There are two ways that property is divided following divorce. The majority of states follow the equitable distribution theory, and a few states follow the community property theory for distribution of marital assets. Under the equitable distribution theory, the court will fairly divide marital property between the parties. Under the community property theory, marital property is divided equally regardless of which party contributed the asset to the marriage.
What is Marital Property?
Marital property is property, including business or professional practices started during the marriage, which was acquired during marriage. Generally, property that is acquired before or after the marriage is not marital property. This concept is important because the court divides only marital property upon divorce. However, non-marital property that is commingled with marital property may be deemed marital property.
What Isn’t Marital Property?
Generally, a court will not award the separate, non-marital property of one spouse to the other. Some examples of non-marital property are:
- A gift or inheritance received during the marriage
- Assets a spouse had prior to marriage
- Property the parties validly agree is separate property (as in a pre-nuptial agreement)
- Property received in a judgment against the other spouse
- Income derived from non-marital assets during the marriage
Thus, the court will determine which assets are marital or non-marital property and distribute them accordingly.
In the majority of states, marital property is equitably divided and distributed. This means the court awards a “fair” distribution of the property to the parties. This is not necessarily a 50/50 distribution. In calculating an equitable distribution, the court may consider such factors as:
- The party’s contribution in acquiring, maintaining, preserving or increasing the value of the property. The court considers the spouse’s contribution to the family as a homemaker as well
- The party’s involvement in dissipation of a particular asset
- The party’s age, education, opportunity to earn, health, skills, income, debts, and needs
- The duration of the marriage and any prenuptial agreement
- Monetary obligations to a prior spouse or children
- Custodial requirements of the parties’ children
- The value of the property each party is awarded and the tax consequences of the property award
- The standard of living maintained during the marriage
What is Community Property?
Nine states distribute marital property under the community property standard. Property acquired during the marriage, regardless each spouse’s contribution to the asset, is considered community property. The courts equally divide the community property between the two parties.
Because it is difficult to divide an asset in half per se, the court will award an asset of equal value to the other spouse or order one spouse to make the difference up in monetary payments.
Property Types and their Distribution
The court will consider those pension funds or retirement funds that accrued during the marriage to be marital property and divide them according to the distribution structure of the state.
Inheritances and Gifts
A spouse that received an inheritance during the marriage is entitled to claim the property as non-marital property. However, if the non-inheriting spouse increases the value of the non-marital property, the incremental value of the inheritance becomes marital property. Gifts among spouses are marital property, but gifts received from others are not marital property.
Marital property is property, with some exceptions, that is acquired during the marriage. Depending on the laws of the state in which the divorce initiated, the court will either equitably distribute the marital property or divide the property equally.