What Type of Property is Eligible for Division in a Divorce?
Getting divorced usually involves dividing property you and your spouse shared while married. However, not all property each of you owned, benefited-from, or used, is eligible for division.
In this blog post, we examine the two broad categories of property that Louisiana law addresses in a divorce: community property and separate property. We delve into the rules applicable to dividing (or not dividing) each of them, and what you can do to achieve a property division that suits your needs.
Community Property vs. Separate Property in a Louisiana Marriage
All states have rules addressing what property belongs to both spouses during a marriage, what property belongs to each of them individually, and how to treat each type in a divorce. In Louisiana, we call these two broad types of property ownership “community property” and “separate property“, respectively.
About Community Property
Under Louisiana law, absent an agreement to the contrary (see below), marriage creates a “community property regime” in which most (but not all) property acquired, owned, and used during a marriage belongs equally to each spouse. The community property belonging to both spouses equally in a Louisiana marriage includes:
- Wages, salaries, and other income earned by either spouse through their labors.
- Investment income, including interest, dividends, and capital gains.
- Property purchased with either of the above.
- Gifts given to the spouses as a couple.
- An award in a personal injury lawsuit for monetary losses (such as medical expenses and lost wages).
- All other property not specifically recognized as separate property.
Under Louisiana law, property in the possession of either spouse during the marriage is presumed to constitute community property, unless proven otherwise.
About Separate Property
By law, a few specific categories of property do not constitute community property in a Louisiana marriage. The law deems these items separate property owned exclusively by one spouse individually. Separate property owned only by one spouse in a Louisiana marriage consists of:
- Property a spouse brought into the marriage, having acquired it beforehand.
- Property purchased with that pre-marriage property.
- Inheritances.
- An award in a personal injury lawsuit for a spouse’s pain and suffering.
- Any other property designated by law, act, or agreement to constitute separate property.
Because the law presumes property in the possession of either spouse constitutes community property, divorcing spouses need to be prepared to prove what specific items of property they own individually to have them treated as separate property.
Why The Distinction Matters in a Divorce
In a divorce in Louisiana, as a baseline rule, community property gets divided equally between the divorcing spouses. Separate property does not get divided, and instead remains the property of the individual spouse who owns it.
In other words, the distinction between community property and separate property can make a significant difference in what property and assets a spouse leaves a marriage owning. For that reason, experienced matrimonial and divorce attorneys in Louisiana pay close attention to designating property as one-or-the-other, and to figuring out how to prove the separateness of specific items of marital property.
Potential Complications and Disagreements
The lists above might make it seem relatively straightforward to distinguish between community property and separate property in a Louisiana divorce. However, in practice, complications and disagreements frequently arise over how to characterize property when it comes time to divide marital assets. Here are two common areas of conflict.
Fruits and revenues of separate property
An individual spouse owns separate property exclusively. However, income and products generated by that property, by default, constitute community property during the marriage, unless the spouse who owns the separate property specifically and formally designates those so-called “fruits and revenues” as separate property in a manner recognized as valid under Louisiana law.
Here’s an illustration. Suppose a spouse inherits a family sugarcane farm. That farm constitutes separate property. However, the actual sugarcane grown there during the marriage, as well as the revenues generated by the sale of the sugarcane, constitutes community property, unless the owner-spouse formally designates those crops and revenues as separate in a legally-valid official act.
Using community property to benefit separate property, and vice-versa
Spouses in a Louisiana marriage rarely observe the strict formalities of community and separate property in their everyday married life. Instead, the lines between community and separate property commonly get blurred. They may use funds in their shared checking account (community property) to pay for the cost of renovating a house one of them owned before getting married (separate property). They may use one spouse’s inheritance money (separate property) to invest in a business they start and run together (community property).
In a divorce, attorneys for the spouses sometimes face the challenge of re-establishing the lines between types of property, and of figuring out how spouses should get reimbursed for their contributions, monetary or otherwise, to separate or community property. This process can lead to disagreement over who-did-or-paid-what that, if not managed responsibly, can strain an expense to an already tense situation.
How Marital and Divorce Attorneys Can Help
Divorcing Louisiana couples can avoid many of these potential pitfalls and roadblocks by working with an experienced marital and divorce attorney. Here’s how.
Matrimonial Agreements
Forward-thinking couples can streamline the process of property division and non-division by entering into a matrimonial agreement, the most well-known form of which is a prenuptial agreement (or “prenup”). Louisiana law gives married couples broad latitude to modify the baseline rules for what constitutes community or separate property, to achieve a property split during and, if necessary, after marriage that suits the spouse’s needs and expectations.
A skilled attorney can help individual spouses think through their priorities and preferences, and can draft a valid and enforceable matrimonial agreement that avoids many of the pitfalls and potential uncertainties above.
Divorce Representation
Regardless of whether couples entered into matrimonial agreements before or during marriage, a divorcing spouse always needs an experienced divorce attorney’s advice and counsel during the process of ending a marriage and dividing property. With the help of an attorney who understands the intricacies of Louisiana marital property regimes, a divorcing spouse can achieve a partition of marital assets that complies with Louisiana law and, when applicable, the couple’s agreements with one another.
Attorney Betsy A. Fischer Represents Divorcing Spouses in Property Division Matters
Have more questions about dividing property with your spouse in the process of a divorce in the Greater New Orleans area? Contact Attorney Betsy A. Fischer today. She has represented Louisianans in matrimonial and divorce matters for 27 years, and knows how to achieve her clients’ goals for dividing marital property.