In Louisiana, marriage affects the property rights of both parties. The rights of married people to buy, to sell, to control their property, to borrow money and get credit are regulated by law. "Property" includes almost everything of value: houses, land, bank accounts, stocks, pension plans, wages and other income and personal items. A married coupe becomes subject to Louisiana's community property law automatically when they get married, unless the spouses have made a special contract providing different rules to govern their property.
What is the community property system?
The community property system is a group of rules adopted by the Legislature which set up how a married couple will own and manage their property. It also provides rules on who may incur debts, how those debts are paid, and how debts and assets are divided between the spouses when the community ends.
The foundation of the community property system is the rule that most property acquired by a married person during the marriage is owned by the husband and wife together. During the marriage, the husband owns a half interest and the wife owns a half interest. when the community ends, typically by divorce or death, each gets one-half of the community property that is left after their debts have been paid. In this way, the law recognizes that both married people contribute to the marriage, even if one of them earns no money or if one earns a lot more than the other.
At the end of a married couple's community property system, all things that the spouses have are presumed to be community property. If an asset is not community property, the spouse who owns it must prove that it is his or her separate property. It may be difficult to prove what things are separate if the husband and wife have mixed separate and community property, especially over a long period of marriage. The law calls this mixture of property "commingled" property.
When the Community Property System Ends
A community property system, or 'regime', can be ended by the death of either spouse, by a divorce, by a court-ordered annulment, by a contract between the spouses or by a court judgment declaring a separate property system instead of a community property system.
Two Types of Property: Separate and Community
Not all property owned by spouses is community property. Property owned by either spouse before the marriage, gifts made solely to one spouse and property inherited solely by one spouse are the separate property of that spouse alone. Separate property does not belong to both spouses.
Community property includes the salaries or earnings of both spouses, things they buy with community money and rent or other income they earn from community property. Damages received by a spouse for for damage or loss of an item that was community property also belong to both spouses. However, damages received by a spouse for personal injuries are generally the property of the injured spouse.
Income from separate property is community property, unless the spouse who owns the property reserves the income as his or her separate property prior to the marriage.
Controlling the Use of Property
In the community property system, control of property is different from ownership of the property. Even though both spouses own community property, some of it can be sold by one spouse alone. Other property cannot be sold, mortgaged or leased unless both spouses agree. Real estate cannot be sold, mortgaged or leased without both spouses agreeing. In some instances, one spouse alone may sell, mortgage or lease community property without the consent of the other spouse. For example, things that registered in the name of one spouse alone, such as vehicles, boats and trailers, can be sold solely by the spouse in whose name it is registered. A spouse who runs a community business does not need the consent of the other spouse to make day to day business decisions. However, both spouses must consent before the business can be sold.
Either married person if allowed to spend money that is community property without the consent of the other. A debt that a married person incurs either before the marriage or during the marriage can be paid from community funds, regardless of which spouse earned the money. The debt can also be enforced from the separate property of the spouse who incurred it. Usually, the other spouse cannot be forced to use his or her separate funds to pay a debt the other spouse made either before or during the marriage.
Either married person person can use the total value of the community property to get unsecured credit. Both spouses must agree before a house, land or furnishings located in the family home can be mortgaged to secure a loan.
People who plan to marry and live in Louisiana can choose not to be governed by the community property system provided by law. If they so choose, they may make a written marriage contract before the wedding that sets forth how they want their property to be owned and controlled. A marriage contract written and executed before marriage does not need court approval. Couples who do not execute a marriage contract before the wedding may later make such an agreement, but it will require court approval to be effective. People who get married in another state and then move to Louisiana have one year to make a marriage contract without a judge's approval before they fall under the community property system by operation of law.
All marriage contracts must be written and signed before a Notary Public and two witnesses. All marriage contracts must also be recorded in the conveyance records of the parish where the couple is domiciled and in each additional parish where they own real estate.
Call Us If You Need Help
If you need help understanding what the community property system is all about and what it means to you, you should contact us at the Harrison Law Firm.
Remember these things:
1. By law, marriage changes your property rights.
2. The community property laws will apply to you if you do not make a special marriage contract.
3. You must make this marriage contract before marriage.
4. A marriage contract must be in the proper form and properly recorded to be valid.