Community
Property Division
In community
property states, each spouse is entitled to one-half of all the property
acquired during the marriage.
The separate
property of each spouse is not included in property division in community
property states. "Separate property" typically includes:
- Property or businesses owned prior to marriage
or living together
- Gifts and inheritances from family that
haven't been "commingled" with community assets (such as in a
joint bank account)
- Pension proceeds of either spouse that vested
prior to marriage
Community
property states include
Equitable
Distribution
In all other
states, courts will divide a couple's assets in an "equitable"
(fair) manner. "Equitable" does not necessarily mean
"equal," but what is fair to both spouses.
In deciding
what's "equitable," a court will commonly take into account:
- The length of the marriage
- The work history and job prospects of each
spouse
- The physical and mental health of each spouse
- The source of particular assets
- Expenses of the children
Taking a
Property Inventory
It is very
important to give your lawyer a complete list of all property belonging to both
you and your spouse. It is vital not to hide assets, as anything left out of
the property settlement will have to be dealt with later.
Many lawyers
have property checklists designed to jog your memory regarding property you may
have forgotten about.
Assets, which
people sometimes forget to list, include:
- Pension and retirement accounts
- IRAs
- Stocks and bonds
- Certificates of Deposit
- Money Market Accounts
- Items from your safety deposit box
Valuing Assets
When you and
your spouse cannot agree on the value of a particular piece of property, it may
be necessary to have a professional appraiser- such a real estate broker- put a
value on the property for you. You will want to provide your lawyer with any
information you have regarding the value of property, including prior
appraisals and assessments from tax collectors and so forth.
Many divorcing
couples make the mistake of fixating on one piece of personal property, such as
an art object or something else of sentimental value, and spending many times
the value of the object in arguing over who will own it. It is almost always
better to compromise between the two of you as to how to divide your personal
household possessions, unless your lawyer finds some reason to get involved.
Tax
Considerations
You will want
to consult with a tax lawyer or certified public accountant regarding any
possible tax consequences of holding, transferring or selling property as part
of the divorce process.
Property
Settlement Agreements
If you and your
spouse can agree on how to divide your assets, whether it follows your state's
guidelines or not, your lawyers will write up a formal agreement called a
"property settlement agreement" or "separation agreement."
Detailed lists of who gets what will be included in this agreement.
Read the
property settlement agreement carefully, and ask your lawyer about anything you
do not understand. Once you have signed the agreement and it has been approved
by the court, it will be difficult and expensive to change.
Following
Through After the Divorce
As soon as the
property settlement is approved or the court finalizes the divorce, you will
want to take care of the details of property transfer:
- Get your ex-spouse's signature on any deeds,
stock transfers or bank account forms that will be necessary to transfer
property into your name
- Make any payments necessary to fulfill your
end of the property division arrangement
- Start the process of refinancing property if
that is a part of your agreement
- Make sure you release your name on the title
to any property your ex-spouse is receiving
While it may be
the last thing you want to do, taking care of these details will save future
trouble and make it easier to gain closure on this chapter of your life.