When divorcing couples aren’t able to negotiate a property division agreement on their own, they turn to the court. Courts are required to follow the property division laws of their state.
Most states follow the equitable distribution system, where property is divided “fairly,” which may or may not be equally. Factors like the length of the marriage, each spouse’s needs and earning ability and marital misconduct or “fault” may be considered.
Nine states are considered community property states. Under community property laws, any property acquired by one or both spouses during the marriage is divided 50/50.
Alaska is unique in that it is considered an equitable distribution state, but couples can choose before or during their marriage (but prior to any divorce filing) to sign and file a community property agreement.
What is a community property agreement?
Couples often enter into a community property agreement (and sometimes set up a community property trust) for tax purposes – not in anticipation of divorce. Often, these agreements stipulate that all property acquired separately or jointly during the marriage is community property. When that’s the case, then under the law, all future property acquired “is presumed to be community property,” and each spouse owns half of it. Any “appreciation or income” gained by those assets is also considered community property.
Couples who are considering putting a community property agreement in place are wise to first consult with financial, tax and legal professionals. Those who already have such an agreement in place and are considering divorce should determine the effect of that agreement on their property division. They may also want to determine whether they want to keep the agreement in place or terminate it prior to any divorce filing.
While divorce can be one of the most emotionally fraught experiences someone can go through, it is a legal process. Understanding Alaska’s unique laws is crucial to working toward the best possible outcome.