There are actually two key differences to be aware of between marital or community property and separate property. These key differences relate to how property was acquired and to how property will be split up or divided in the event of a divorce.
Community Property States and Divorce
The concept of marital property versus separate property is important in states that have community property divorce rules. Each state sets its own guidelines for how assets should be divided up in the event that a couple ends their marriage, and one system used in this community property system. In states that use this system, like California, all marital or community property is divided up 50-50 at the end of the marriage.
This means that, regardless of who worked or who made what income or who bought what or who contributed what to the marriage, each party will get half of all assets acquired during the course of that marriage. Of course, there may be exceptions to this rule if a couple has a prenup or makes their own settlement agreement outside of court. However, any time a litigated divorce occurs and the court decides how assets are split, those marital assets are going to be divided 50-50.
In community property states, however, parties get to keep separate property and that is not divided up as part of the divorce settlement. Thus, the distinction between separate and marital property is vital to determining who will walk away with what.
How Is Separate Versus Marital Property Determined?
Separate property is generally viewed as anything that each individual party brought into the marriage, unless it was co-mingled with marital assets. In addition, assets received as gifts or as an inheritance are generally considered separate property. For example, if you owned a house prior to marrying, and you then added your wife to the title, then the house could become community property. The same would be true if you had money in a bank account which you both then used. However, if you had a bank account before you got married and you kept it separate and never shared it or had your wife contribute to it, then it would likely remain separate property.
Getting Help
To better understand whether your particular assets will be considered marital property or separate property, you should strongly consider consulting with an attorney.