Going through divorce, there are many headache-inducing issues that must be resolved before everything is said and done.
From custody and visitation to child support and alimony, you and your soon-to-be ex are bound to disagree at some point on how to separate your lives.
One the most common contentious subjects during a divorce revolves around how to divide all of the “stuff” you have acquired together throughout the marriage.
Like all aspects of divorce, property division laws depend on where you live. Most states follow equitable distribution statutes, though there are some that divide assets based on community property laws.
These result in very different outcomes, so before you can begin to estimate how your property settlement will look, you must understand which laws your state follows and how asset division is generally implemented at your local level.
*Note that this is a look at how the courts in the various states will divide property. Divorcing couples are encouraged to negotiate — and usually agree upon — their own settlement before ever reaching court.
There are nine states that follow community property laws. These include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. (Alaska could be included in this mix, as a divorcing couple can opt to go by community property instead of the typical equitable distribution.)
In these states, both parties are assumed to equally share all income, property and debts accumulated during the course of the marriage.
This simplistic method cuts down on much of the painstakingly tedious arguments regarding the valuation of non-tangible items, such as income potential lost by a spouse who left their job to stay home with the kids.
However, this can create feelings of inequity, and could potentially lead to higher alimony or spousal support obligations. Since everything — including any debts incurred during the marriage — is split 50/50, a spouse who became a homemaker likely has lower income potential.
This could cause difficulties for them making half of the mortgage or credit card payments on their own, and the court may decide they need a higher maintenance award to continue their standard of living.
Some of these states do offer exceptions for assets acquired during the marriage to be considered separate from the marital estate, such as any property acquired through inheritance or through gift to just one spouse.
The rest of the states all follow a set of rules known as common law, or equitable distribution, where assets are not necessarily divided down the middle.
Instead, the court looks at a variety of factors in determining a “fair and equitable” division of all marital property. This is significantly more complicated than community property rules, where everything is split in half.
First, the court will determine what constitutes marital property and what constitutes separate property.
Anything owned prior to the marriage, attained through an individual’s inheritance, gift, etc., can be considered separate from the marital estate; however, it will need to be proven in court.
This is particularly difficult, as disputes may arise over whether a certain asset is marital or separate property. Additionally, longer marriages have a higher risk of separate property becoming commingled with marital property, causing even an even bigger mess to sort out.
Once all of the marital assets up for division are on the table, the court must go through the process of applying a monetary value.
This can be another lengthy and litigious process, as experts, such as business evaluators or real estate appraisers, may be needed. It can also be difficult to put a value on items such as the loss of income or career opportunity if one spouse forwent their career to take care of kids and the home.
Finally, once everything has been broken down, the court can move forward determining a fair and equitable division. The regulations governing how to distribute the property are numerous, and can get extremely complicated.
Equitable distribution factors
The variables will also differ by state, and even counties can lend greater weight to some aspects over others.
This makes it important to speak with an experienced local attorney before you can even begin to make some sort of estimation how the court will determine your settlement. Some of the common factors include:
- Length of marriage
- Age of both spouses
- Standard of living during the marriage
- Entitlement to alimony or child support
- How both spouses contributed to the marriage (working, taking care of the kids, etc.)
- Each spouse’s earning potential
- Health status
- Any other relevant factor
It is clear that judges have much more to consider when making a ruling in states that follow equitable distribution.
Since everything is not as clear cut, and one party will often receive a larger share of the marital estate, it can become much more contentious if your property disputes reach court.
However, the flexibility offers the courts more of an opportunity to create a fair settlement — it just might take a lot longer and significantly increase your expenses.
Obviously, the best option would be to sort out the property agreement privately before it ever makes it to the courtroom, which completely negates the added expenses and complicated legal battle inherent to litigating a property dispute.
However, it is in your best interest to know where your state stands on dividing property regardless of whether you make it to court or not.
It may help motivate you to negotiate a settlement outside of court, and also prepares you for what to expect if you do find yourself arguing for property in front of a judge.