When a couple gets a divorce, they do their best to agree on dividing their assets, debts, and any other legal issues. However, negative personal feelings can cloud each party’s desire for a mutually agreeable 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 its own laws directing how the assets owned by the spouses and their debt should be divided in a divorce.
States generally follow one of two legal schemes, i.e., community property or equitable distribution, with the majority following the equitable distribution. This article guides the equitable distribution of marital property in divorce law.
What Is Equitable Distribution?
In an equitable distribution state, when a couple considers divorce, all their property, houses, cars, bank accounts, home furnishings, and the like, must be classified as separate or marital property.
Marital property is generally anything acquired by the couple during the marriage, while separate property is acquired either before the marriage or through inheritance or gift during the marriage. In a community property state, this property is called “community property.”
The main difference between community property and equitable distribution states is how the marital property is split. Courts in equitable distribution states are compelled by the law to make property division on divorce as fair and equitable as possible.
This may include one party being given a larger portion of that marital property, even a much larger portion, if the circumstances justify that. Courts consider the amount of separate property each spouse has when deciding on the division of marital property.
For example, a judge might award more marital property to the spouse who has significantly less separate property. In community property states, separate property is not considered; all community property must be divided equally between the spouses.
Which States Are Equitable Distribution States?
Most states follow the equitable distribution approach to property division in a divorce. The exceptions are the community property states 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, 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 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 state has its own list of factors that judges consider before dividing marital property in a divorce, although there are commonalities. One of the more obvious factors is each spouse’s contributions to acquiring marital property, both monetarily and otherwise.
They consider each spouse’s financial and earning power, looking at their current assets, career prospects, and other options. They factor in each person’s contributions to the education, career, or earning power of the other.
Judges in some states may start with the presumption that marital property should be divided equally, but they may sacrifice pure equality in their division in the interests of fairness. For example, a spouse who has squandered or possibly tried to hide assets may be ordered to give up some of their share in marital assets to the other as compensation. The act of squandering wealth is referred to as “waste” or “dissipation.”
In equitable division states, judges may also consider such factors as the following:
- If there is a valid prenuptial or postnuptial agreement;
- How long the marriage lasted;
- The conduct of the spouses and whether one was at fault,
- The respective ages of the spouses;
- The health of the respective spouses;
- The occupations of the spouses and their respective incomes;
- The respective needs of the spouses;
- The financial needs of the spouses’ children;
- The contribution of each of the spouses to the acquisition of marital assets;
- Whether one spouse sacrificed their own career for the betterment of the other or the marriage,
- The child custody arrangements
- Whether one spouse is going to pay child support to the other.
When deciding how to divide marital property, some courts do consider whether there was fault on the part of one of the spouses. In some states, this is true even if the couple seeks a no-fault divorce.
Courts in other states prefer to distribute marital assets for the most part based on financial considerations. They only consider fault if the at-fault party’s conduct involved wasting or the dissipation of marital property. For example, one of the spouses may have carried on an extra-marital affair and spent marital assets on their paramour.
Examples include a situation in which one spouse gives up their career to care for children. One spouse may work to provide for the family while the other is in school. If one spouse has sacrificed their own earning ability to promote the success of the other spouse, the spouse who made the sacrifice may have a claim to a larger share of the marital property than the spouse who ended up with the greater earning power.
Each spouse’s age and current and future healthcare needs could also prompt a shift in distribution. This is because one spouse might require significant medical treatment either now or later on and need more of the couple’s marital property.
As noted above, a judge considers each spouse’s accumulated separate property. This means stocks, bonds, 401K accounts, retirement funds, business interests, and any other significant assets.
Marital property is not the only thing that needs to be divided. The marital debt must be divided as well. The amount of debt may affect how the assets get divided up. In an equitable distribution state, debt incurred during the marriage is usually treated as the separate debt of the spouse who incurred it.
There is an exception for debts in the name of one spouse only, but both benefit. For example, credit card debt incurred to purchase basics such as food, clothing, and shelter for the family would be marital debt, not separate debt.
What if I Move from an Equitable Distribution State to a Community Property State?
A person may marry and acquire property in an equitable distribution state and then move to a community property state and get a divorce. In this case, courts categorize any property obtained in the equitable distribution state as “quasi-community property.”
This means the state’s community property standards judge any property acquired by either spouse in the other jurisdiction. Thus, if the property would have been community property in the state where it was acquired, it is classified as community property.
Is This How Property Division Works in All Divorces?
These laws are the default only if the spouses cannot agree on property division themselves. In this case, a family court would hold a trial and decide based on the evidence.
Divorcing spouses are free to devise a plan that is agreeable to both sides. If a family court judge approves the plan, it may 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 and personal financial stakes involved in divorce proceedings make having a lawyer on your side especially important. Every state has its own specific laws regarding divorce and property division.
It is in your best interests to consult a local divorce lawyer who is familiar with your state’s particular laws regarding the issues in a divorce. Your local lawyer would make sure that your interests are protected.
