Splitting the Estate

Aug 8, 2012 by

The division of assets and real property is often one of the most contested issues in a divorce. People facing a divorce might be surprised to learn that although the laws that govern the division of marital property and assets in all 50 states are a bit different and each state has its own interpretation of the laws governing property and asset division. One thing that many people facing a divorce are not aware of is the fact that although the laws that govern the division of marital property and assets in all 50 states are a bit different, they all are based on one of two basic division methods used within the U.S. legal system. The laws in all 50 states are based on either community property division or equitable property division.

Taking a look at the short list, the states that employ community property division laws try to divide all property and assets equally between spouses. Far more states utilize equitable property laws than those using community property division, but the states that have adopted this way of handling property settlements include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states the goal is to give each person precisely half of the total value of assets minus total amount of debt. Community property division requires houses, bank accounts and other investments all be split right down the middle. Any debts the divorcing couple owes will also be treated the same way and divided 50-50.

Although community property division might seem like a completely fair and equal way to handle property division, it does not always turn out to be completely fair to both spouses equally in all cases. Factors like property and other assets which one spouse may have owned prior to marriage, as well as any increase in value one spouse may have added to a property or asset during the marriage can make splitting property completely equally a bit tricky. It is always difficult to assess the exact value of assets like pensions, stock options and business interests and the fact that all nine of the community property states each have their own interpretations of the laws doesn’t make dividing marital property any easier.

Obviously, the other 41 states utilize equitable property division laws where assets, debts and resources are divided according to what the court determines to be the most “fair and equitable” distribution. As a result, equitable distribution of property can be heavily biased toward one spouse or the other depending on the court’s perceptions. Equitable property division means the length of marriage, work history, future job prospects, the physical and mental health of both spouses, the source of assets, and the expense of raising children will all be factors in the division of marital property. Property or assets owned by one spouse prior to the marriage, as well as gifts or inheritances given to one of the spouses during the marriage may be exceptions to equitable division rules, but it is not always easy to predict the outcome of equitable distribution because the formulas used to calculate division will vary according to the jurisdiction and are often lengthy and complicated.

Before you file a divorce action you’ll need to know whether your state uses community property division or equitable property division. Your local county courthouse or local divorce attorney can tell you what the laws are in your area, but if you can come any type of mutual agreements concerning the division of your marital property before you go to court or hire an attorney, it can save both time and money and reduce the stress of splitting things up in court. Proposed property division agreements created mutually by both spouses are also likely to be upheld by the court. It is always good when divorcing spouses can come to mutual prior agreements on property division regardless of which type of law applies in their area.


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