When a married couple files for divorce, one of the various legal issues addressed by the divorce will be the division of assets between the parties. Assets can refer to:

  • Cash;
  • Property, whether real or personal; and
  • Anything with monetary value.

There are many ways in which assets can be divided, depending on whether the divorce is uncontested or contested. If the divorce is an amicable and uncontested divorce, couples may agree on how the assets are to be divided. This is generally the best option as it can save both parties money by reducing court costs and attorney’s fees. Additionally, mediation is an effective tool in helping divorcing couples agree on fair asset division.

If the couple cannot come to an agreement on a fair division of marital assets, meaning it is a contested divorce, the issue will be resolved by the court during a formal divorce proceeding. Because the laws governing the division of marital assets vary greatly from state to state, you should consult a local divorce attorney to advise you in any divorce proceeding.

What Is Marital Property?

Marital property refers to any assets or funds that were obtained during the course of a marriage. These are generally valued and split evenly between the spouses. However, states generally have very different laws governing how to define and calculate marital property amounts. Marital property can also be called by other terms, such as shared property or community property.

Marital property is generally divided equally between the parties, and includes items such as:

  • Homes;
  • Cars;
  • Bank account contents; and
  • Securities.

Any property that is not classified as marital property is generally referred to as separate property, which will be owned in full by the owning spouse after the divorce. This will be discussed further below.

Some common examples of legal disputes over marital property include:

  • Hidden assets, such as not declaring ownership of certain items in order to avoid division with the other party;
  • Property improvements by one spouse, as it can be difficult to determine whether one party should be reimbursed if they made property improvements without contributions from one spouse;
  • Commingling separate property together, which will be further discussed below;
  • Disagreement over intent, as spouses may agree to turn community property into separate property which could raise other issues;
  • Increases in property value, as some jurisdictions treat increases in marital property value as a divisible asset itself, which must be shared; and
  • State laws, as each jurisdiction has different rules that can affect the portion that each person will receive as a result of the divorce process.

What Is Separate Property?

As was previously mentioned, separate property is any property that was acquired individually by a partner before the marriage occurred. This can be acquired by purchase, gift, or other means of acquisition; however, the defining characteristic is that it was intended to be owned only by one spouse, rather than jointly by both partners.

Separate property also includes property that has been specifically identified as separate property in a contract, prenuptial agreement, or other types of legal documents. Alternatively, shared property or community property is property that is accrued by both partners during marriage. To reiterate, this property is owned jointly by each partner.

Upon divorce, separate property is treated differently than shared property. Separate property is retained by the original owner during the divorce process. An example of this would be how if one party individually owned a home before the marriage, this property is generally classified as separate property. The owning partner retains full title to the home after the couple files for divorce.

Shared property is subject to the divorce laws specific to each state, but shared marital property is generally divided evenly (50-50) between the partners. It is imperative that the parties be clear about which property is classified as separate property, and which property is considered to be shared communal property.

There are a few exceptions to the laws governing separate property in a divorce:

  • Specific Instructions: If the owning partner has specific instructions about the property which are listed in a valid written contract, they may be able to change separate property into shared property. However, this may depend upon the consent of the other partner; and
  • Property Improvements: If one partner has contributed improvements to the property, this could reclassify the property as shared property. As such, the other partner may be entitled to a share of the property, generally in amounts equivalent to their investment in the improvement and full rights to the property.

What Is Commingling Property In Divorce?

Commingling occurs when funds that belong to one party are mixed with the funds of another party, especially when one party has a responsibility to keep them separate. In the context of marriage and divorce, commingling refers to instances in which separate property is mixed with community property, so that the separate property can no longer be distinguished from the communal resources.

Commingling generally occurs when the couple shares a joint account, but begins depositing separate resources into the account. It can also occur when the couple has purchased property using a mix of shared and separate monies. In such cases, it can be considerably difficult to trace which funds were used to buy the property, resulting in issues when attempting to classify the purchased property.

Spouses are not prohibited from commingling funds; commingling only becomes an issue when the spouses are contemplating divorce. Commingling laws may vary from state to state and are generally only applicable in community property states.

The mere act of commingling assets does not necessarily change separate property into community property, or vice-versa. Commingling only has legal effects when the separate property can no longer be distinguished from the community property, in which case the separate property is transmuted into community property (if the couple is in a community property state). Upon divorce, the property will be divided equally between the partners, as opposed to one spouse owning it in full.

In non-community property states, courts do not rely on classifications such as separate or community property when dividing assets in a divorce proceeding. Rather, they will follow principles of equity when determining how property can be fairly divided between the parties.

What Else Should I Know About Divorce Assets?

During the divorce proceeding, the court divides both the assets and the debts of the marriage fairly between the two spouses. In terms of student loans specifically, if there were student loans taken out by either spouse during marriage and both spouses benefited from the education, both spouses would be responsible for repaying the student loans. If the student loans were taken out prior to the marriage, the spouse who took out the loan will likely be responsible for the whole debt.

An asset such as a business that was owned by the spouse before marriage is generally considered to be separate property. However, if the business grows in value during the marriage, the added value may be considered marital property.

Do I Need A Lawyer For Help With Divorce Assets?

Filing for divorce usually requires the assistance of a qualified divorce lawyer, who can help you with issues of property characterization and the division of assets. Your attorney can inform you of your state’s specific laws regarding the matter, and will also be able to represent you in court, as needed.