Should Separate Property Gradually Become Community Property as a Marriage Continues?

• Author: J. Thomas Oldham
• Position: John Freeman Professor of Law, University of Houston Law Center.
• Pages: 127-143

Should Separate Property Gradually Become

Community Property as a Marriage Continues?

J. Thomas Oldham*

I. INTRODUCTION

“Community property” states do not always apply identical

rules to determine the rights of spouses when a marriage ends.

Indeed, as I have recently shown, there are some significant

differences among these states.1 However, all of them adhere to the

distinction between separate and community property. Premarital

acquisitions by a spouse and property acquired by one spouse

during marriage by gift or inheritance are separate property, and

acquisitions during marriage due to the effort of either spouse are

community property. The spouses each have a 50% interest in each

item of community property from the moment of acquisition;

separate property is solely owned by the acquiring spouse. At

dissolution the community estate is shared, but separate property is

not, regardless of the length of the marriage.2 Separate property

remains separate, as long as it is segregated from other property,

and the parties do not change title or sign a written agreement to

change its character.

This distinction between premarital acquisitions and gifts or

inheritances by one spouse and acquisitions during marriage due to

effort has also been accepted by a majority of the non-community

property U.S. states as the guiding principle for how property

should be dealt with upon divorce. “Separate property” is not to be

divided, while “marital property” is shared.3

Copyright 2011, by J. THOMAS OLDHAM.

* John Freeman Professor of Law, University of Houston Law Center.

The author would like to thank Amanda Parker for her administrative help in

creating this article.

1. See J. Thomas Oldham, Everything is Bigger in Texas, Except the

Community Property Estate: Must Texas Remain a Divorce Haven for the

Rich?, 44 FAM. L.Q. 293 (2010).

2. The sole exception to this rule is Washington, where separate property

can be divided at divorce. See WASH. REV. CODE ANN. § 26.09.080 (West,

Westlaw current thro ugh Aug. 2011 amendments).

3. See generally J. THOMAS OLDHAM, “Property” and “Marital

Property,” in DIVORCE, SEPARATION AND THE DISTRIBUTION OF PROPERTY §

5.03, at 5–9 (2010). Professor O’Brien states that “community-property

standards are increasingly predominant in divorces occurring in separate-

property [non-community property] states.” Raymond C. O’Brien, Integrating

Marital Property into a Spouse’s Elective Share, 59 CATH. U. L. REV. 617, 688

(2010) (emphasis in o riginal).

128 LOUISIANA LAW REVIEW [Vol. 72

The generally accepted idea is that spouses are partners in the

marital economic enterprise, which encompasses all acquisitions

during marriage that result from the efforts of either spouse.

Premarital acquisitions, as well as gifts or inheritances received by

one spouse during marriage, are not considered part of this

economic partnership.

Some have begun to question this distinction. Various proposals

have recently been made that, particularly in marriages of

substantial duration, spouses at dissolution should share a portion or

all of what would normally be considered “separate property.”

I will summarize these various proposals below and describe the

commentators’ arguments why such a change would be desirable. I

will outline why I disagree and then offer other suggestions about

how sharing could be increased at divorce.

II. PROPOSALS TO CHANGE THE RULES APPL ICABLE AT DIVORCE BY

PARTIALLY OR FULLY TRANSMUTING SEPARATE PROPERTY INTO

COMMUNITY PROPERTY

A. Proposals to Share Pre-marriage Savings

The American Law Institute (in the Principles of the Law of

Family Dissolution) has proposed that, when determining what

property should be divided upon divorce, premarital “separate”

property should gradually become “marital” over time, once the

length of marriage exceeds the specified minimum duration.4 The

drafters argue that after many years of marriage, spouses “typically

do not think of their separate-property assets as separate,” and “the

longer the marriage the more likely it is that the spouses will have

made decisions about their employment or the use of their marital

assets that are premised in part on . . . expectations [of having

access to] the separate property of both spouses.”5

In an example discussed in the body of this proposal, the

drafters envision a system where shared ownership would begin

after five years of marriage at an increment of four percent per year

thereafter. So, if a marriage ends in divorce after 20 years, 60% of

pre-marriage property would be treated as marital6 (four percent

per year for the 15 years of marriage exceeding the five-year

4. See AMERICAN LA W INSTITUTE, PRINCIPLES OF THE LAW OF FAMILY

DISSOLUTION: ANALYSIS AND RECOMMENDATIONS § 4.12, (2002) [hereinafter

ALI PRINCIPLES]. The drafters note that this minimum duration should be at

least “two or three years” before any sharing should begin, and after “thirty or

thirty-five years” total sharing should occur. Id. cmt. b.

5. Id. cmt. a.

6. Id. cmt. b, illus. 1.