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Divorce And Property Division 101

Divorce And Property Division 101

If you’re thinking about getting a divorce or in the middle of one, it’s natural to want to learn more about how your property will be handled. Over the course of a marriage, a couple usually accumulates a lot of property, from houses and cars to retirement accounts and inheritances. How do courts decide who will own this property? How do you know what to expect?

The first thing to realize is that divorce is a legal relationship governed by state law. You can obtain a lot of general information on the Internet, but when it comes right down to it, the best way to know what to expect is to consult with a lawyer licensed in your state. With that said, knowing a little about the issues that are likely to come up can aid you in those discussions.

There are three basic issues when it comes to divorce and property division:

  • Whether there is a valid prenuptial agreement,
  • What property exists, and
  • How property should be divided

Do you have a prenup?

A threshold issue when it comes to divorce and property is whether the parties to the marriage have a valid prenuptial agreement (also known as an “antenuptial agreement” or just a “prenup”). If a prenup exists, it will be followed as long as it meets the state law requirements. Here are a few typical challenges to prenuptial agreements:

  • One of the spouses did not make a full and fair disclosure of assets owned and debts owed.
  • One of the spouses did not have an opportunity to consult with an independent lawyer before signing the agreement.
  • One of the spouses did not sign the agreement voluntarily but rather was coerced into signing it.
  • The agreement is so one-sided as to be unfair and should therefore not be enforced.

If a court finds that a prenuptial agreement does not meet the requirements of applicable state law, all or part of it may be invalidated. If you are getting a divorce or thinking about it and you have a prenuptial agreement, you should contact an attorney licensed in your state right away.

How do you know which property gets divided?

In every divorce, it is important that all property and debt be identified and classified according to state law. The divorce process requires that the spouses make full disclosures to each other of all property they own and debts they owe. This includes assets of every kind, like these:

  • All real property, such as the marital home, summer homes, vacant land, and timeshares;
  • Tangible personal property, such as cars, jewelry, tools, computers, and machines; and
  • Intangible personal property, such as stocks, bonds, copyrights, mutual funds, interests in retirement plans, and interests in businesses.

The couple must also identify all debts they owe, including mortgages, car loans, and personal loans.

How do you know which property gets divided?

How do you decide whether property is marital or separate?

In most states, after property and debt is identified, it is classified under state law as belonging to one spouse (separate property) or both spouses. This is where it gets tricky, often requiring the assistance of a lawyer licensed in the relevant state. That’s because different states have different systems of property ownership when it comes to marriage, and the way property is titled is often not dispositive of ownership. In other words, just because a car is titled in a husband’s name does not necessarily mean that the husband is the only owner of the car.

Speaking very generally, property owned before marriage or after the date a couple separates is usually considered separate property, as is property inherited by one spouse during the marriage. However, if the property was titled in the names of both spouses or was commingled (mixed) with marital property, both spouses usually have an ownership interest. However, this determination is very state- and fact-specific, so it’s critical that you consult with a lawyer licensed in your state if you have questions about your situation.

How is the value of property established?

After all assets have been identified and classified, they must be valued. This is very easy for some property, such as bank accounts, which have a specific value assigned to them. However, valuation can be very complex when it comes to other types of assets, such as business interests, professional degrees, and art. Because the value of assets is so important, the parties will often hire experts to assign a value to them. And when the experts don’t agree, the judge decides.

How is marital property divided?

Where you live plays a large part in how marital property is distributed if you divorce. Two major systems are used in the U.S.: “equitable distribution” and “community property.” And even within those two categories, there are significant variations in state law.

To divide property classified as belonging to both spouses, a majority of states use “equitable distribution,” a term that is usually defined to mean “fair” or “reasonable.” The considerations depend on state law but often include factors like these:

  • How long the couple was married;
  • Each spouse’s income and ability to earn income;
  • Each spouse’s age and health;
  • The separate property holdings and financial condition of each spouse after the marriage; and
  • The standard of living established for the couple and their children during the marriage.

A minority of states use what is called “community property” law to divide marital property. Again, state laws vary, but generally speaking, in these states, each spouse has the right to one-half of marital property.

Although the couple may agree on how marital property should be divided, the judge has the final say.

What happens to property that can’t be physically halved?

How does a court “divide” things that cannot be physically split in half? Courts usually add up the value of all of the marital property, then tally the value of property assigned to each spouse to determine if the state’s standard is met. A judge may also require or approve the sale of marital property so that the proceeds may be divided between the parties.

If you’re facing a divorce and need advice, it’s imperative that you contact a lawyer who is licensed in your state. Divorce laws differ greatly from state to state, and only a licensed attorney can provide you with legal advice where you live.


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