Community property in the United States

[4] Finally, Florida adopted a similar law in 2021, allowing citizens and noncitizens to establish community property trusts.

In the case of Puerto Rico, the island had been under community property law since its settlement by Spain in 1493.

[citation needed] The U.S. Supreme Court ruled that a similar statute allowing spouses to elect a community property system under Oklahoma law would not be recognized for federal income tax reporting purposes.

[7] The Harmon decision should also apply to the Alaska, Florida, Kentucky, and Tennessee systems for income reporting purposes.

[8] Joint ownership is automatically presumed by law in the absence of specific evidence that would point to a contrary conclusion for a particular piece of property.

In other jurisdictions, such as Texas, a divorce court may decree an "equitable distribution" of community property, which may result in an unequal division of such.

[A] The community property system is usually justified by the pragmatic recognition that such joint ownership recognizes the theoretically equal contributions of both spouses to the creation and operation of the family unit, a basic component of civil society.

[17] The countervailing majority view in most U.S. states, as well as federal law, is that marriage is a sacred compact in which a man assumes a "deeply rooted" moral obligation to support his wife and child, whereas community property essentially reduces marriage to an "amoral business relationship".

[citation needed] Community property has certain federal tax implications, which the Internal Revenue Service discusses in its Publication 555.

If the marriage terminates in subsequent years, there can be difficult community property problems to solve.

There may also have been an inheritance or substantial gift from the family of one of the spouses during the marriage, whose proceeds were used to buy a property or pay down a mortgage.

Community property issues often arise in divorce proceedings and disputes after the death of one spouse.

Companies with growth potential sometimes award stock options as compensation to employees, during times when there is not enough money to pay a suitable salary.

By accepting a stock option for compensation, an employee invests his or her own trust in the belief that he or she will help make the company acquire a higher value.

If the company later acquires a higher share valuation, then the employee may "cash in" his options by selling them at the fair market value.

If the marriage is terminated before the shares are cashed in, then the parties must decide how to apportion the community property portion of the options.