Splitting Assets in a Divorce

by David Montoya
Mediators can help facilitate an agreement and keep court costs down.

Mediators can help facilitate an agreement and keep court costs down.

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Divorce can turn into a long process, especially when couples have a lot of assets. Fighting over cars, houses and investments can turn into an expensive battle you can otherwise avoid by understanding how the law divides assets and knowing the resources available to you. Couples can use alternative dispute resolution -- ADR for short -- to come to an agreement without the input of a judge.

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The ADR Process

ADR allows a couple to come to an agreement without the input of a court. The couple meets together under the guidance of a mediator or arbitrator to help decide how to divide marital assets. ADR can also help with division of debt and parenting issues. A mediator's decision is non-binding, whereas an arbitrator's decision may be final. Another form of ADR includes collaborative divorce. Here, lawyers act as negotiators and both parties come to an agreement, so court is avoided.

The Benefits of ADR

With ADR, the divorcing couple may come to an agreement quickly; thereby, avoiding the thousands of dollars it costs to litigate a protracted divorce case. Additionally, a constructive ADR may diminish harsh feelings and allow both parties to move on with their lives more efficiently. The presence of a mediator or arbitrator may also help facilitate compromise between the parties, which helps ensure an outcome both parties find satisfactory.

Property Division in ADR

The ADR process works so both parties come to a fair division of property. Although most often assets are divided roughly in half, the property division can take any form both parties agree to. For example, suppose a husband and wife own a small house and one car. Even though the house is worth more, both parties may agree during mediation that the wife takes the house and the husband takes the car. The arbitrator makes that decision if the couple chooses arbitration.

When Courts Step In

The courts and state law take over when the ADR process is not used or certain issues remain unresolved. While state laws differ, some general rules apply. Typically speaking, for example, assets inherited by one spouse during the marriage, assets brought into the marriage and gifts tend to belong to the spouse who received the asset. For the remaining assets -- marital assets -- courts divide them in two ways, depending on your state. In the nine community property states, courts divide your assets in an even 50-50 split. In so-called equitable distribution states, courts have a bit ore latitude -- dividing the assets in a manner it deems fair -- although in practice this, too, is often close to an even split.