When a married couple decides to divorce, one of the most complex and emotionally charged issues they will need to resolve is the division of marital property. This includes real estate, cash, investments, retirement accounts, vehicles, and other assets acquired during the marriage. While many couples are able to reach agreement on property division through mediation or negotiation, contested divorces often require judicial intervention to divide assets fairly. Here is an overview of how property division works in a divorce.
The basic principle governing property division is “equitable distribution.” This means that marital property should be divided in a fair and just manner, though not necessarily on a strictly 50/50 basis. Courts will look at a variety of factors to determine what split would be equitable. These include:
– The length of the marriage
– The income and earning potential of each spouse
– The age and health of each spouse
– Whether one spouse stayed home with the children
– The contribution of each spouse to acquiring assets
In community property states like California, property acquired during the marriage is presumed to be owned equally. But even here, courts have discretion to divide assets equitably. Separate property that was owned by one spouse prior to marriage generally goes to that spouse.
Determining which assets are marital property versus separate property is a key issue. In general, marital property includes assets acquired and income earned during the marriage. But gifts and inheritances are typically considered separate property unless they have been commingled into joint accounts. The increase in value of a separate asset may also be deemed marital property if it resulted from joint efforts.
Pensions, 401(k)s, IRAs, and other retirement accounts are also subject to equitable division in a divorce. The most common approach is to split the amount accumulated during the marriage. There are specific rules and procedures for handling QDROs (qualified domestic relations orders) so that retirement funds can be divided.
The marital home is often one of the most significant and emotional assets to divide. Options include:
– Selling the home and splitting proceeds
– One spouse buying out the other’s share
– Transferring title to one spouse, who then refinances in their own name
To achieve an equitable overall division, retirement accounts or other property may be used to offset one spouse keeping the house.
Dividing business assets or professional practices can be complex. Courts may order them sold, or one spouse can buy the other’s share. The value must be determined, which often requires expert valuation.
Courts have broad discretion in dividing debts as well as assets. Marital debts are typically assigned equally or according to who incurred them.
The bottom line is that property division depends on the specific facts and circumstances of each case. Many factors go into achieving a fair distribution. Working with experienced divorce lawyers helps ensure your rights are protected as this challenging process moves forward.
