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Community Property

Many times clients come to attorneys and state that they have "an uncontested divorce." Despite the fact that numerous parties may be in agreement as to what may happen during a divorce, and feel that they will be able to get along and come to an agreement, usually those "uncontested divorces" become extremely contested once the issues of child custody and support are engaged.

The other issue that generally causes an uncontested divorce to become contested is what happens during community property settlements. The community property settlement itself is a separate and independent legal proceeding that is litigated completely aside from the actual divorce and or child custody and support proceedings.

Two things must be accomplished: 1) terminate the community property regime of law that previously existed between married persons so that they will stop incurring community debt and assets; and, 2) split up the property they owned together under the community property laws that applied to them while married.

The community law "regime" is terminated by death, divorce, or Court approval even while still married. The community must be terminated before assets and debts can be divided as separate property.

After the community regime is terminated, a community property partition petition must be filed to ask that Court divide the assets and debts of the parties so that a fair outcome is achieved. Each party always seems to have a different idea of what "fair" is and there are often disputes about values of certain property. Also, bitter disputes may arise if in fact one of the parties has separate property that has been used to help pay for community property such that funds have become "commingled." At any rate, all of these issues require a complete and thorough legal analysis based on the facts, records, and the behavior of the parties during the marriage and during the separation period in regard to the handling of assets and debts, etc.

What is separate and what is community property?

One of the biggest areas of contention in property partition suits is the classification of certain property. For example: Is my engagement ring my separate property or is it community property? What about property I've inherited from my parents, is it separate property even though I deposited the money into a joint checking account and we spent all of it on a vacation and to remodel the kitchen? What about our automobiles, does it matter whose name the car or truck is in on the title to the vehicle?

As you might expect, all of these questions require a lawyer's analysis as to whether or not a property is community property or separate property. The biggest contention regarding these two classifications is whether or not one party is entitled to a full reimbursement of their separate property or whether or not they have to give half of their separate property to the other spouse in the property partition.

The only way that any complete evaluation of separate and community property can be made is after meeting extensively with an attorney to discuss the facts of your case. Assets need to be classified so the client can take advantage of every possible legal argument to increase their award in a settlement or judgment.

When can I expect to settle?

Generally, community property partitions are done after a divorce is obtained. Louisiana law provides the parties, however, with the option of filing a motion with the Court to terminate their community property regime if in fact the parties have been separate and apart for 30 days or more.

Also, parties can petition the Court for a separate property arrangement even if they intend to remain married. Sometimes, one of the spouses has a spending problem, or is beset with some other problem concerning mismanagement of the community assets such that one of the spouses simply cannot remain married to that spouse unless a separate property regime is established to protect the responsible spouse from the irresponsible behavior of the other spouse.

Under such circumstances, parties can petition the Court to terminate the community property regime and establish a regime of separate property and remain married. At that time the parties will also divide their community property just as if they were getting divorced and a judgment will emanate from the Court that will provide the parties with property rights to their now divided and separate property. That document can be filed in the public records to place third parties on notice that any debts of either spouse will be the debts of that spouse alone. The spouse that incurred the debt will be solely responsible for the debt, etc.

With all that said, there are numerous methods within which to terminate the community property, and all situations can be discussed with your attorney.

How will the property be divided?

If the parties will not come to an agreement on how to divide their community property, the Court will make determinations as to how to divide the property. Louisiana law provides Courts with direction and instructions as to how to go about trying to value and settle community property.

Louisiana law provides Judges with wide discretion to make all orders necessary, including ordering some assets to be sold, etc.

As one might imagine, many times when spouses separate or divorce they can no longer afford to maintain the home that they previously lived in. With two incomes they could afford the home they were living in, but on their own, neither party can pay the house note or purchase the home. In those circumstances, there is only one option and that is to sell the home and split any equity between the parties that may have resulted (or any debt if only debt results). With regard to the valuation of the home, many times the parties will have to hire expert appraisers to provide that information to the Court if the parties cannot agree on a value of the home, etc.

Accordingly, and as to all assets including the home, the Court will make determinations as to what the value of all said property is, and then divide the property in such a way so as to liquidate the community property and provide one half of all community property (or funds from a sale) to each of the parties. Of course, if there is separate property involved, then the party who owns the separate property will receive the entirety of that property outright during the partition and it would be included in any determination by the Court. If there is a dispute about whether the property is community or separate, then the Court will decide that issue as well.

One of the most intriguing ways of settling community property that many Courts employ is an auction, but it is not your typical auction. The parties will have provided the Court with a detailed descriptive list placing all of the assets of the community on the list. Each party will take a turn going down the list sequentially, item by item, and will take turns placing a value on each said item. Once a party places the value on an item, the other party can either buy the item for that price or force the person who named the price to purchase the item themselves. The parties go through the list, alternating item by item in such fashion until the list is complete and the property has been distributed. This is but one of numerous tools and methodologies by which community property can be settled.

Of course, there are numerous complicated issues involved in community property settlements and a complete discussion of what one can expect is far beyond the scope of what can be addressed here.