Divorce Property Rules

by Rob Jennings J.D.
Property in a divorce can be considered marital or separate.

Property in a divorce can be considered marital or separate.

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When you and your spouse separate, you must split your economic lives as well as your personal lives. Although the law on property division varies from state to state, all states have some way of dividing marital property and debt upon separation. Learning how your marital estate may be distributed can make an often confusing process easier to bear.

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Community Property

The nine "community property" states follow the "50-50" rule: All property acquired during a marriage by a married person is presumed to community, or marital, property. This is usually divided equally upon divorce or legal separation. Community property can be divided by actually dividing each asset or by distributing the estate equally to each spouse. If a division results in one spouse receiving assets that are worth more than the other, the spouse receiving more can pay the other to balance out the division.

Equitable Distribution

The 41 other states use "equitable distribution" to divide property during a divorce instead of community property. While community property courts presume marital property should be divided equally, equitable distribution requires that the court divide it equitably, or fairly. Since "fair" and "equal" don't always mean the same thing, equitable distribution statutes typically have a variety of factors that a court can use to justify an unequal distribution. If you live in an equitable distribution state, your family court will probably presume that an equal division is fair, but you might not get 50 percent of your marital estate.

Equitable Distribution Factors

Courts in equitable distribution states consider a variety of factors in deciding whether to award an unequal distribution. The specifics vary by state, but common "distributional factors" include the length of the marriage, the spouses' health, the income or property each party brought to the marriage and each spouse's income and earning capacity. Courts may also consider one spouse's contribution to the other's education, each party's contribution to the increase or decrease in value of marital property, the contribution of one spouse as a homemaker, tax consequences and the parties' debts.

Dissipation of Marital Assets

Dissipation of marital assets occurs when one spouse wrongfully spends marital funds either before or after separation, like buying an expensive car with funds from a joint account. The court can order the wrongful spender to repay the marital estate if the expenditures occurred after the marriage was irretrievably broken down and without the approval of the other party. If you're concerned about your spouse dissipating assets, you can seek a restraining order at the outset of your case. Some states impose automatic restraining orders as soon as someone files a divorce action.

Marital Vs. Separate Property

Most family courts are concerned with dividing marital and divisible property, not separate property. Marital property typically includes all property acquired by either party during the marriage, with exceptions generally made for inherited or gifted property. Divisible property consists of passive increases or decreases in value on marital property -- such as dividends on stocks. Separate property is everything that isn't defined as marital or divisible.