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Once you and your spouse decide to get a divorce, the next step is dividing assets. Things that were once “ours” are now “yours” or “mine”. For some, this can be quite a long process. Here’s an overview to help you navigate property division.
The division of assets covers everything from the family home and retirement benefits to furniture and personal keepsakes. These assets will be divided into two halves, however each part may not be equal. State laws determine whether property acquired during your marriage will be split under a community property approach or the law of equitable distribution.
Community property divides jointly-owned marital property equally. Each spouse is entitled to half of the assets, though this doesn’t necessarily mean a physical division. For instance, a jointly-owned vacation home would not be divided into two parts. Rather, the home could be sold and proceeds split 50/50. Or, if the husband is awarded a jointly-owned vacation property, the wife could be entitled to keep the primary residence to balance things out. Community property is followed by a handful of states including California and Texas.
Separate property, or an asset owned exclusively by one spouse, cannot be subject to community property division as long as it was kept separate throughout the lifetime of the marriage. For example, an inheritance received prior to marriage and kept in a separate individual savings account is considered separate property.
Most states follow equitable distribution and consider property amassed during a marriage to belong to the spouse who earned it. During divorce in these states, a judge decides how to divide property fairly. The conclusion is driven by a variety of factors including age, health, earning power, marital contributions and future financial needs of each spouse.
Before you proceed with a property division settlement, it’s best to take inventory of your assets including real estate, investments, vehicles, retirement accounts, military benefits, household goods and sentimental items. If possible, work with your spouse to build a list of all assets. Through the LegalVorce online interview, you will be asked to identify these assets and identify them as joint or community and then assign them to you or your spouse. The division then will be spelled out in the Marital Settlement Agreement and final judgment. By working on the inventory together, you can save time, headaches, acrimony and money.
Keep in mind that community property states also divide debt in divorce; financial mediation may be beneficial to solve disagreements about money issues.
The division of assets can be the most difficult part of a divorce; consider your options when navigating challenging division issues such as:
• Real Estate: Properties can be sold and divided, or an equity buy-out can transfer full ownership to one spouse.
• Vehicles: Cars can be categorized as either marital or separate property depending on how they were purchased and titled. Typically, equity and fairness guide the decision and each person will keep the vehicle he or she drives most often (along with any associated payments).
• Retirement Plans: If each party has an individual plan through an employer, you could agree to keep your own plan without sharing the balance. However if you have a variety of accounts or a pension plan, you and your spouse may decide to split your account or the account of your spouse.
While it’s challenging to split assets, the better you can work with your soon-to-be ex, the quicker the divorce can proceed and more you can walk away with on the other end.