Property Division Legal Overview - More of the Basics

Understanding the distinction between community property and equitable division states is crucial for individuals navigating a divorce, as it determines the legal framework that governs the division of assets and debts.

The State you are in Matters

• Community Property States: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states
• Equitable States: All the other states
• Alaska allows couples to opt into a community property system, otherwise its an equitable division state

Community Property Analysis

• Marital or shared assets and debts are considered jointly owned by both spouses, regardless of individual contributions or ownership
• Both spouses presumed to have an equal ownership interest in all marital or shared property
• Upon divorce, these assets and debts are typically divided equally between spouses
• If separate property was shifted into both parties’ names, it is often then treated as shared or joint property and divided equally (even if it was originally separate property)

Equitable Division Analysis

• Marital assets and debts are divided fairly and equitably between spouses, but not necessarily equally
• Courts consider various factors to determine a fair distribution based on the specific circumstances
• Take into account factors such as:
  • Length of the marriage
  • Each spouse's contributions
  • Financial needs
  • Future prospects
• Courts have discretion to weigh these factors and may allocate assets and debts unequally if necessary to achieve a fair outcome
• Often ends up in an equal division‍
• If you can document or "prove" non-marital property, then it typically stays with you, regardless of how its titled

Key Differences Between Community Property and Equitable Division

• Presumption of Ownership
• Division Principle
• Court Discretion

This is how a Court would work through the analysis – you and your spouse can always negotiate a settlement that treats your property division different than what a court would do

Let’s talk through a balance sheet next and then we can look at individual types of property