In most cases, yes. However, there can be exceptions and complications. Community property refers to assets and income acquired by either spouse during marriage. In a community property state like Washington, both spouses have equal ownership rights to wages, commissions or bonuses earned by either spouse during the marriage.
This means that, during divorce, the court may divide the income you earned during the marriage equally between you and your ex-spouse. However, there may be cases when courts may classify certain income as separate property.
When is income earned during marriage considered separate property?
Certain types of income remain separate property even when earned during marriage. This includes:
- Inheritance and gifts: Money or assets received through inheritance or as individual gifts intended for just one spouse
- Personal injury settlements: Particularly portions compensating for pain and suffering
- Income from separate property: Revenue generated from assets owned before marriage, such as rental income or investment returns
- Business profits from separate enterprises: Income from a business that remains separate property
There are also some types of income in which the distinction between separate and community property becomes unclear. This often happens with income that doesn’t fit neatly into “married” or “separated” times. Think about work bonuses that cover both the time you were married and after you split up or sales money you earned while married but didn’t officially receive until after separation.
Company stock benefits can be just as confusing. You might have gotten stock rights while married but couldn’t use them until after you separated. There’s also the question of future stock rewards that depend on work you haven’t done yet.
Income from commingled assets, where spouses have mixed their separate property with community property, can also be difficult to categorize. This can include a business you may have started before marriage, but it grew or profited during marriage or due to marital funds.
When you own complex assets, clarity is necessary
Determining whether income earned during marriage is community property or separate property is not as straightforward as it may seem. If you have complex assets like business interests, stock options or commingled properties, then working with an attorney may be necessary.
