Are you getting divorced?
Property division is easily the most stressful part of the entire process. And here’s the thing…
Most people have no idea how it actually works.
They think everything gets split 50/50. They assume whoever paid for something gets to keep it. Or they believe that putting assets in their name alone will protect them.
Wrong, wrong, and wrong.
Property division follows specific legal rules that vary by state. Knowing these rules ahead of time can save you thousands of dollars and months of headaches.
In this guide, we’ll cover:
- What’s the difference between marital property and separate property?
- How property gets divided in divorce
- Common property division mistakes to avoid
- Why you should always hire professional legal help
What’s the Difference Between Marital Property and Separate Property?
Here’s something most people don’t realize…
Not all property gets divided in a divorce.
Courts divide property into two categories: marital property and separate property. Knowing the difference between the two is absolutely critical to protecting your assets.
Marital property
Marital property is all the property that a couple accumulated during their marriage. It includes each spouse’s income during the marriage, houses and cars purchased while married, retirement accounts and investments, furniture and household goods, and debts accrued during marriage.
And here’s the kicker… It doesn’t matter whose name is on the title. That car you bought and registered in your name only? Still marital property if you bought it during the marriage.
Separate property
Separate property is just that… Property that belongs to one spouse. This can include property owned before the marriage, gifts or inheritances received by only one spouse, personal injury awards (except for lost wages), and property specifically designated as separate in a prenup.
But don’t think it’s always that simple.
Separate property can become marital property through a process known as “commingling”. This occurs when you commingle separate assets with marital property – such as depositing an inheritance into a joint bank account. That’s when things get messy.
How Property Gets Divided in Divorce
Want to know how courts actually divide property?
It depends entirely on where you live.
The United States has two different systems for property division. Understanding which one applies to you is one of the most important things you can do when working with divorce lawyers in Arkansas or any family law attorney handling your case.
Equitable Distribution States
Most states (41 plus D.C.) are equitable distribution states.
This means that the court divides marital property in a way that it deems to be fair, but not necessarily equal. A fair split could be 60/40 or even 70/30 depending on the circumstances.
Courts look at many factors including the length of the marriage, each spouse’s age and health, earning capacity of each spouse, contributions made to the marriage (including homemaking contributions), whether one spouse helped the other advance their career, economic circumstances of each spouse after divorce, and more.
The goal is to come to a division of property that is just and reasonable for both parties.
Community Property States
Nine states take a very different approach.
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states. In these states, any property acquired during marriage (with a few exceptions) automatically belongs equally to both spouses.
Traditionally this meant that the marital estate would be divided exactly 50/50. But even this is changing in some community property states. In both Texas and Arizona, the trend is toward only requiring a “just and right” division of marital property. And in Nevada, the courts can deviate from a 50/50 division if equal distribution would be unfair to one party.
Common Property Division Mistakes
Let me tell you the biggest mistakes people make…
Hiding Assets
Some people try to hide assets to keep them out of the divorce settlement. Bad idea. If your spouse can prove that you hid property from them, a judge can penalize you heavily. In some states, you could even lose your share of the value of the hidden asset.
Forgetting About Debts
Here’s something people forget… Debts get divided just like assets. Credit cards, mortgages, car loans, you name it, all need to be accounted for in the settlement. Just because your name isn’t on a debt doesn’t mean you won’t be responsible for part of it.
Fighting Over Everything
According to a recent study, 43% of first marriages end in divorce.
The more you fight over every single thing, the more money you’re throwing away on legal fees. Sometimes it makes more sense to let the other party “win” on a smaller issue in order to focus on what really matters to you.
Ignoring the Marital Home
The marital home is usually the biggest asset in a divorce.
According to one study, about 70% of divorces involve couples deciding what to do with their house.
This makes sense when you consider that it’s often the most valuable thing you own together.
You can let one spouse keep the house (usually involves buying out the other spouse), sell the house and split the proceeds, or continue co-owning the house until a later date. Don’t rush this decision. There are tax consequences and financial implications to consider.
Neglecting Retirement Accounts
Retirement accounts are tricky.
They can’t be simply divided without a special court order known as a Qualified Domestic Relations Order (QDRO).
This is an order that must be approved by the plan administrator and lays out how to divide the account. Without a QDRO, the division of a retirement account cannot legally happen.
Professional Legal Help is Important
Here’s the truth about property division…
The laws are complicated. The stakes are high. Mistakes can cost you thousands of dollars.
Experienced legal representation allows you to protect your rights, avoid expensive mistakes, negotiate effectively, and ensure you’re treated fairly. An attorney will know what you’re entitled to under state law, will watch for issues you’d never think about, and can guide you through every step.
When Do You Absolutely Need an Attorney?
In some situations, it’s imperative that you hire an attorney:
- High-value or complex assets, such as businesses, multiple real estate holdings
- Significant retirement assets
- Disputes over child custody
- Cases where one spouse is hiding assets
- If spouses are unable to reach agreements through mediation
Don’t try to go it alone in these cases.
Getting Property Division Right
Property division doesn’t have to be a nightmare.
If you take the time to understand the basics, you’ll be in a much stronger position. Know the laws in your state to set realistic expectations. And always have the right legal team on your side to ensure a fair settlement that sets you up for financial success after divorce.
Keep these key points in mind: Know the difference between marital and separate property. Understand your state’s property division system. Don’t try to hide assets or fight over every little thing. Get professional help for complex situations, and focus on what matters to your future.
The decisions you make during this process will have financial consequences for many years to come. So take the time to understand your rights, work with experienced professionals, and approach the situation strategically instead of emotionally.
Final Thoughts
Divorce property division follows specific legal rules that vary by state.
In almost all cases, marital property is all the assets the couple acquired during marriage that will be divided up either equally (community property states) or fairly (equitable distribution states).
The marital home, retirement accounts, and debts all require special attention. Professional legal guidance helps you protect your rights and ensures a fair settlement that positions you for financial success after divorce.
