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Family Law - Property In The Family

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Property in the Family

Historically, common law regarded a married couple as a legal entity with the husband as the head of the household. He controlled all marital property, including property brought into marriage by the wife. If the wife outlived the husband, she could recapture her rights over the property she brought into the marriage. During the 1970s, the United States Supreme Court struck down many gender-based laws, holding that the laws violated the Equal Protection Clause of the Fourteenth Amendment. For example, in Reed v. Reed (1971) the Supreme Court struck down a state law that preferred men over women as administrators for descendants' estates. Now husbands and wives can manage their own property.

Some states adhere to the English common law "title theory" of property which attaches ownership of an asset during marriage to the spouse who holds the title. Title to a marital asset is held by the spouse who earned the funds to purchase the asset, unless title was shifted by gift, contract, or a court order. The owner of the property can manage, control, and dispose of the property without the consent of, or even giving notice to, the other spouse. If the purchaser of the asset includes the other spouse on the title, it is presumed the spouse intended to present the other spouse with a gift unless evidence demonstrates otherwise.

Other states are known as community property states. This property system, created in Spain and France, is based on a sharing or partnership theory of marriage. It presumes each spouse, whether directly or indirectly, contributes equally to the accumulation of assets during the marriage. The homemaker provides intangible contributions to the marital relationship, and property acquired through the efforts of either spouse is regarded as marital property owned equally between the two. Spouses can also hold separate property including assets acquired through gifts or inheritance prior to marriage.

In a common law property system, traditionally the wife would have nothing to leave at death since the husband already controlled all of the property. However, a husband could choose to leave his estate to someone other than the widow, thus leaving the widow destitute. To prevent this unfairness, over the years states devised methods of granting surviving spouses some rights to marital property. The most common form still implemented today is the "statutory elective share." This method entitles a surviving spouse to a legally prescribed portion, typically one-third to one-half, of the deceased spouse's property owned at the time of death.

In community property jurisdictions, the deceased spouse may dispose of his or her one-half of the estate through a will along with any separate property. The surviving spouse has no right to survivorship in this system unless the property was left to him or her in the will.

By the late 1990s, division of pensions became a major divorce asset issue and the subject of proposed state legislation. State laws and the Retirement Equity Act of 1984 traditionally allowed spouses to obtain rights to the other's pension benefits if divorced. Increasing use of 401(K) pension plans meant that pension funds might be the largest asset of a family besides a home. However, due to the flexibility of such plans which made them attractive, protection of spousal financial interests following divorce were lessened in valuing and dividing the pension benefits. Proposed restrictions for withdrawal of funds were opposed by the pension industry for fear of increased liability and the greater record keeping demands a new system might pose. Inclusion of pension benefit clauses became an increasingly important part of the court order approving a property settlement agreement.

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