No one wants their marriage to end up in a divorce. However, it is a reality that happens to some couples. One of the most taxing aspects of a divorce is dividing assets acquired during the marriage. Some relationships may be amicable enough to get through this step relatively quickly. However, most couples find it extremely difficult to settle. It is crucial to hire the best high net worth divorce lawyers at times like this. They are professionally equipped with the knowledge and skills to provide the most favorable results to clients and can explain how assets get divided in a divorce.
Ways Assets Get Divided in a Divorce
Divorcing partners typically struggle to come to terms, especially when splitting assets and properties. In divorce cases where an asset split is contested, the legal system is used to decide how to divide properties between ex-spouses dutifully. In the US, the approach and decision depend on the applicable state law regarding divorce. The court’s most common approaches are community property and equitable distribution. When assets get divided in a divorce, the courts typically start by dividing the property into marital property and non-marital property.
Certain states in the United States use the community property approach when dealing with divorce asset division. These states include California, Arizona, Louisiana, Nevada, New Mexico, Idaho, Texas, Wisconsin, and Washington.
Under this approach, a judge is responsible for identifying and classifying all property acquired during the marriage. These are referred to as marital properties. The judge determines which ones are considered a community property owned by both spouses or simply a separate property among these communal properties. Personal properties are assets owned or obtained by an individual before the marriage.
A judge needs to classify the community properties and other people’s assets successfully. Under the community property law, a person gets sole ownership of their individual properties, while identified community properties are equally divided between spouses through the judge’s decision.
Also referred to as the common law, equitable distribution applies to all non-community property states. Under this approach, the judge determines which asset is considered marital property and which ones are considered separate property. Once the judge successfully identifies the couple’s marital property, assets will be divided between spouses. However, the split is not necessarily equal but instead equitable. The goal is to end in a fair settlement for the individuals involved.
Community property vs. separate property vs. separate commingled property
The grounds used to define a community and separate property can sometimes be confusing. Although community property states automatically treat assets acquired during the marriage as community property, there are exceptions to this general rule.
Generally, community property includes:
- Income earned by the couple while they are married
- Products and items bought with money acquired during the marriage
- All debt is incurred while married, regardless if only one of the couple is a signatory
On the other hand, separate properties are identified as:
- Property and assets purchased using personal funds
- Money or property already owned by a spouse before the marriage
- Gifts or rewards directed only to one spouse during the marriage
- Pension proceeds a spouse is legally entitled to before the marriage
- Inheritance was given to the individual during the marriage
- Personal injury settlement received by a spouse during the marriage
- A business owned by a spouse before the marriage
However, the last item can be considered community property if the value significantly increases during the marriage.
Separate commingled property refers to a separate property – an asset owned before the marriage – mixed with the marital property during the marriage. Depending on the degree of involvement, the separate commingled property can be transformed into partial or complete community property during a divorce. A judge can decide to consider a separate commingled property as community property if the entanglement of assets makes it impossible to split equally.
How Assets Get Divided in a Divorce
Divorce is never an easy process. While it is possible to undergo an uncontested divorce and divide properties equally, this is likely not the case. A contentious divorce can be emotionally, mentally, and physically taxing. Assets acquired during the marriage are often difficult to split and divide between spouses. In such cases, the legal system steps in to mediate. This is the best time to hire an experienced divorce lawyer to help ease the burden of the divorce and make sure the results come in your favor.