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December 03, 2020

Separating Property

When a couple gets divorced, how is their property divided?

If the spouses can come to a fair agreement on their own, a judge will usually approve it after a short hearing. In a relatively small number of cases where the spouses cannot come to an agreement, the court will have to split the property. State law will establish what factors the judge will consider when dividing property.

As a starting point, many states allow parties to keep their nonmarital or separate property. Nonmarital property includes property that a spouse brought into the marriage, kept in his or her own name during the marriage and did not commingle with marital property (commingling property would occur, for example, if the property was put in the same bank account as marital property). For example, if you owned a home before you got married and you never changed the title to include your spouse and did not put marital money into the house for renovation and upkeep, the house will likely be considered nonmarital property.

Nonmarital property also includes inheritances received and kept separate during the marriage. It also may include gifts to just one spouse during the marriage. Some courts may divide nonmarital property during a divorce, but its status as nonmarital property will play some role in determining how it is divided.

After dividing separate property, the court then turns to the rest, called marital or community property. Marital or community property generally includes property and income acquired during the marriage. Wages earned during the marriage usually would be considered marital property, as would a home or furniture purchased during the marriage with marital earnings or assets.

How do courts divide marital or community property?

Again, the answer varies from state to state. A few states, such as California, take a rather simple approach: they believe that property should be divided equally. In these states, the net value of all marital property and debts will be divided fifty-fifty, unless a premarital agreement states otherwise.

However, most states apply a concept known as equitable distribution. Equitable distribution does not mean equal distribution. This means that the court will divide marital property in a way that it thinks is fair. The division of property may be fifty-fifty, sixty-forty, seventy-thirty, or whatever the court deems fair. In some cases, one spouse may even receive all of the property, with nothing awarded to the other, though such situations are very unusual.

What kind of factors will the court look at when dividing property? My (soon-to-be-ex) husband spent a lot of money on his gambling addiction and we therefore have less savings to divide.

In cases in which a court is applying equitable distribution, the court will look at a variety of factors and won’t necessarily weigh all of them equally. This gives the judge more leeway and allows more consideration of the financial situation of both spouses after the divorce. However, it also makes the division of property less predictable. There are several factors courts consider when applying the principles of equitable distribution, including:

  • Nonmarital Property: If one spouse has significantly more nonmarital property than the other, the court may award more marital property to the less-wealthy spouse.
  • Earning Power: If one spouse has more earning power than the other, the court may award more marital property to the spouse with less earning power.
  • Who Earned the Property: When awarding property, often courts will favor the party who worked hard to acquire or maintain the property.
  • Services as a Homemaker: Courts recognize that keeping a home and raising children is hard work, and that homemaking services often enable the spouse working outside the home to earn more money. Thus, homemaking services may weigh in favor of the homemaker.
  • Waste and Dissipation: If one spouse wasted money during the marriage, it could count against him or her when the court divides the property. Examples include excessive spending and money spent on an addiction.
  • Fault: Some states will take into consideration fault, as in the case of spousal abuse or marital infidelity, but most do not consider such things when it comes to property division.
  • Duration of Marriage: A longer marriage may weigh in favor of a larger property award to the spouse with less wealth or earning power.
  • Age and Health of the Parties: If one spouse is in poor health or is significantly older than the other, the court may award a larger amount to the sicker or older spouse.

Who will get our house?

The decision of who gets the house depends on your situation. If you have minor children and can afford to keep the house, the law usually favors awarding the house to the spouse who will have custody of the children most of the time. If you cannot afford to keep the house, it may be sold and the proceeds divided (or perhaps given to one party). In some cases, a middle-ground approach is applied: The spouse who has custody of the children will have a right to live in the house for a certain number of years. At the end of that time, that spouse will buy out the other spouse’s interest or sell the house and divide the proceeds.

What about the pension of the military spouse? Who gets that?

Military pensions add a unique twist to military family divorces because such pensions are regulated by a particular law, the Uniformed Services Former Spouses’ Protection Act (USFSPA). Congress passed the Act to make military pensions subject to divisions by state courts during divorce proceedings. (Before the Act, the states would handle military pensions in a huge variety of ways.)

However, the USFSPA still didn’t tell the states how to handle military pensions; it just set some ground rules. Many servicemembers and spouses incorrectly believe that being married for at least ten years automatically entitles the nonservicemember spouse to receive a part of the military pension. For the most part, there is no automatic entitlement to pension benefits and this so-called “ten-year rule” has nothing to do with how the military pension may be divided in divorce; instead, it simply relates to the method of sending pension payments.

Dividing a military pension can be very complicated—this is one of the areas where having a skilled lawyer licensed in your state is worth the time and effort. If you are the nonmilitary spouse, you can lose your rights in your military spouse’s pension if you don’t affirmatively assert them. You should also discuss with an attorney how to handle distribution of any proceeds under a Survivor Benefits Plan (SBP).