What is the difference between a commonwealth state and a community property state?

Answer 1

AnswerJoint Tenancy is a specifc way to hold real property. It is not specific to either a community property jurisdiciton or non-community property jurisdiction. At common law, a joint tenancy was created when a grantor (person who originally held the land) conveys (transfers) the property in a written instrument to two or more people with the specific clause, "with a right survival." Therefore, at common law there were four unities required, that of time, title, interest, and possession. That means that each joint tenant has the same right to the use and possess the whole of the land. Joint Tenancy is special because it has a survivorship quality. That means that if a joint tenant dies, the estate will automatically pass to the survivors of the joint tenants. For example if A and B held as joint tenants and A died, then B would automatically possess the whole of the land in fee simple absolute.

There are more details, such as alienability and severability of one's interest, but that may be more detail then necessary.

Community property is a legal system used to determine how property should be distributed if a married couple and in some states registered domestic partners, should be dissolved, by divorce or death for example.

In such a system there are certain types of property that are considered to be community property, meaning they are property held equally by husband and wife even if title should indicate otherwise. Community property is actually best defined by what it is not. Community property is all property that is not separate property. Separate Property is property that 1) was acquired before marriage, (2) acquired after marriage by gift, bequest, or devise, and (3) acquired during marriage with separate property (think of using a savings account created before marriage to buy something during the marriage).

All other property is community property. That would include one's salary during the marriage, and anything purchased during the marriage with non-separate property funds. A business started during before a marriage that grows can have community property characteristics depending on the valuation method used.

The basic idea is that community property jurisdictions view the marriage as a common endeavor by both parties. Even though only one party may be working and making a salary, the rationale is that the non-compensated party makes it possible for the the wage earner to participate in the workplace. The non-compensated party also presumably provides valuable services to the other party (think of staying home and watching kids, cooking, cleaning.) Some say this system started to protect the non-compensated party by giving him or her an automatic 1/2 interest in all community property. Others say now that many families have two wage earners, this system is antiquated.

So, considering what i have said above. You can now see that holding property in the joint tenancy form can be done under either a community property or separate property jurisdiciotn with largely the same results. The easiest way to explain is with an example. Let's say Husband (H) and Wife (W) are NOT YET MARRIED. H and W nonetheless decide to buy a house together as joint tenants with a right of suvivorship. This would mean that they each have the same rights to possess and use the whole of the home, and the Survivor automatically receives the whole property. In either a community property state or non-community property state the result is the same.

The result may be different, however, if the facts are changed. Let's say H and W are married. H decides to use community funds (a bonus he got at work of $50,000) to buy a house with his Mistress (M) as joint tenants. Note the difference, in a separate property state, this 50k would be his property and he is free to buy what he wants with it, in whatever form (ignore at this time testamentary substitues a form of protection in separate property states like NY.) So in a separate property state H and M would hold as joint tenants. If H died first, M would automatically get the house.

In a community property state, H has used community funds to buy this house. H really only had a 1/2 interest in the bonus he earned at work, so W also had a 1/2 interest in the home that was purchased. So in a community property state H has a 25k interest and W has a 25k interest. If H were to die first (predecease) then M will take the property, BUT W will still have a 25k interest in that property. That means that M will either have to pay off the 25k to W or an equitable lien will be placed on the land in the amount of 25k to satisfy W's interst in the property.

Community property states afford clear and automatic protection to W.

Answer 2

Commonwealth is simply a term used by some of the Eastern US states that is dated from much earlier times. The distinction has no impact on the laws of said state nor Federal Laws or the US Constitution. The term community property state refers to states which have laws that relate to debts incurred and personal and real property obtained during the marriage. Basically in CP states all personal and real property are owned equally by both spouses and all debts are shared equally by both spouses even if when only one spouse is the named debtor.

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