When you’re going through a divorce, much of the process is about how assets are divided in divorce. You might own a home with your spouse. In addition, there might be bank accounts, retirement accounts, stocks and bonds, vehicles, and many other items and financial assets that need to be divided fairly. When it comes to dividing assets, fair does not necessarily mean equal, and a lot will depend on the types of contributions each person made to the marriage. Here is a guide to how assets are divided in divorce. Contact your legal resource group for more guidance and knowledge, because every case is different.
What Type of Property Is It?
Each state makes its own rules about exactly what counts as community property versus separate property as well as how these types of property are handled. With that being said, knowing whether a particular asset is community or separate property can help you gauge how the assets are divided in divorce.
- Community Property: Community property includes your income, the income of your spouse, and everything that you’ve purchased with that income. Unless you have a prenuptial agreement stating otherwise, even if you and your spouse kept your income in separate accounts, it’s still community property. This means that if you had your own account and bought a car with the money that you made from your job, it’s likely going to be considered community property when the divorce is finalized. In many states and in many circumstances, any property that was purchased with both your own separate funds (from before the marriage) and community funds will be considered community property, but your legal advisor can help you determine if this is the case for you when assets are divided in divorce.
- Separate Property: Separate property is property or money that you acquired before the marriage or, in some cases, after the date of separation. It also includes gifts or inheritances that are meant for just one of you. If one of you is receiving a pension, that might be considered separate property as well. If one of you owned a business before the marriage, it can be separate property, but if the business grew throughout the course of the marriage, a portion of it might be considered community property when assets are divided in divorce.
In general, community property needs to be divided and separate property does not when assets are divided in divorce.
Who Gets the House?
The biggest piece of community property in many marriages is the house. If you or your spouse purchased the house before the marriage, then in many cases, that house will remain the property of the original owner. There are exceptions to this, however. In most cases, a house belongs to both spouses equally because they purchased it during the course of the marriage. Who gets the house might be determined by whether there are children involved when assets are divided in divorce.
- When There Are Children Involved: Because it’s usually in the best interest of the children to stay in the family home after a divorce whenever possible, the primary caregiver of the children is often allowed to stay in the house. They might need to buy out the other spouse or there might be some other type of agreement. In some cases, the primary caregiver might not be able to pay the mortgage, so this might necessitate selling the home or letting the non-primary caregiver live in the family home. If the main caregiver can afford it, however, they will often be allowed to keep the house when assets are divided in divorce.
- When There Are No Children: This is a different situation because both parties generally have equal say as to what happens with the house. You might come to an agreement to have one partner buy out the other. Or if one spouse can afford the payments and the other cannot, that might be the deciding factor. Either way, neither spouse can force the other to leave until a judgment has been given. If the two of you can’t decide who gets the house, a judge will decide how assets are divided in divorce.
Why Income and Asset Acquisition Matters
In some cases, alimony is awarded when one spouse makes substantially more money than the other. It could be that one spouse made all of the money and the other stayed home for a decade to raise children. In this case, it would not be fair for the employed spouse to have all of the money and for the non-working spouse to have none, because the non-working spouse put his or her career (and earning potential) on hold as part of a mutual decision. Don’t think that just because you worked or did not work you won’t be sharing the household income and assets after a divorce. Talk to your legal resource group about your options in this type of situation where assets are divided in divorce.
What About Debts?
Debts are generally considered community debts unless they are from before the marriage. In that case, many states keep the debts separate while other combine them regardless. (Keep in mind that a prenuptial agreement can change how the debt is handled.) Usually, the judge will try to divide the debts equitably, but sometimes the spouse who is getting more of the property will also be responsible for more of the debt. Income matters, too; in some cases, the spouse who makes more money will be responsible for more of the debt. If one spouse cannot pay their assigned debt, they might end up in contempt of court if the creditor goes after the other spouse. This can be a difficult situation to resolve, so be sure to talk to your legal advocacy group if you are having this type of trouble and don’t know how assets are divided in divorce compared to how debt is distributed.
When navigating asset and debt division during a divorce, it helps if you are knowledgeable enough about the laws and common proceedings to represent yourself in court. This will also save you money and prevent you from going even deeper into debt. Talk to the legal experts at Family Law Legal Group about how you can learn as much as you can about the laws pertaining to your case.