The issue of how to divide marital property comes up in almost every divorce, which is why it’s important to know if you live in a community property state or an equitable property state. The way your state handles property division depends on which of these property systems apply.
The exceptions to this happen when there was a prenuptial agreement, or if the parties to the divorce draft an agreement that divides the property according to those specific terms.
Equitable property
Most states operate under equitable property division rules (or separate property rules). Under this system, a court divides marital property according to what it considers to be equitable, or just, to both parties.
This means that a divorce under equitable division doesn’t necessarily allocate assets 50-50 to each spouse. In fact, in some of the rarer circumstances, one spouse can end up with almost everything if this is what the court considers as fair.
In equitable property division divorces, spouses are usually awarded property in proportion to how much they contributed to the marriage. What this means is that usually the spouse who earned more will receive the larger portion of the property and assets because they put more in financially to the marriage.
However, a court doesn’t apply the same rules to every case-it sometimes tries to balance things out by taking other factors into consideration as well. For instance, a stay-at-home mother who raised three children alone may be awarded assets to compensate for her contributions to the family.
Some other examples also include the length of the marriage, the earning potential of each spouse, the standard of living established during the marriage, etc.
As for debts, a court evaluates the financial ability of each spouse when considering marital debt and liability distribution.
Community property
Community property law only applies to these nine states: California, Arizona, Idaho, Nevada, Louisiana, New Mexico, Wisconsin, Washington and Texas.
By contrast, in a community property system a court looks at all assets that were acquired during marriage and then divides them equally between the spouses during divorce. All assets are divided equally regardless of who owns title to them.
For example, both spouses are considered to own all money 50-50 even if one spouse doesn’t work at all. The only time when marital assets aren’t split equally is if a prenuptial agreement was in place.
Additionally, community property laws apply to all joint debts and liabilities because these count as marital property. Therefore, all debts and liabilities are equally divided between both spouses.
