Divorce courts divide property either as equitable distributions or as
community property. Courts in equitable distribution states have the discretion
to divide whatever property is owned by both spouses. The courts consider
the length of the marriage, the age, health, conduct, occupations, skills,
and employment and earnings potential of the respective spouses, and other
requisite factors included in their state divorce statutes.
Equitable division doesn’t necessarily mean
equal division. They equitably distribute property acquired during the marriage
or marital property. Non-marital property includes gifts or inheritances
to one spouse during marriage or property acquired before marriage. However,
non-marital property isn’t necessarily safe from division. Equitable
distribution states can divide pre- or post-marital assets.
Community property states divide community property equally. Separate property
is property acquired by each spouse before marriage. Community property
includes property acquired and used jointly or individually during the
marriage. Separate property includes property one spouse owned before
the marriage and retains sole title to after marriage, as well as property
a spouse receives as a gift or inheritance before or during the marriage.
Divorce Proofing Your Assets
Separate property is not divided in divorce. If you exchange separate property
for another asset, the new property continues as separate property, as
does the sale proceeds. If you commingle separate property with joint
property, the separate property becomes divisible joint property.
Spousal obligations incurred before marriage also remain separate obligations.
The parties may agree to separately pay marital debts but this does not
bind creditors who can nevertheless sue either spouse.
To protect property in a community property state, each spouse should list
their separate property upon marriage. The spouses would formally agree
that these assets are to remain separate property thereafter. Gifts or
inheritances received during a marriage should also be kept separate to
keep these assets free from a spousal claim.