You may have heard that Louisiana is a "community property state," but what does that really mean? In short, it means that by default, a married couple in Louisiana has a 50/50 interest in the assets acquired and the debts incurred during their marriage, no matter who earned the money, made the purchase, or incurred the debt. While that sounds simple enough, for every rule there is an exception; and once two spouses are faced with divorce and a community property partition, it's not as simple as "what's yours is mine and what's mine is yours."
In Louisiana, assets and debts can be characterized under two main categories: Community and separate. Community property describes the assets and debts in which spouses share a 50/50 interest. It generally includes:
- The assets either spouse acquires and the debts either spouse incurs from the date of marriage to the date either of them files a petition for divorce;
- The salary or wages of either spouse earned from the date of marriage to the date a petition for divorce is filed, regardless of who earned the salary or wage;
- The assets or money either spouse acquires or earns for work and effort that occurred during the marriage, even if the asset or money is received after a petition for divorce is filed.
In contrast, separate property belongs to one spouse or the other. In the context of divorce, it can generally include:
- Any assets or debts that existed before the date of marriage;
- Any thing either spouse individually inherits after a family member or friend's death;
- Any thing either spouse is individually gifted by a family member, friend, or the other spouse;
- Any assets acquired or debts incurred by one spouse after the petition for divorce is filed (with the exception of the third category of community property listed above).
However, to make matters more complex, in some cases:
- A greater thing can include both separate and community property;
- Separate property can create community property;
- Separate property can transform into community property; and
- Some assets purchased during the marriage can be "transformed" into separate property.
As an example of category #1, a bank account can include $300 of spouse B's separate funds and $500 of community funds owned by the spouses 50/50. As another example, if spouse A is in a car accident, the portion of the monetary award he or she receives for lost wages may be a community asset, while other portions of the award that he or she receives may be spouse A's separate property.
As an example of category #2, if spouse B enters the marriage with an investment account worth $20,000, the interest and revenue that the investment account generates during the marriage are a community asset. As another example, if spouse A owns a piece of rental property prior to the marriage, the rents received during the marriage are community property.
As an example of category #3, in the case of spouse B's $20,000 investment account, if the spouses are married for many years, and during the marriage they spend some of the money, then additional interest and revenue accrues, then they spend some of the revenue, and then deposit spouse A's monthly wages into the account, and on top of it, the old account statements are now unavailable, it can become difficult to identify what money is Spouse B's original, separate money and what money is community. In that case, the account can be deemed "hopelessly commingled" such that the entire value of the formerly separate account becomes community. As another example, spouse A can sign an act of donation to donate one-half of the interest in the rental property to spouse B; making the entire interest a community asset.
As an example of category #4, if the spouses purchase a home during the marriage (making it a presumably community asset), spouse A can "intervene" in the act of sale and state in writing that he or she intends for the home to be spouse B's separate property. As another example, if the spouses purchase a piece of art during the marriage (again, making it a presumably community asset), but use 100% of spouse B's separate money on the purchase, then the art will "transform" from a community asset to Spouse B's separate asset.
While these categories and examples are illustrative, and not exhaustive, they highlight some of the underlying complexity in a community property partition. As noted above, for every rule, there is an exception; and for every exception, there are exceptions-to-the-exception!
In Louisiana, everything that exists as of the filing of a petition for divorce is presumed to be community. It is up to you or your spouse to demonstrate that something is the separate asset or debt of one spouse. While some assets and debts can clearly be identified as community or separate, others will require more proof -- through documents, testimony, and other evidence -- to correctly characterize them. An attorney can be an invaluable resource to help navigate the law and facts surrounding any assets or debts at issue. If you have questions about your own property interests, contact a divorce or family law attorney in your area to set up a consultation.
This post and any comments below do not constitute legal advice or form an attorney-client relationship. Please consult a licensed attorney in your state if you have questions regarding your personal circumstances.