Divide Marital Property In A Divorce

Dividing assets/property can be tricky, and you would do well to get some legal advice.

In as much as the 50 states have differing divorce laws, one aspect of divorce is fairly uniform. The division of marital assets is a judicial division of property rights and obligations between spouses during separation and divorce. A Property Settlement Agreement signed by both parties often serves as a court order for the couple to follow. Achieving a divorce settlement and dividing the marital property is sort of cut and dried (pardon the pun), and  will be done according to the rules in your state.

What State you live in determines the rules for dividing assets

Community Property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), each spouse is entitled to one-half of all the property acquired during the marriage.

Equitable Distribution states – Various factors are taken into account, including the financial situation of each spouse when dividing assets in these states. Courts divide the marital assets in a fair and equitable manner, although the division is not likely to be equal.

Separate Property, (also known as non-marital property) is not included in property division in community property states. Separate Property includes property or businesses owned prior to marriage or living together, gifts and inheritances from family that have not been commingled with community assets (such as in a joint bank account), or pension proceeds of either spouse that vested prior to marriage.

When the parties cannot agree on dividing assets, courts will commonly take into account the length of your marriage, the work history and job prospects of each,  the abilities of the spouses to be self-supporting, the physical and mental health of each, the expense of any children, and the source of particular assets. The court will then fashion a divorce settlement that approximates a fair division.

Stuff that is frequently subject to division by the parties:

Homes, Rental Property, Brokerage Accounts, Bank accounts – Checking, Savings, Christmas Club, CDs, etc., Retirement and Pension Plans, Closely-held Businesses, Stock Options, Country Club memberships; Annuities; Life Insurance, Deferred Compensation, Restricted Stock, Tax Refunds, Professional Practices, Licenses and Collections.

Property that is considerate separate – not subject to dividing
property settlement

Property Settlement

  • any property that was owned by either party prior to the marriage
  • an inheritance received by either party before or during the marriage*
  • gifts received by either party and given by a third party (your Father gave you his restored antique car)
  • awards received from a lawsuit for personal injury

* Caution should be exercised regarding property that you may have co-mingled with your spouse. Inheriting money and depositing it into a joint account with your spouse or property that you have re-titled with your spouse’s name on it could cause the property to lose its separate property status. In many States any increase in the value of your separate property is considered marital property and subject to be divided.

Facts that are considered by the court include
  • The length of the marriage
  • The income or property brought into the marriage by each spouse
  • The standard of living established during the marriage
  • The age and physical/emotional health of each spouse
  • The income and earning potential of each spouse
  • The financial situation of each spouse when the divorce is finalized
  • The contribution of a spouse to the education, training or earning power of the other
  • The needs of the custodial parent to maintain the lifestyle for the children

Debts get divided as well, although the treatment of marital debt is handled differently between Equitable Distribution and Community Property.

Property Valuation

In the event you and your spouse will be unable to agree on the value of one or more assets, a third-party appraisal will be necessary. Any prior valuations or appraisals will be helpful to the process, so if you have those documents you should produce them. In divorce settlements, it is typical that the partner with more resources wants less disclosure and the other partner wants more disclosure.

Assets that occasionally get overlooked can include: stocks and bonds, IRAs, Pension and retirement accounts (past and present), certificates of deposit, money market accounts, items from your safety deposit box, insurance policies, business partnerships, company-sponsored stock options and the like.

As emotions are likely to be running high through this phase, you should be mindful not to get too focused on or attached to any one particular asset as one you absolutely have to have, or that you deserve; as fighting your spouse over the artwork over the sofa can end up costing more in legal fees than its worth. You will have to let go of certain property to achieve a good divorce settlement.

Taxes and Divorcehead banging

Sometime before the property settlement agreement is finalized, you’ll want to determine what tax implications will arise from selling or dividing your marital assets. In some cases capital gains taxes can be such that the parties look for a different settlement solution. A CPA or tax attorney can be very cost-effective here.

Large or complicated pension plans or retirement accounts

If you are involved with large pensions or retirement accounts in the marriage, you will require an analysis in order for it to be valued correctly for distribution to each party. We strongly suggest you get your own evaluation. Your lawyer (or your spouse’s lawyer) will get you an evaluation by contracting with a third-party provider, likely at significant cost. We suggest you have your own done for a fraction of the cost, just so you know if someone else’s evaluation is slanted away from you, if you know what we mean. For $299 you can have an accurate analysis to use as a base. This stuff is complicated, so you need to be on your game. Contact our partners at the QDRO Desk. It will be the best three hundred bucks you ever spent.

If you attempt to divide assets with your spouse

Take a sheet of paper, and turn it sideways. Make three columns – one for assets you consider jointly owned and the other two columns to list possessions you consider owned by each spouse. On the back of your asset sheet, list stuff that has little value other than sentimental. Quickly agree on who will take what low-value stuff. Put a name or initial by each item. If there is a dispute about an item on the back side of the paper, it belongs on the front side.

Put dollar values on all items. For home, property or business assets, agree to have a professional provide estimates. For household furnishings, work from purchase prices and age. For antiques, get them appraised. Pensions and investments may require an actuary and accountant respectively. Subtract unpaid mortgages from property value to arrive at true net values.


In most states, and in most cases, if you and your spouse can agree on how to go about the division of property in your divorce, whether it follows your state’s guidelines or not, the court will approve your divorce settlement agreement. It is important to understand that the parties can structure their divorce and divide their assets in most any fashion that an agreement will allow. Issues that remain unresolved will be decided either by mediation or by the court.

If and when the parties agree, the attorneys will draft a divorce settlement agreement that will include the various stipulations and agreements. This document should specifically detail who gets what property. As in any legal document, you will want to review the document to make certain it is in order. Once it is signed and a permanent part of the final divorce decree, it is set in stone, and you will need a chisel to change it later.

If you cheat it could cost you

The following states take marital misconduct, especially economic fault, into consideration when dividing marital or community property or in reimbursing the marital or community estate: Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia and Wisconsin.¹

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Leave no loose ends

Just as soon as the divorce settlement is approved or the court finalizes the divorce, you will want to complete the details of your property transfer. We suggest you demand that any transfer papers be signed as a part of the agreement before it gets finalized by the court. Sometimes a bitter newly-divorced spouse can drag the transfer out to spite the other. Have your ex-spouse sign any deeds, stock transfers or bank account forms that will be necessary to transfer marital property into your name; determine what payments need to be made to fulfill your end of the property settlement agreement; begin the process of refinancing property if that is a part of your settlement agreement; and release your name on the title to any property your ex-spouse is receiving. Your first inclination after its over is to distance yourself emotionally from the experience. Do not. Cross the T’s, dot the I’s, and don’t leave any loose ends. THEN you can relax. Unless yours is a Tiger Woods-sized divorce settlement, it should not take very long to complete. The longer you wait, the more difficult it will be to complete your divorce settlement and move on.

¹American Bar Association, Family Law Quarterly, Winter 1998, Tables Summarizing the Law in Fifty States.

Questions and Answers

As a rule, assets owned by either spouse prior to the marriage will remain that spouse’s separate property after the marriage ends, and won’t be distributed by a court as marital property. Of course, there are exceptions. In some states, courts can define the beginning date of a marriage differently than the actual wedding date (they lived together for years before marrying, etc.). In cases of cash, if one was to commingle it with marital funds, that would re-constitute its status. There can be other cases. Consult your lawyer.

For the most part, unmarried couples aiming for a settlement agreement have no property rights relative to the other’s assets. Effectively, there is no marital property. Without the benefit of marriage, they have no claim or right to support from the other, and really depend on any settlement agreements or contracts they may have entered into during the relationship. Assuming you are both on the deed, you’ll each have half-ownership. Not being on the deed can cause difficulty in proving ownership in the absence of a contract. In most circumstances it may be wise to cut your losses, agree to a ‘we each keep our own stuff’ settlement, and move on. Look at it this way: you don’t add to the divorce rate; no legal separation needed; no divorce lawyers; no annulments or any costly divorce processes. You got off cheaply.

No simple answer here. If the property was never re-financed and he can trace back to his having bought the home before your marriage, there’s a good chance he can claim that down payment. There is also a chance he can claim appreciation on his investment dollars. Much will depend on how much if any marital money was put into the home.

This can get pretty complicated, in that you must be able to track the funds movement, and if other funds were added and removed it may be difficult to identify which funds were removed and which were not. Your attorney can guide you through this.

Your state laws are going to determine this answer. Some states will create a date, a de-facto date for when the marriage ended (when he left) and others will use the constructive divorce date. However, in any case, his interest at the time of leaving remains, and any appreciation of that interest is his. Check your state divorce laws.

You’ll need to check your state’s divorce and property laws. Some states say yes; others say no. In any case, the law practice is a good indicator of future income, and your contribution allowing him to build the practice can become an ally of yours in a property settlement, maintenance or alimony (spousal support) proceeding. Legal advice is a must.

One of you needs to request a dismissal of the other’s petition, and if you and your spouse can’t agree, one of the judges will. It’s best to get a lawyer’s opinion on this though

We presume you have been the named beneficiary. This is another question where it will depend on your state laws. In many cases there is a restraining order issued against the sale or dissipation of assets until the divorce is final. In most states, property acquired through the “labor” of a spouse is usually marital property, so the question is: how does your state view this? Chances are, the money or assets used to purchase the insurance were from marital assets or cash, making much or all of it marital property and therefore divisible. In general, one cannot remove the beneficiary if that beneficiary is a spouse without court approval.

That’s going to depend on certain answers. Was there an account before you got married? Was the account started with marital property (cash or securities from joint income)? Are there any inherited securities in the account? If the account was started during your marriage, with money or securities that you shared, it’s in all likelihood a marital property. If it began before your marriage, it’s likely that at least a portion of the value is non-marital property.

It depends on what stage of completion it is in. Is the divorce final? If not, you likely can amend the settlement agreement if both parties agree. If the divorce is final, it’s very difficult to go back, but it may require a separate legal action. Ask your lawyer.

You need to get with your divorce lawyer and discuss this question before you sign your name. A divorce settlement generally is not taxable, but an alimony settlement certainly can be. If assets are sold to complete an agreement of settlement, there may be capital gains due on the sale. If your attorney is not absolutely certain answering all your questions, we suggest you meet with a CPA or tax attorney.

We presume you mean not have a property settlement agreement? If so, do not make a verbal agreement. People change. Conditions change, and intent changes. Only make an agreement in writing, with the court and overseen by an attorney.

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