When divorcing, it can be difficult to decide who gets what when it comes to property and assets. The way that these matters are decided differs by state, but part of it comes down to which types of property are separate assets and which types are communal assets. Read on to learn more about these concepts as well as tips for splitting up your assets and liabilities during your divorce.
What Is Community vs. Separate Property?
While definitions can vary based on the state and also based on specific circumstances, community property (or marital property) is anything that the couple has acquired over the length of their marriage. Separate (or sole) property is anything that one individual brought into the marriage that they owned before the marriage took place.
There are some exceptions and special considerations, however. For example, if you owned a business before you got married but then the business grew after you got married, then the business does not necessarily count as separate property because the assets increased during the marriage. Also, if one spouse owned a home prior to marriage and then the couple lived in it together, had children, and both contributed to the mortgage, the home would, in some cases, be considered marital or community property. Debts are usually considered separate property if they are acquired before marriage.
Community Property States
Some states are considered community property states. These states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In Alaska, South Dakota, and Tennessee, you have the option of using the community property rules during your divorce. The community property rules are, put simply, that any items you acquired before or after the marriage are separate property and any items you acquired during the marriage is community property with the exception of gifts and inheritances. Gifts and inheritances are usually considered separate property even if they were received during the marriage.
In these states, community property is distributed in a 50/50 fashion and separate property is retained by the spouse whose property it is.
Equitable Distribution States
All of the other states use an equitable distribution method. This means that if one spouse came to the marriage with a lot of property and the other spouse came to the marriage with nothing, all of the property, including the community property, is divided equally between the spouses. Both assets and liabilities are taken into consideration. It is possible that one spouse will have to give up some of his or her separate property to make the settlement fair. Also, if one spouse ends up with more liabilities, then that spouse will usually also end up with more assets.
In an equitable distribution state, some of the property that one spouse earned or acquired during the marriage might be considered separate property. This is something that you will need to speak to a legal advocacy group about so you can understand exactly how these matters are handled in your specific state.
If you have a prenuptial agreement, it will usually override your state’s property and distribution rules. For example, if you live in an equitable distribution state and you have come into the marriage with a lot of property, a prenuptial agreement (sometimes called a prenup) can allow you to state beforehand that this property won’t be available to make the distribution of property equal. Similarly, if you live in a community property state, you can develop a prenup that specifies that income earned by each spouse will remain that spouse’s property.
If you are getting a divorce and you already have a prenuptial agreement in place, talk to a legal resource expert to find out what you need to do to have it override your state’s laws.
It is against the law in all states to hide assets with the intention of not having them counted in your settlement. This includes bank accounts. Also, many times, some accounts will be frozen so neither of you can rack up a lot of debt, sell any properties, or move money to an undisclosed location. Be aware that if you or your ex tries to hide or liquidate assets, the other spouse might be awarded 100% of that asset.
Working With Your Spouse
If you can negotiate with your spouse on your own, you can come up with your own agreements in most states. A judge may step in if the agreement you decide upon is blatantly unequal, however. It can help to make a list of all of the assets and properties that you both own as well as all of the debts and liabilities. Then begin working out who should get what.
There will be items that only one person wants, so it is easiest to start with those. For example, if you love your dining room set and your spouse doesn’t have any particular feelings about it, you could plan on taking that and find out what in the home your spouse wants that would be roughly equal in value.
As you work your way down the list, put off anything that is very emotionally charged to discuss later. The more you have decided on by yourselves, the less work a mediator, a resource group, or a judge will have to do on your behalf. This can save you both time and money, so do what you can to resolve as much of the issue as you can before calling in a professional.
Determining who will get what property is a difficult task during a divorce, but it is usually a necessary part of the process. Working with a legal resource group like National Family Solutions can help you get through the obstacles that are ahead as you go through your divorce. We can help you get a fair settlement including alimony, child support, and even child custody. Contact us today to find out if we are the right choice to handle your divorce and child custody case.