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Distribution of property in community property states

When going through a divorce in New Orleans, one of the things each party must take into consideration is that Louisiana is a community property state. This means that property division could become difficult in couples with significant shared or individual assets.

Generally, property owned by a spouse prior to the marriage does not become marital property unless funds to maintain that property are commingled. Anything earned during the course of a marriage, however, becomes community property and will be split equally among spouses.

For example, if a person owns a company prior to the marriage he or she will likely maintain sole ownership of the company in the event of a divorce. This situation recently came up with Facebook founder Mark Zuckerberg got married. After Facebook went public, Zuckerberg's net worth was established at $17 billion. The clarification of his net worth is important because it is possible that if the couple gets divorced, that $17 billion has been established as his. Any assets or earnings acquired after the wedding, however, are generally considered to be community property.

It can get a little fuzzy when it comes to the growth of a separate property, though. While the stock may have been pre-marital property, what the couple does with the earnings or losses from that stock determines whether it becomes community property.

A good way to protect one's assets is to have a prenuptial agreement outlining the worth of the company as of the date of the marriage. The pre-marital agreement should spell out if and how much of a company's earnings are to be community property should the couple end up getting divorced and splitting assets.

If a couple does not keep records as to where the money went after a company earned it or where additional funds came from, the assets could become marital property. For spouses who are business owners or property owners, speaking with an attorney can clarify what can be counted as community property and what is established as separate property.

Source: The New York Times, "Zuckerberg's Property Status, Post-Marriage," Tara Siegel Bernard, May 21, 2012

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