When a couple gets a divorce, they (along with their attorney), do their best to come to an agreement on dividing marital assets and any other legal issues. But divorce tends to be a particularly complicated and sometimes rough area of the law, as negative personal feelings can cloud each party’s desire to find an amicable resolution.
When this is the case, they must turn to the family courts in their state, where a judge makes decisions about these issues for the couple. Every state has their own laws directing how marital property should be divided upon divorce. They generally follow one of two schemes: community property or equitable distribution, with the majority following the latter. Here is a guide to equitable distribution in divorce law.
What is Equitable Distribution?
When a couple considers divorce, all of their property (houses, cars, bank accounts, etc.) must be classified as either separate or community property. Community property is generally anything acquired by the couple during the marriage, while separate property is acquired either before the marriage, through inheritence, or by gift.
The main difference between community property and equitable distribution states is how the marital community property is split. Courts in equitable distribution states have the directive to make property division on divorce as fair as possible. This can include one party being given a larger portion of that community property, even a significantly larger portion if the circumstances warrant it. They will take how much separate property each spouse has into account when making this decision.
For example, a judge might award more community property to the spouse that has significantly less separate property. In community property states, separate property is not considered for this division.
What States are Equitable Distribution States?
Most states follow the equitable distribution approach to property division, with the exception of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and the territory of Puerto Rico.
A few equitable distribution states allow couples to use a community property approach if they specifically ask to, but the default approach remains equitable distribution. Alaska allows some couples to use the community property approach if they ask. In South Dakota and Tennessee, couples can choose to use a modified community property approach by transferring specific assets or property into a community property trust.
How is Property Divided in an Equitable Distribution State?
Each jurisdiction has their own list of factors that judges consider before divided up property. One of the more obvious factors is the contributions each spouse made to obtain marital property, both monetarily and otherwise. They will consider the financial and earning power of each spouse, looking at their current assets and career prospects and options. They will also look at each person’s contributions to the education, career, or earning power of the other.
Examples of this include when one spouse gives up their career to take care of children, or works to provide for the family while one spouse is in school. Each spouse’s age as well as current and future health care needs could also prompt a shift in distribution. This is because one spouse might require significant medical treatment either now or later on, thus needing more of the couple’s community property.
And as stated above, the judge will consider the couple’s accumulated separate property. This means stocks, bonds, 401Ks, retirement funds, business interests and assets, and anything else.
What if I Move from an Equitable Distribution State to a Community Property State?
If you marry and acquire property in an equitable distribution state, what happens if you move to a community property jurisdiction and get a divorce? In these cases, courts categorize any property obtained in equitable distribution state as “quasi-community property”.
This means that any property acquired by either spouse in the other jurisdiction is judged by the state’s community property standards. Thus, if the property would have been community property in the current jurisdiction when it was acquired, it is therefore classified as such.
Is this how Property Division Works in All Divorces?
No. These laws are the default only if the spouses are unable to come to an agreement on property division themselves and thus need proceedings in family court. The divorcing spouses are free to formulate their own plan that is agreeable to both sides. As long as the plan is approved by a family court judge, it will then become legal and binding on both parties.
Do I Need an Attorney for Help with Marital Property Issues?
All legal matters can be complicated, but the emotional stakes involved in divorce proceedings make having a lawyer on your side especially important. Every state has their own specific laws regarding divorces and property issues. It’s in your best interests to find a local divorce lawyer who is familiar with your jurisdictions particular rules to be sure all your interests are protected.