One of people’s most significant concerns is how to divide property during the divorce. If the reviewing court determines that a party’s own agreement is equitable or fair, they will generally approve it. But what happens when parties do not agree? What factors would the court used to determine who gets what and why? One of the most significant factors that affects property division depends on where the parties live. All issues in family law, including property division, are determined by state law which varies from state to state. Even when the same factors are included, they are not weighted equally across states.
What Are Equitable Distribution Versus Community States?
There are two broad categories of states that determine how property is held during marriage and at divorce, equitable distribution states and community property states. Most states use an “equitable distribution” method of dividing property. Generally, an equitable distribution is one where the court determines what is fair (but not necessarily equal) based on various factors.
Some of these are objective factors including the age and health of the parties, how much money each has earned, the length of the marriage, whether the property was purchased during or before the marriage, as well as whether the property was gifted or inherited by one of the parties.
Other factors are more subjective such as deciding what is the economic value of the homemaker in the marriage or how much work one person may have put into an asset such as the marital residence or a business. In deciding who receives the marital home, some states consider which spouse will have primary custody of the children.
Community property states do not use a strictly equitable distribution method. Those states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. During the marriage spouses can own either community property or separate property. Generally, community property is property acquired during the marriage through the effort of either spouse (such as a 401(k) plan), property given jointly to the spouses, and other property not classified as separate. Property owned before marriage, as well as gifts, bequests and inherited property during marriage are separate property and not subject to division during divorce.
Marital Property Agreements
Spouses can also make an agreement that specifies how property acquired during the marriage will be divided in divorce and will have significant latitude if the agreement is perceived to be fair or reasonable by the court. Absent a written agreement for division of property, most community property states either presume or require an equal division of the community estate based upon specific factors. The concept is that property equally owned during the marriage should be also be equally divided upon divorce, while separate property would remain with the owner.
If the parties do not agree, in community property states, the court must first decide whether the property or debt is community or separate. Then, the court will decide the value of the property and consider your specific state’s factors in deciding how to divide it.
Why Should I Hire an Attorney or Divorce Mediator?
It is critical to consult with an experienced West Bend family law attorney or participate in divorce mediation with professionals in your state as there are significant distinctions. Community property states will not always divide the community property equally. Most either have factors for the court to consider equitable concepts (Wisconsin) or do not specifically require “equal” division. (Although Texas is a community property state, in property division it refers to what is “just and right” rather than equal). While most community property states must first decide what is the community property and what is separate property, Wisconsin presumes an equal division of all property (both community and separate). It then considers community property concepts, by excepting from division property received as gifts, bequests and inheritance. Even then, if excluding gifts or inheritance from division creates a hardship, along with other factors, the court can deviate from equal division. Washington may also divide separate property considering factors such as the type of property, length of the marriage and each one’s economic reality at the time of divorce.
A further complication is that many states define property differently. Some states specifically include a personal injury award as separate property (Texas) and others do not. In California, separate property includes property acquired after the parties separate rather than the date of divorce. While these differences are critical in a trial, spouses who mediate their property division can consider their own state’s laws as well as what they each believe is fair in their own lives.