When splitting up assets during a divorce, a divorcing couple should clearly understand three key factors that determine how the property is divided. They include the kind of divorce filed, the type of assets owned, and the state where the couple lives.
Type of Divorce Filed
Couples that are ready to collaborate have several options when it comes to deciding which kind of divorce to file. These options include:
In this option, both spouses accept all the conditions of the divorce and submit the papers to the court. A formal trial is usually unnecessary in this situation. This divorce style saves a divorcing person time, legal fees, court expenses.
This divorce option involves disputes over sensitive areas like child custody, assets, and spousal support. Each party typically hires an attorney to represent him or her in court. A judge hears the submissions of both parties through their attorney and issues a verdict. If one party isn’t satisfied with the verdict, he or she can file an appeal through the attorney. This divorce option can be lengthy, expensive, and potentially hostile.
Other divorce options fall somewhere between uncontested and contested divorces. Collaborative, arbitration, and mediation divorce options save the divorcing couple a significant amount of money and time by having each spouse represented by an attorney. If a couple opts for mediation, it’s advisable to work with a divorce mediator. The mediator will help the couple come up with ideas that can ultimately result in agreements that are future proof.
The Type of Property Owned by the Divorcing Couple
State law determines how assets owned by a couple are divided during a divorce. It all depends on whether the divorcing parties live in a community property state or a separate property state.
- Separate property is owned by just one spouse. It includes anything that the spouse owned prior to getting married. Earnings of a pension, inheritances, or gifts received by a spouse before the marriage are treated as separate property.
- Community property consists of all the assets acquired or earned jointly by both spouses during the marriage. A perfect example is a property, such as a house, purchased with a share of both community and separate assets.
The State Where the Couple Lives
Court uses two principles to divide property among divorcing couples. These include equitable distribution and community property. The same principles apply when it comes to dividing debts.
Community Property States
Certain states classify all married property as either community or separate. In the event of a divorce, community property is usually split equally between the two parties involved, while each party retains his or her separate property.
Other states divide assets and funds amassed during marriages equitably. Some may even direct one spouse to use separate property to arrive at a fair settlement for both spouses.
It’s important for anyone going through a divorce to understand that division of assets doesn’t necessarily involve physically splitting up everything equally. Instead, the court may award each spouse a specific percentage of the overall value of the family home or assets.