When you divorce, many of your assets must be divided between you and your spouse, but the way these are divided varies between states. Not all assets are subject to division, and assets you had before your marriage usually cannot be split in your divorce. Ultimately, your divorce court will split your assets if you and your spouse cannot reach an agreement.
Marital and Separate Property
Typically, a court can divide only your marital property in your divorce, not your separate property. Marital property is everything you and your spouse acquired during your marriage that does not qualify as separate property. State laws vary, but gifts, inheritances and items acquired before your marriage are generally considered to be separate property. For example, money you inherited while you were married is separate property but the paycheck you earn is not.
Community Property Vs. Equitable Distribution
Most states are “equitable distribution” states, meaning the courts in these states split marital property in a manner that is deemed fair. This distribution doesn’t have to be equal because the court is concerned with making a fair split, not an equal one. Nine states are “community property” states instead: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. These states treat both spouses as equal owners of marital property, and the court’s goal is an exact 50-50 split between spouses. Thus, in a community property state, your spouse can take half of your marital property, but usually not your separate property.
Equitable Distribution Factors
In equitable distribution states, courts use factors established by state laws to make distributions of marital property. These factors may include the length of the marriage, the earning capacity of each spouse, the standard of living the spouses established during the marriage, the contributions each spouse made to the marriage, and support one spouse gave toward the other’s education or job opportunities. Your state may allow the court to consider additional factors, including spousal misconduct. Separate property is not usually subject to division in equitable distribution states.
Dissipation of Marital Assets
If one spouse causes a loss of marital property during or after the breakdown of the marriage, called a dissipation of marital assets, the court may give the other spouse a larger portion of marital assets since there are fewer marital assets to distribute because of the loss. Courts are unlikely to consider spending that benefits the family as a dissipation of marital assets, but spending marital money on a new love interest or paying off separate debts with marital money may be considered a dissipation. In both equitable distribution and community property states, the court can remedy the dissipation by awarding a greater share of property or cash to the innocent spouse.