Community Property 101
We are sure you have heard that Nevada is one of nine community property states in the U.S., but what does that mean? NRS Chapter 123 defines what community property is and what separate property is, and NRS 125.150 states that community property is to be divided equally. This means, if you go to court and have the judge decide, the court must award each party 50% of the community estate (unless the court makes a finding of marital waste, which is discussed in an upcoming blog). Also note that you and your spouse are free to agree to any division, so long as it is fair and equitable. You are also free, at any time before or during the marriage, to agree to alter these default rules. That is how prenuptial agreements and postnuptial agreements come into play.So what is the community estate? The Court will start with presuming everything is community property, and you bear the burden to prove an asset (or debt) is not community property, so really, the best way to define community property is what community property is not. Here is a list of assets generally accepted as not community property:
(1) Property owned before the marriage (not as simple as you think)
(2) Inheritance (even if received during the marriage)
(3) Personal Injury settlements (excluding wages)
(4) Gifts (only if you can prove it was a gift to just you, and this could include gifts from your spouse)
Anything that does not fall into this list is community property, regardless of whose name is on the account. Also note that these only apply in the event that these assets have stayed truly separate. If you put your spouse’s’ name on title to a separate property house, it presumed that you gifted that asset to the community. If you put your inheritance in a joint account, it is again presumed you have gifted that money to the community. If your spouse buys you a new Lexus for Christmas complete with the bow on top, but both names are on title, its community. Also remember you bear the burden to overcome the community property presumption and prove an asset (or debt) is separate property.
Footnote: Disability benefits and social security payments are a whole different beast and too complicated to explain in this blog. If you receive either, you should consult with a family law attorney on how those assets/income are treated in a divorce.