The Problem(s) with Community Property

New Mexico is one of only a few states that follows the law of community property. In general, this means that when either spouse acquires property during the marriage, that property is presumed to be community property. Community property laws apply to real property, such as land and houses thereon, as well as personal property, such as cars and home furnishings.

Of course, there are exceptions to this general rule. The two most common apply to property that is inherited during the marriage and gifts to a single spouse. For example, property that is inherited by one spouse during the marriage and kept separate generally retains its status as separate property. Therefore, in a dissolution proceeding, that spouse will usually get to keep that property free of any claim from the other spouse. Other than very narrow exceptions, however, all property that either spouse acquires during the marriage is community property that will be subject to equal property division in a divorce.

One of the problems in understanding the notion of community property is that the title to the property often does not matter. Many people think that the way property is titled shows clearly who owns that property. For instance, a husband may believe that a car he buys during the marriage and places in his own name is his separate property that he gets to keep if the parties later divorce. Most of the time, if the car was bought with community assets, this assumption is false.

Another problem with community property is that even if an asset may have originally been separate property, co-mingling can transform it into community property in which both spouses have an ownership right. A simple way to understand this idea is to imagine a recipe. If you make a simple cookie consisting of peanut butter, sugar, and an egg, after you mix the ingredients and bake the cookie, the ingredients lose their individuality.

The cookie analogy can also be applied to a bank account or even a house. For example, if one of the spouses owns a bank account before the marriage, that is his or her separate property. However, if, when married, the parties begin to use the account as a joint account, titling it jointly, adding their paychecks to the accounts, and paying for community assets and debts out of that account, the account will likely be converted into community property. Over time, the money in the originally separate account loses its individual identity as it is commingled with community funds.

If you or a family member is involved in divorce and need legal representation on matters relating to community property, the Lightning Legal Group can help. We have decades of experience in New Mexico family law and will fight for what is best for you. Please contact us at (505) 247-2390 for a free consultation.

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