Distribution of Marital Assets in Community Property Jurisdictions: Equitable Doesn?t Equal Equal

AuthorJames R. Ratner
PositionProfessor of Law, University of Arizona James E. Rogers College of Law.
Pages21-55
Distribution of Marital Assets in Community Property
Jurisdictions: Equitable Doesnt Equal Equal
James R. Ratner*
The hallmark of an American community property system, in
contrast to common law jurisdictions, is that community property
is owned in undivided one-half ownership by each spouse.1 In the
event of a divorce, the undivided ownership interest needs to be
divided. At first glance, it might sound simpledivide each asset
50/50but nothing is ever simple when it comes to marital
property. Although California,2 Louisiana3 and New Mexico4
require an equal distribution of the community assets, other
community property jurisdictions, using various terms, call for
equitable distribution of the community assets.5 But what is an
Copyright 2011, by JAMES R. RATNER.
* Professor of Law, University of Arizona James E. Rogers College of
Law. A version of this paper was presented at the LSU Law School Symposium
The Future of Community Property: Is the Regime Still Viable in the 21st
Century?, on April 1, 2011.
1. Eight states have community property regimes: Arizona, California,
Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. GRACE GANZ
BLUMBERG, COMMUNITY PROPERTY IN CALIFORNIA 5 (5th ed. 2007). In those
jurisdictions [c]ommunity property is owned equally by the spouses from the
moment of acquisition.Id. at 6. Wisconsins statutes, WIS. STAT. ANN. §§
766.001766.97 (West, Westlaw through July 2011 amendments), patterned
after the Uniform Marital Property Act, 9A U.L.A. 103 (1998), maintain most
attributes of a community property system, including the attribute of a present
undivided ownership interest in marital assets generated by either spouse during
the marriage and has been described as the ninth American community
property state.” WILLIAM A. REPPY & CYNTHIA A. SAMUEL, COMMUNITY
PROPERTY IN THE UNITED STATES 12 (7th ed. 2009). In common law states,
spouses own property during the marriage indistinguishably from how they
would own it if there were no marital community. BLUMBERG, supra, at 6.
2. CAL. FAM. CODE § 2550 (West, Westlaw through 2011 amendments).
The California norm is equal division of each asset,” BLUMBERG, supra note 1,
at 54647, but has exceptions when community liabilities are greater than the
total of community assets, and has a statutory exception for personal injury
recoveries, CAL. FAM. CODE § 2603 (West, Westlaw through 2011
amendments), and [w]here economic circumstances warrant.” CAL. FAM. CODE
§ 2601 (West, Westlaw through 2011 amendments).
3. LA. CIV. CODE ANN. art. 2336 (2011).
4. Ruggles v. Ruggles, 860 P.2d 182, 192 (N.M. 1993) (articulating the
rule requiring equal d ivision of the community property on divorce).
5. See IDAHO CODE ANN. § 32-712 (West, Westlaw through July 2011
amendments); NEV. REV. STAT. ANN. § 125.150 (West, Westlaw through 2010
amendments); TEX. FAM. CODE ANN. § 7.001 (West, Westlaw through 2011
amendments); WASH. REV. CODE ANN. § 26.09.080 (West, Westlaw through
Aug. 2011 amendments); ARIZ. REV. STAT. ANN. § 25-318 (West, Westlaw
through 2011 amendments); REPPY & SAMUEL, supra note 1, at 351. Wisconsin
22 LOUISIANA LAW REVIEW [Vol. 72
equitable distribution, and how does it differ from an equal
distribution?
Arizona is a representative example of a community property
jurisdiction with a divorce distribution instruction that all
community assets, although owned equally by the divorcing couple
in undivided one-half ownership, are to be divided “equitably,
although not necessarily in kind . . . without regard to marital
misconduct.”6 The statute need not be read as authorizing
meaningful departures from a 50/50 split of the net worth of the
community. “[E]quitably, although not necessarily in kind” could
mean only that it is unnecessary to divide each asset 50/50 and that
an overall distribution scheme of the various assets and liabilities
to one or the other spouse need not result in a distribution that is
equal down to the last penny. Such an interpretation of “equitably,
although not necessarily in kind,” offers useful flexibility
compared to a requirement of perfectly equal distribution. Equal
may imply a more cumbersome 50/50 split for each asset.7 The
less constrained construction establishes an optimal structure in
which a divorce court has extensive discretion and flexibility
concerning how to divide various community assets and liabilities
to arrive at a 50/50 split.8 This construction need not achieve a
also statutorily authorizes equitable distribution at divorce. WIS. STAT. ANN. §
767.61 (West, Westlaw through July 2011 amendments). California provides for
equitable division of community debts when marital debts exceed marital assets.
CAL. FAM. CODE § 2622 (West, Westlaw through 2011 amendments).
6. ARIZ. REV. STAT. ANN. § 25-318(A) (West, Westlaw through 2011
amendments). The statute also contains a typical authorization for adjustment in
the event of management and control fraud or serious squandering or dissipation
while divorce was pending: This section does not prevent the court from
considering . . . excessive or abnormal expenditures, destruction, concealment or
fraudulent disposition of community, joint tenancy and other property held in
common.Id. at § 25-318(C).
7. California, which has a requirement of equaldistribution, CAL. FAM.
CODE. § 2550 (West, Westlaw through 2011 amendments), and a norm that each
asset be divided 50/50, has adjusted its structure to avoid some of the harshness
associated with that norm, as it can force economically undesirable liquidation
of assets, including the custodial home, or other economic impairment. See CAL.
FAM. CODE § 2601 (West, Westlaw through 2011 amendments) (Where
economic circumstances warrant, the court may award an asset of the
community estate to one party on such conditions as the court deems proper to
effect a substantially equal division of the community estate.); In re Marriage
of Brigden, 145 Cal.Rptr. 716 (Cal. Ct. App. 1978).
8. Because there are many different ways to arrive at a roughly 50/50 split
of the overall community assets and liabilities, requiring numerical perfection
would eliminate much of the flexibility and regress in the direction of
liquidating the assets, as cash provides a vehicle for a perfect numerical split.
2011] EQUITABLE IS NOT EQUAL 23
numerically perfect division, but at the same time does not
authorize any meaningful departure from a 50/50 overall split of
the community worth. In such a regime, divorce settlement, the
mechanism by which the vast majority of divorce property
arrangements are achieved,9 would be negotiated in the shadow of
uncertainty about valuation and about the final resting place of
various assets, but no uncertainty concerning the shares.
Judges in community property jurisdictions who interpret
“equitably, although not necessarily in kind, however, are
reluctant to assign it a meaning of roughly 50/50 in the overall
split.One reason for the reluctance may be that the judges feel
compelled to assign to the term equitable its well-known general
meaning in law: do the fairest thing given the circumstances.10
Common law equitable distribution jurisdictions, facing the
different distributional issue of how to divide separately owned
property,11 tend to use a broader concept of equitable, including
concepts of need and contribution, often rejecting even a
presumption of equal division.12 Community property equitable
distribution jurisdictions tend to follow along with the common
law version of an equitable distribution at divorce, seemingly
discounting the fact that what is being divided is property with
present equal ownership.13 In Arizona, for example, descriptions of
9. ELLMAN, KURTZ, WEITHORN, BIX, CZAPANSKIY, & EICHNER, FAM ILY
LAW: CASES, TEXT, PROBLEMS 863866 (5th ed. 2010).
10. See, e.g., Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 133
(1995) (Ginsburg, J., concurring) (In legal systems . . . equitablesignals that
which is reasonable, fair, or appropriate. Dictionary definitions of equitable
notably include among appropriate meanings: just and impartial,American
Heritage Dictionary 622 (3d ed.1992); also dealing fairly and equally with all
concerned,Websters Ninth New Collegiate Dictionary 421 (1983).) ; ELLMAN
ET AL., supra note 9, at 336 (“‘Equitableis merely a four-syllable word for
fair.’”).
11. REPPY & SAMUEL, supra note 1, at 12.
12. Id.; BLUMBERG, supra note 1, at 6 (In modern common law states,
variable distribution is the norm . . . .); AM ERICAN LAW INSTITUTE, PRINCIPLES
OF THE LAW OF FAMILY DISSOLUTION: ANALYS IS & RECOMMENDATIONS § 4.09,
Reporters Notes cmt. a (2002) (citing Luedke v. Luedke, 487 N.E.2d 133 (Ind.
1985), as an example of an equitable distribution jurisdiction resisting adoption
of an initial presumptionof equal distribution) [hereinafter ALI PRINCIPLES].
13. See, e.g., In re Marriage of Urbana, 195 P.3d 959, 964 (Wash. Ct. App.
2008) (explaining that an equitable distribution requires fairnessrather than
mathematical precision,should be based on a wide variety of factors, and can
justify a substantially unequal distribution); McNabney v. McNabney, 782 P.2d
1291, 1296 (Nev. 1989) (A fifty-fifty rule as a rule of law is inherently
inconsistent with our statute. . . .Very frequently justice and equity will require a
divorce court to adjust community property in an unequal manner . . . .);
Phillips v. Phillips, 75 S.W.3d 564 (Tex. App. 2002) (divisions of community
property can depart from equality by substantial amounts at the discretion of the

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