Divorce is complicated enough, and when property is involved, things can get even more complicated. 40-50% of couples in the United States get divorced, making the issue of how to divide property a common one.
Since most married couples purchase property together, it can be hard to determine who owns what. Understanding marital property laws and the steps to divide your hard-earned assets and property can assist you during the divorce process.
Community Property vs. Separate Property
When you’re getting a divorce, you might hear the terms community property and separate property thrown around. Distinguishing between the two can help you come to a fair divorce settlement agreement.
What Is Community Property?
In community property states including Washington, the term community property refers to anything from debt to assets earned during marriage, as well as the items that were purchased with those assets. Any debts acquired during marriage are also considered community property. Lastly, assets funded partially by both parties are typically treated as community property.
What Is Separate Property?
Separate property consists of assets that specifically belong to one spouse. This may consist of anything from inheritances, gifts, and personal injury settlements that were given to one party. It can also include the property or a business that was purchased by one spouse before marriage.
Marital Property Laws
Every state has its own set of laws regarding marital property. When a divorcing couple can’t figure out a divorce settlement, the court will use their state’s laws to divide the property. Some states like Washington abide by community property laws, while others follow equitable distribution laws.
Community Property Laws
The states that comply with community property laws are Alaska, Arizona, California, Idaho, Nevada, New Mexico, Texas, Washington, and Wisconsin. This means that in those states a divorcing couple’s property is split between community and non-community property.
Community property is owned and divided equally between both parties. However, each party is still able to keep their own separate assets.
Equitable Distribution Laws
The remaining states follow equitable distribution laws. In this case, the division of property is fairly separated, but that doesn’t mean it’s equal. The judge will listen to both sides and determine who gets what according to their cases.
Certain states may require one party to use their own separate property to make the agreement more equitable.
How to Divide Property
Once you understand marital property laws, it’s time to start separating your assets. This can generate a heated argument between parties, but it’s important to remain calm. Here are the steps you’ll need to go through to fairly divide property.
Create a Checklist
The first step of the divorce process is to create a checklist containing all of your property. Your list should be truthful and accurate. It will contain separate lists of assets that you both own, along with your own personal assets, financial assets, and business assets.
Examples of assets that both parties own could include a house, vacation home, and land. On the other hand, personal assets may consist of items like furniture, antiques, rugs, collectibles, computers, cars, clothes, and jewelry.
Also take note of your financial assets like checking and savings accounts, stocks, trusts, retirement funds, 401(k) plans, and life insurance policies. Business property may include asole proprietorship, corporation or other business assets. In some states a college degree may be considered an asset, however this is not the case in Washington.
Bringing a checklist to your divorce attorney makes it much easier for him or her to create a fair divorce settlement.
Hire a Family Law Professional, If Needed
Some divorcing couples are able to come to an agreement, which makes the process much easier. In this case, the divorce can be promptly signed and granted.
Otherwise, divorcing couples that can’t figure out a plan will have to turn to a lawyer or mediator for help. Divorcing couples that can’t talk without arguing can have their lawyers communicate with the other party. If needed, divorce attorneys can obtain documentation, take depositions, and get a formal disclosure from the other spouse.
The Division of the House
If you have children, the spouse who is the primary caretaker may be granted a temporary right to stay in the house with the children. However, this is not always the case, and certainly not permanently. If there are no children involved and the house is considered the separate property of one spouse, then that spouse may be able to keep the house.
The house division can get a bit more complicated when you don’t have children, and you both have ownership in the home. When you both own the house, it’s illegal to force your spouse to leave. In the case that your spouse kicks you out and changes the lock on your jointly-owned home, you have the right to call the police.
The only exception in getting your spouse thrown out of the house is if he or she is violent towards you and if you’re able to obtain a restraining order against them. Just bear in mind that you may have the right to call the police if you get locked out, but getting kicked out and having the locks changed is not a crime and the police will not arrest the other spouse.
A court can help get funds and determine who gets to use the house, however. Someone in that situation would need to present a petition to the Court for divorce, present a motion supported with a declaration and any documents supporting the motion, and argue to a judge why what was done was wrong and harmful.
However a restraining order may get earlier results. If there is any domestic violence, the court can order the other spouse out of the home on an emergency basis followed up with a hearing to explain why the spouse should or should not be kicked out of the house in two weeks.
In any case, court rules must be followed. Your attorney must know all the local court rules to ensure they file all the necessary documents (and it can be different county to county) and they have to confirm the hearing in the right way. Also, they must follow all state and local laws for serving the documents so that the judge knows due process was followed and the hearing is fair.
Also, there is no guarantee that a house owned before the marriage stays the property of the person who bought it before the marriage. There are some complicated factors here, but the court is going to consider the length of the marriage, other assets to divide and the ability of the other spouse to provide for him or herself. So, part of the value of the house may be divided despite the purchase date, especially in a long-term marriage where there really aren’t other assets.
Handling Retirement Funds
Negotiating retirement funds can also cause a lot of conflict between divorcing couples. While some spouses have the idea that retirement funds belong to whoever earned it, it doesn’t always play out this way.
Since retirement benefits and funds can be considered community property, the working spouse may be required to give the other spouse a portion of it. Asking your attorney for a Qualified Domestic Relations Order (QDRO) can make it easier to split up the earnings from your retirement plan.
Family-Owned Businesses
Businesses can be another tough split, as the business’ value must be taken into account. Smaller businesses that are owned by both parties can usually be separated without an issue.
If you own a business with a spouse that you’re divorcing, you can opt for a buyout agreement.
In that case, one spouse buys a part of the business that belongs to their spouse. In other words, one will keep the business, while the other receives a payment.
Hiring an Attorney
Divorces can be stressful. Knowing how to divide your assets during a divorce can help minimize some of your frustration.
Many couples often need legal assistance during a divorce. Hiring an attorney can make the process go much smoother. Contact our law firm today to request a consultation with one of our expert attorneys.