How are assets divided in a divorce? – Peter from Milwaukee, WI
The division of assets, or marital estate, is often one of the most difficult aspects of a divorce. It is common for one spouse to have a better handle on the financial picture than the other. However, it is also common for two people to keep many accounts separate from the other. The first step, when assets are divided in a divorce, is making sure you really know what you have and what your spouse has.
Assets Divided in a Divorce
Once you solidly grasp what your marital estate looks like, debts and assets divide in divorce generally two different ways depending on the states you live in. Your money may divide in a divorce two ways: community property state and equitable distribution state. This all depends on your state laws and may need looking into to see where your money may fall.
Community Property State
The community property states are Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and Puerto Rico. If you live in a community property state, debts and assets split into two categories – community property and separate property. Both spouses equally own community property, dividing it down the middle, 50/50. In separate property, anything acquired or owned by a spouse before or during the marriage belongs to and stays with that spouse. Separate property often includes assets or debts one spouse brings into the marriage or an inheritance or gift.
Equitable Distribution State
The other states not mentioned are equitable distribution states. Equitable does not necessarily mean equal, but fair and impartial. In an equitable distribution state, assets and debts that were accumulated during the marriage are shared and distributed in an equitable manner. This means that the assets and debt often are not 50/50. In some cases, the separate property can make a settlement fair and equitable to both parties as the property often stays with the spouse who owns it.
Marital property loosely defines as any asset or debt acquired during the marriage. However, many state specific laws can play a role in splitting up the pie and it is important to know how your state works. Locate a SplitReady professional in your area if you have questions.
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