Division of Property and Debt in Divorce
Frequently Asked Questions
Who decides how property will be divided at divorce?
A divorcing couple is entitled to determine how their assets will be divided. However, if a couple is unable to agree to the terms of a settlement, a judge will divide the property.
How is property divided at divorce?
A judge will divide a couple's property in one of two ways, depending on the state in which the divorce is located. Nine states follow the principles of community property, while the rest of the country relies on a system of equitable distribution.
- Community Property: In Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, courts distinguish between community and separate property. Community property is all property acquired during the marriage, with the exception of property acquired by gift or inheritance. Separate property is all property acquired before and after the marriage, as well as all property received during the marriage by gift or inheritance. At divorce, each party retains his or her own separate property, while community property is divided equally between the parties.
- Equitable Distribution: In all other states, a court divides marital assets equitably. While Alaska is an equitable distribution state, couples within that state may sign a written community property agreement to opt-out of the equitable distribution arrangement. Under equitable distribution, a court will distribute property acquired during marriage in a way that is fair to both parties. A court will consider a number of factors when making an equitable division of marital property, including any agreements made between the parties, the length of the marriage, the conduct of the parties during the marriage, the age of the parties, the health of the parties, the occupation and income of the parties, the needs of the parties and their children, and the contribution of each party to the acquisition of marital assets.
Am I entitled to part of my spouse's business?
If a spouse started or acquired a business before the date of marriage, the business is typically considered that spouse's separate property. However, if a business appreciates in value during the marriage, some courts award the non-business-owner spouse a percentage of the appreciation. Additionally, a court may award a percentage of the business to the non-business-owner spouse if that spouse provided labor or made any other contribution to the business during the marriage.
Am I entitled to part of my spouse's pension or retirement fund?
In most states, a spouse is entitled to a portion of the other spouse's pension or retirement fund to the extent the fund was earned during the marriage.
I provided the down-payment for our family home. Can I get that money back?
If a spouse used separate property to pay for the down payment of a home or other property during marriage, the spouse is typically entitled to a return of that investment. Some states also allow an investing spouse to receive a percentage of the property's capital appreciation.
How is debt divided at divorce?
State laws vary in how they treat debts remaining at the time of divorce. Typically, however, states distinguish between debts acquired before marriage, during marriage, and after marriage. Some states treat debts incurred before or after marriage as marital or community property to be divided between the parties. Other states assign pre-marital or post-marital debts to the party who incurred the debt or the party who is better able to repay the debt. Most states treat debts acquired during marriage as the responsibility of both parties, regardless of which party incurred the debt. Additionally, most creditors are entitled to seek repayment from both spouses for debts incurred during the marriage.
What happens to a debt if my ex-spouse files for bankruptcy?
If a spouse files for bankruptcy after being assigned a joint-debt, the bankrupt spouse is released from liability for that debt. The creditor is entitled, however, to seek repayment from the non-bankrupt spouse, even if the court did not assign the debt to that spouse.