community property; and
• All other property not classified as separate property.

In some cases, the court has defined some property as “partial” or “quasi” community property. This usually occurs when assets that would have been defined as separate property at the beginning or during the marriage have become so mixed with community property that it is difficult to identify.

In Louisiana, only the community property, or marital property, is divided according to Louisiana’s community property laws. Therefore, if one spouse owned property before getting married, that property is probably separate property.

Separate property. Separate property is property or assets that belong solely to one spouse. Examples of separate property include, but are not limited to, the following:

• Any property acquired by one spouse before marriage.
• Any property acquired by one spouse as a donation or inheritance.
• Property which one spouse acquired by using separate funds.
• Property affected by mishandling by one of the spouses.

Therefore, an inheritance is generally treated as separate property.

Property division in a Louisiana divorce

Louisiana does not have a specific list of factors that determine property division in a divorce. Therefore, the court has some flexibility when considering property division. Typically, the community property is divided 50-50, unless the parties agree to another division or the court finds that division is inequitable. Separate, or non-marital property, is not considered community property and is not subject to equal division.

Can a prenuptial agreement affect property division in Louisiana?

Married couples can alter the community property rules by entering into a prenuptial or matrimonial agreement, which is a binding legal contract signed by both parties before they get married in Louisiana. The couple does not need court approval for a prenuptial agreement. These agreements, or contracts, allow the parties to renounce or modify the community property rules. The parties can establish what is separate property and what is marital property. They can agree on managing financial matters during the marriage and property division if the parties divorce. The agreement generally covers issues such as:

• The rights to property owned by them individually and jointly as a couple
• The division of assets and debts in the event of a divorce or death
• How expenses will be paid during the marriage
• Reimbursement for specific amounts spent during the marriage, if applicable
• The terms of alimony, if applicable
• What events trigger the agreement, such as divorce, death, or some other event.

Are you facing an inheritance issue during a divorce?

Ending a marriage is always distressing. In addition, marriage and divorce have long-term financial implications for each spouse. Therefore, it is vital to understand all the consequences of your impending divorce. For more information, call experienced family law and divorce attorney Betsy A. Fischer at 504-780-8232 or contact us online.