Property Division
Summary in Divorce

One of the most difficult tasks of a divorcing couple is the property division of the marital estate. Here is where a couple divide "the goods," and if they cannot agree themselves a court does it for them. Couples who want to avoid slugging it out in court (and making lawyers rich) should remind themselves that courts will approve any reasonable division of property that the divorcing spouses fashion.

Rufus and Rhonda could take the same set of circumstances -- and the same marital estate -- to courts in different jurisdictions and their divorce settlement would be different. No two states divide property the exact same way.

Before the property can be divided, however, in most jurisdictions it must be classified as separate or marital. The classification of assets, in turn, depends upon a date of separation, after which, on both sides of the balance sheet, what is his is his and what is hers is hers.

In most states, everything a couple owns and owes is classified into one of two categories -- marital or separate property. In twelve states -- the so-called all property or kitchen sink states -- both kinds of property is subject to distribution. In other states, however, only the marital property is divided.

Different jurisdictions have different shadings to the definition of marital and separate property. Generally, marital property is everything a couple earned or acquired during the marriage. Generally, separate property is property that belongs only to one party, such as property owned before the marriage, gifts and inheritances, property acquired using separate assets.

Needless to say, deciding what is marital property and what is separate property often becomes contentious when couples divorce. Much, if not even most, separate property becomes commingled to one degree or another during a marriage. Difficulties frequently arise when one party places his or her separate property in joint names, when a spouse commingles separate property in an account that contains marital property, or in the case of a business, when one spouse made active contributions to the growth of a business the other owned before the marriage. In general, however, when separate and marital funds are commingled, regardless of which came first, the resulting mixture is presumptively marital. The spouse who made the separate contributions can establish a claim to it by proving the nature and amount of the separate contribution.

States treat the appreciation of assets, separate and marital, in different ways. Some states make a distinction between active and passive increases in income from separate property and active and passive appreciation in the value of separate property.

After the assets are classified, they can be divided and distributed based on the applicable law in the jurisdiction where the couples divorce. Courts divide property in one of two ways: they either divide the marital estate as community property, which means equally, as is the case in nine states, or in means other than community, which means equitably or fairly, as is the case with the remaining forty-one states.

In general, in community property states, spouses own equally almost all the property the other one acquires during the marriage, regardless of who has title, and in these jurisdiction the terms "marital property" and "community property" are used interchangeably. This would include the income of a spouse. In general, in equitable distribution states, a personís income is his or her own, and property in one name, even if both paid for it, is the property of that person.

The division of property as described here sounds simple and easy. In practice it is not. In determining whether a spouseís interest is marital property, a court must decide whether the interest meets the legal definition of property. Each state not only has a set of what are termed "factors" by which a judge determines a fair division of property but also gives courts "the freedom to consider anything that is relevant to [an individual] situation."

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