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How are Assets Divided in Divorce?

Your Financial Future: How Assets Are Divided In A Divorce

The process of getting a divorce raises many important questions about your financial future as well as the property that has been amassed during the course of the marriage. You are no doubt wondering how are assets divided in a divorce.  In states across America, the way that property is divided is at the judge’s discretion usually with an order for equitable division. Bear in mind that equitable division does not necessarily mean equal so it may not be evenly divided based on all of the assets’ values. There are important distinctions that need to be made between community property and non-community property. Division of assets and child custody determination in divorce are the most complicated process in a divorce

How are assets divided in a divorce? How Property Division May Affect You

The property awarded to you may be critical for allowing you to move on financially after getting your divorce decree. The arrangements for division of property can also cause frustration between you and your former spouse if you are unable to reach agreements on your own. If this happens, the court will evaluate the situation and decide who receives what. Since the courts have a lot of discretion over these issues and since it can influence your life in big ways, it is important to be aware of all the ramifications of a division of property and how state laws may impact the choices the judge makes. Hiring the right divorce lawyer can also help you navigate this process.

Community Property

Community property includes all earnings that were accumulated over the course of the marriage as well as all debts incurred over the course of the marriage unless a creditor were specifically looking to separate the property of one spouse for individual payment classified as community property debts. Separate property includes personal injury funds received by one spouse, inheritances or gifts given directly to that spouse, and the proceeds of a vested pension that occurred prior to the marriage. It is common for individuals who are going through a divorce to determine debts and property division on their own or by working directly with a neutral third party such as a mediator. However, in the event that the couple cannot come to an agreement, the court is charged with the responsibility of dividing the property based on legal rules.

Two Ways The Court Will Divide Assets

Courts divide assets via two different types of arrangements: equitable distribution and community property. Equitable distribution states allow for earnings and assets accumulated during the marriage to be divided equitably. In those states, a judge can also use separate property to make the settlement fair to both individuals. Community property states are:


  •       Alaska
  •       Arizona
  •       Nevada
  •       California
  •       Louisiana
  •       Texas
  •       Wisconsin
  •       Puerto Rico
  •       New Mexico

Community Property In These States

These states divide assets by property type, all property of a married individual is either classified as community property or the separate property of one of the individuals in the marriage. Community property is most often divided equally between the two spouses while each individual spouse remains entitled to keep their own separate property. Bear in mind that property division doesn’t always refer directly to a physical division. For example, a percentage of the total property value may be awarded to one spouse. Each spouse will have debts, assets, and property that will add up to his or her percentage.

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