How Is Marital Property Divided When Spouses Divorce?
If you are contemplating divorce, then you should carefully consider how the court will divide the marital property you and your spouse have acquired. The division of marital property – who gets what in the divorce – is predominantly a matter of state law. Therefore, it is always advisable to contact an experienced divorce lawyer in your jurisdiction before filing a divorce complaint or before filing a responsive pleading in answer to your spouse’s petition.
Difference Between Marital Property and Separate Property
In most states, getting organized in preparation for divorce requires identifying, appraising, valuing, and allocating all the couple’s marital assets. Property owned at the time of the divorce action will either be the marital property of both spouses or the separate property of one spouse (or the other). Whereas marital property is divided between the spouses, separate assets and debts are owned and controlled by one spouse.
Importantly, many couples will reach an agreement on the division of their marital assets and debts. Doing so saves time and assures they retain control over who gets what in the divorce. But if they cannot agree, then the family law judge assigned to the case must make a decision on the property division for them. In many instances, the property is not clear all marital or all separate. An asset can become a little bit of both, making the division more complicated. For example, when the house was owned by one party before the marriage, but both spouses contributed their wages earned during the marriage on a major remodel. The house may have started as the separate asset of one spouse. But wages earned during the marriage are typically considered marital assets and can transform, or transmute, separate property into marital property divisible in divorce. If not wholly, then at least partially via a community lien.
Community Property States
Generally, these property terms are defined by state statute and common law concepts. Importantly, it is the separate property of one spouse that is not divided in a divorce, absent agreement, or special circumstance. The marital property known as community property belongs equally to both spouses and must be divided equally as part of the dissolution of marriage process in community property jurisdictions. Although a 50/50 split, an equal division of marital assets and debts is not precise to the very penny in all cases but should be reasonably close.
There are only a handful of community property jurisdictions in the U.S., however: Arizona, New Mexico, Texas, Louisiana, Washington, California, Nevada, Wisconsin, and Idaho. (A special situation exists in Alaska, where spouses may agree to hold specified assets as community property.)
Equitable Distribution States
The equitable distribution of marital assets in a divorce is the predominant law in the U.S., emphasizing what is fair, reasonable, and just under the circumstances. For divorces in Michigan, Tennessee, Florida, Wyoming, South Dakota, Massachusetts, and New York, to name only a few states, the parties’ property will be subject to equitable division – fair, but not necessarily equal. This resulting property division in equitable distribution states may vary considerably from that experienced in community property states. The jurisdictions that require equitable distribution in divorce emphasize fairness in a balance of the equities, the circumstances, rather than the need for an equal division of assets.
Many relevant factors are considered by family courts in weighing the equities in these cases. Such as the parties’ comparative earning capacity, education, and age, along with the length of their marriage and the lifestyle they enjoyed, among many others. On balance, the court may award an unequal, yet equitable, a portion of assets and debts to each party in the divorce.
Just as with community property jurisdictions, parties to a divorce in equitable distribution states may agree on the division of their assets and debts. Complete settlement of property issues is not uncommon, making divorce negotiations an important aspect of every divorce no matter which state’s law applies.
Fred Ruotolo is a divorce and family law attorney in Scottsdale, Arizona. Mr. Ruotolo is a partner with Stewart Law Group. The firm has helped many clients navigate the legal complexities of divorce, child custody, child support, spousal support, property division, and child relocation disputes.
