When couples divorce, they have to make arrangements to address financial matters. They typically need to split up their marital or community property. Both assets and debts can be part of the marital estate subject to community property rules. Spouses can either cooperate and negotiate their own property division settlement or litigate and ask a judge to divide their community property.
Spouses sometimes find it difficult to determine what resources they have to divide and what they can treat as separate property. While marital assets and debts are subject to community property rules, separate property and financial obligations belong solely to one spouse. Establishing what assets are subject to division is critical for a fair divorce outcome.
Spouses share what they earn and acquire
The name on an account does not dictate ownership, and the higher-earning spouse does not automatically get to retain more of the marital estate. It does not necessarily matter who earns more money during the marriage.
Both spouses have an interest in the income that either spouse earned and any property that they acquired with marital income. The marital estate can contain resources ranging from retirement accounts and vehicles to real estate and home furnishings.
In some cases, spouses can exclude certain resources as separate property. Items that they inherit or receive as gifts from people other than their spouse might be separate property. Assets that people designated as separate in a prenuptial agreement may also have protection from division during divorce proceedings. Property that people owned before marriage is also usually separate property.
However, people can put their separate property at risk if they commingle it with marital resources, give their spouse an ownership interest in those assets or use marital income to maintain or improve their separate property. It can be somewhat difficult to determine which assets are separate and which ones are community property that are subject to division.
People may need help going over household financial records and the inventory of assets provided by their spouses as they prepare for divorce, and that’s okay. Understanding what resources may be subject to division can help people focus on achievable goals as they prepare for divorce.