Divorce is a lengthy process that may involve many back and forth court sessions. Before signing the final papers, the divorcing couple has to agree on important things like child custody, child support agreement, division of properties, securities, debts, and so on. The court has to make a fair decision on each of the following subjects before granting you a divorce.
Even if there is no dispute between you and your spouse regarding the division of property and debts, a divorce lawyer can still guide you and help finalize the process smoothly instead of involving the court.
Types of Properties and Debts in a Divorce
There are two categories of properties and debts involved in divorce cases:
community or marital property and separate property. Community property refers to all the earnings made by either of the partners during the marriage. It also includes all the assets associated with these earnings, such as items purchased with funds from community property. The law also views any debts borrowed during the term of the marriage as community property.
On the other hand, separate property is made up of earnings and debts incurred separately and before marriage. Other forms of separate property can include the following:
- Valuable gifts given to a spouse by their partner or someone else, in the absence of proof that the item was an investment rather than a gift. Proof includes a previous valuation or a couple’s history of buying valuable items for a collection.
- Any existing property solely acquired by either of the partners before marriage.
- Pension funds given to either spouse before marriage.
- Any businesses that were established before marriage. However, it is critical to note that if the non-owner spouse has contributed to this business, it can become marital property.
- Property that is gifted or inherited by either of the spouses, even if it happens during the marriage. Again, if the other spouse has added value to the property, it can change to contain community aspects.
Commingling occurs when there is an undefined integration of separate with community property such that differentiating them becomes impossible. In this case, the property or debt becomes community-owned.
Who Gets What in the Property Division for Divorcing Couples?
Divorce laws stipulating the division of property and debt for divorcing couples are different across states.
In the states of Puerto Rico, Wisconsin, Washington, Texas, New Mexico, Nevada, Louisiana, Idaho, California, Arizona, and Alaska, each spouse receives half of the community property. For separate property, each partner retains their assets and debts.
In all the remaining states, division of property and debts among divorcing couples depends on equitability or fairness. Remember, equitable does not always mean equal.
Divorce attorneys decide equitability by looking at where the assets came from, the mental and physical health of both partners, job prospects, individual earnings, and work history of the spouses, the needs and expenses of children if any, and the length of your marriage.
If you are uncertain about family laws in your state, consider talking to a divorce attorney before signing away any property and debt ownership. The most common source of contention when splitting property after a divorce is house ownership.
Typically, divorce laws state that if it is part of community property, the parent who is the main caregiver or is granted child custody remains in the house. However, if you do not have children, both of you can maintain equal ownership. You can then decide amongst yourselves how to divide the house amicably. These often include an appraisal of the house, followed by either a sale to split the cash, or one spouse buys out the other’s ownership.