Divorce and Money: How Are Assets Divided When a Relationship Ends
Dividing all assets when a marital relationship ends is stressful. During separation, it is fair that all property is divided between spouses; however, the way it will be divided depends on various factors. Sometimes, it doesn’t matter whose name is on credit cards, as even stay-at-home moms and dads and those who earn very little still have rights to assets.
Divorce and Money to Split Up
What most divorcing people don’t like about getting divorced is that once the process is finalized, none of them ends up with more money than they had while they were married. All marital finances can be split either amicably out of court or by a judge when a contested case is initiated.
Does a wife get half in divorce?
There is no clear answer to this question mainly because in different states marital property is divided differently. While, in some states, marital assets are divided equally, in others, they are divided fairly which is often far from a fifty-fifty split.
Before a couple can get to divide their assets, they need to do an inventory first. Both spouses are supposed to disclose financial information to each other and it is important to remember that there is a penalty for hiding assets in a divorce. Therefore, if someone tries to hide any financial information, a judge may award all the marital assets to another party , order a deceiver to pay another side’s legal fees, and, in some cases, may even put an offending party behind bars.
What is considered marital property?
Once every penny is accounted for, each party is supposed to determine which assets are marital property and which ones are separate. Even though separate assets remain undivided, parties may use ones for balancing their marital property during equitable distribution. Marital assets that are subject to division can include:
- Savings accounts;
- Life insurance;
- Business ownership, etc.
What happens to inheritance money in a divorce?
It may or may not be considered marital, depending on whether or not it was blended with marital property. The court encourages divorcing spouses to resolve their money issues amicably in a way that is satisfactory to both sides. However, if parties cannot reach an agreement and thus, in a divorce, splitting of assets cannot be handled out of court, a judge will consider all assets and take into account each party’s financial situation to divide marital property fairly.
How is Property Divided in a Divorce?
For every party involved in a divorce, the best way to divide property is to do this out of court. No one can know for sure what exactly a judge will award to whom, and a legal process may last for months or even years. For this very reason, finding common ground and developing a settlement agreement amicably can help spouses avoid unnecessary conflicts and delays and reduce their divorce-related expenses.
How to decide on who gets what?
As a first step, parties have to create a list of all property they own and determine its value. It is best to put the most valuable items on top of the list and mentioned the less valuable ones further. Once the list is completed, spouses should decide on who will get what. There is no need to divide everything on the list evenly; however, it is important to ensure that the split is fair. Sometimes, hiring a mediator can help spouses reduce tension during the negotiation process.
How is a house divided in a divorce?
Spouses can handle their marital house in three different ways: they can sell it and split the reward; one party can buy out another party’s equity; or they can keep the house until their kids finish school. So, when one asks “Can I split my property and sell half?”, the answer is positive when it comes to selling half of the house to another spouse.
Who gets the house in a divorce with children?
Usually, the court grants the house to the party who gets physical custody of the kids, meaning that a custodial parent will get the right to keep the marital home.
Can a judge overrule the asset division agreement?
The divorce property division must be fair; otherwise, a judge may not approve the agreement. If one party gets significantly less than the other side, a judge may want to investigate a few details before signing any papers.
Unfortunately, far not all spouses can divide what they own themselves. If they go to court, a judge will split their property using one of two property division methods, depending on the state where one is filing. The two approaches to dividing marital property are equitable distribution and community property.
Divorce in Community Property States
The community property system is used only in nine states, including Texas, Idaho, Arizona, and California. The main idea behind the system is:
- Finding out which items are separate assets and which ones are community assets.
- Dividing the latter equally between the divorcees.
- Allowing each party to keep all their separate property to themselves.
Community assets usually include all money that either party has earned during their marriage and all items that were bought with that money. Moreover, all debts taken on by spouses for household purposes are considered community debts. When it comes to inheritance, it can be considered either community or separate property, depending on a few factors.
When does inheritance become community property?
This happens when commingling occurs. Overall, inheritance is considered separate property unless parties treat it otherwise. Therefore, if they deposit inheritance money into a joint account or use it to buy marital property, this money becomes a community asset and is to be handled accordingly.