Other than the loss of a relationship and custody disputes, the greatest issue arising from a divorce is the problem of how to divide property, debts, and assets. The simplest way to resolve this is to settle the division between yourselves. If you cannot come to an amicable agreement, a divorce court will help you in one of two ways depending on the laws in the state you live in.
If you live in Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin or Puerto Rico- the court will handle the division of your property according to this version of the law. All marital property will be defined as community property or separate property. Community property will be divided evenly, and separate property will be kept by the owner.
All states other than those listed above follow the law of equitable distribution, more often than not. The judge or arbiter will determine how all of the property will be divided. The judge or arbiter may split everything evenly down the middle, (which is easier said than done), or decide that one party deserves a greater percentage of the property for a number of reasons.
If your divorce is a contentious one, it is not realistic to try to divide everything based simply on its dollar value. Property can, and should, be divided based on who acquired it, to whom it is more valued, and to whom it is more valuable. All of this can, in the end, become the purview of an arbiter if the two parties cannot find any points of agreement. It’s important to understand which assets will be important for your long and short term security. Making this determination can be challenging short of a thorough understanding of an asset’s cost basis, liquidity, and tax implications.
Before this can be discussed, however, it’s important to know the difference between Marital Property and Separate property, and why the difference is critical. Some states have different definitions of the two types of property- but these definitions will give you a clear enough basis on which to go forward with your process.
- Property that was owned by either party before the marriage
- Inheritance received by either party before the marriage or after the divorce
- Gifts received by either individual from a third party
All other property owned during the marriage is marital property. Property that is deemed marital property is so labeled regardless of who owns a given item or in what way the property has been titled. Even private items, hobby paraphernalia, and gender specific things can fall into this hotly contested category.
Few people realize that however personal a given item may be- if it was acquired during the marriage- it is marital property. Many people assume otherwise and take it for granted that they have secured ownership of a given item, or that they have no right to a given item. The truth can be quite a shock in these cases.
All property acquired during the course of the marriage is Marital Property and may be awarded to either party of they cannot come to an agreement.
Consulting an attorney who specializes in divorce law can often times be the only way to navigate the many pitfalls of a contentious divorce.