Property Division

Property Division and Asset Division

Every marriage has at least one topic in common – property. Whether they own a million-dollar mansion or an old RV, a couple will always have to divide up their property and debt.

Certain assets remain the exclusive property of one of the marriage partners, even after marriage, and some will be divided. This is done with debts as well.  Most debt incurred while married will be shared upon dissolution, though a few personal debts may remain exclusively yours.

Remember that the Final Decree of Divorce establishes the obligation between the spouses but does not change the contractual obligations of one or both spouses to the lender.

Marital or Community Property

Marital or community property is defined as assets and debts acquired during the marriage, either jointly or by one party, other than by a gift or inheritance to one spouse.

Most states do not have a set mathematical formula for division, and the court will determine a fair distribution based upon a combination of factors as set forth in the state’s statutes.

Non-Marital or Separate Property

Non-marital or separate property are the assets and debts owned prior to the marriage that remain unchanged, or gifts or inheritances during the marriage to one spouse (usually including gifts by one spouse to the other).

Commingled Property

Commingled property are the assets and debts that were separate property but which were mixed in with other community property assets. Examples would include separate property that was traded in to acquire new property, repaired or enhanced during the marriage with marital funds, or non-marital debts paid with marital funds.


Dissipation is the use of marital assets or creation of marital debt by one spouse for non-marital purposes once the marriage has begun to unravel. The spouse found to have caused dissipation might be required to reimburse the marital estate.

Premarital Agreement

Also known as a prenuptial agreement or “prenup”, a premarital agreement is the primary method of keeping separate property from becoming joint property after marriage. A premarital agreement specifies the separate property of each party, any property agreed to be joint property, and dictates how property acquired during the union will be treated as either separate or joint. A premarital agreement may control the division of property in a divorce.

Real Estate

The acquisition of real estate together or the transfer of existing real estate into joint ownership creates legal rights and liabilities for both parties. Real estate acquired by one spouse after marriage is generally going to be treated as marital property subject to the claims of the other party.

If you are concerned about creating property rights for your spouse, a family law attorney should be consulted prior to the acquisition of the property to determine if segregation of the property is legally possible.

Business Property

For income-producing real estate and self-employment business assets, the creation of a business entity, such as a corporation, limited liability company or trust, can be used effectively to segregate the property. While appropriate efforts may segregate the property itself, the income from the business during the marriage – and possibly increases in value of the business property – may still be marital property.

Bank Accounts and Investments

Money is the asset that is the most difficult to track for the establishment of joint or separate assets. Like real estate, bank accounts and investments can be held individually or jointly. The most common way community funds are comingled is by placing them together in one account. The bottom line is keep the funds and accounts separate. Keeping track of every transaction is the first step in keeping segregated funds separate.

Beneficiary Status and Wills

It is always advisable to designate a beneficiary of your assets so that in the event of your death, the transfer of property will go smoothly. IF you do not have a will naming a beneficiary, then state law will divide your property, which often means your property will go to your spouse. If that is not what you would want, be sure to have a will.

Property Ownership Issues in Child and Spousal Support Cases

If your spouse receives or pays maintenance or child support, the commingling of assets and filing joint tax returns may subject your income and individual property to scrutiny by opposing counsel and the court in reviewing your spouse’s support needs or obligation.

If you wish to attempt to keep your assets and income out of your spouse’s litigation, you should maintain clearly segregated accounts and records, which may include separate tax returns.

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