New Mexico Community Property Laws: Community Versus Separate Property

It is well know that New Mexico is a community property state. The meaning of community property is sometimes difficult to grasp, and the implications for the division of property and debt hard to accept.

The concept of community property views a marriage as a partnership, in which the spouses who own one-half of all the property acquired during the marriage, no matter which spouse‘s name is actually on the title for the property. The essential elements to determining that an asset is community property are: 1) whether or not the property was acquired during the marriage; and, 2) where the money that paid for the asset came from. If an asset was acquired during the marriage, then it is presumed to be community property.

There are exceptions to the community property presumption. An asset may be deemed to be the sole and separate property of the spouse in whose name it is held, if the spouse can prove that the spouse owned the asset prior to the marriage. Also, an asset may be separate property if:

  1. The spouse inherited the asset;
  2. The asset was given as a gift solely to one spouse;
  3. The spouses entered into a written agreement designating the asset as separate property;
  4. If was acquired after the entry of a court order granting a divorce or legal separation; or
  5. The Court otherwise declares the property separate.

Given the presumption that all property acquired during the marriage is community property, in a divorce action, the burden of proving that a piece of property is separate falls on the spouse claiming the separate ownership.

It is also important to remember that the definition of property includes more than just the marital home and cars. The definition of property also includes things like: retirement benefits and pension plans; stocks and bonds; insurance policies; income and bonuses; cash; leases and options to purchase real estate; accrued vacation and sick time; and even frequent flier miles among others.

It is important to address each and every significant item of property in the Marital Settlement Agreement. The purpose of a Marital Settlement Agreement (MSA) is to specifically identify and divide all of the spouses‘ community and separate property, along with the community and separate debt. Keep in mind the value of each item of property and debt. Some items simply lack sufficient value to dispute. Do not let the division of property and debt turn into a contest of ego and will. These are very expensive fights with little return on your efforts, time and money in the end.

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