There are two ways to classify how property is owned during a marriage and before divorce. In a few states, each spouse has an equal and immediate ownership interest in whatever "community property" is acquired during the marriage.

Most states, however, follow a different approach and allow each spouse to buy or acquire property in his or her name alone, and the other spouse has no ownership interest in the property.

When it comes to divorce, all states in the second group (and a few in the first group) divide the parties' marital property through equitable distribution—in other words, a division that is "fair" to both spouses.

The equitable distribution of property involves three steps:

  • The determination of what property will be part of the equitable distribution
  • The valuation of the property that is part of the equitable distribution, and
  • The actual distribution of the property

There are numerous factors and variables that effect each these three steps, most of which are detailed by the various states' equitable distribution laws. Also, keep in mind that a few states do not use the equitable distribution theory. So, if you're involved in a divorce, it is critical that you understand the property division laws in your state or consult an experienced divorce attorney.

Property Included In Equitable Distributions

Most states with equitable distribution laws classify property as either:

  • Marital property, or
  • Nonmarital, or "separate" property

In most states, only marital property will be included in an equitable distribution. In some states, however, the equitable distribution laws permit the distribution of all property owned by either spouse, regardless of who bought it and when.

In general, marital property is property that is bought or acquired during the marriage. However, the various states' equitable distribution laws differ on how the time of a marriage is measured. For example, some state laws merely provide that marital property is property "acquired during the marriage." In other states, property that is bought or acquired at the time of the marriage and before any divorce or legal separation is marital property.

"Nonmarital"("non-marital"), or "separate" property, which usually is excluded from equitable distribution, includes things like:

  • Property that was bought or acquired before the marriage, but note that sometimes property that was bought while the couple lived together with the plan to get married, will be treated marital property
  • Property that was inherited by one spouse or was a gift to one spouse, even if the inheritance or gift was made during the marriage, but a gift to both spouses during the marriage usually be treated as marital property
  • Property that the spouses agreed to exclude from marital property, such as in prenuptial ("antenuptial") agreements

Sometimes, separate property can become marital property through "commingling," which is when nonmarital property is mixed together with marital property and the nonmarital property becomes indistinguishable from the marital property. For example, when one spouse is gifted a sum of money and he or she deposits it into a bank account that is jointly owned by both spouses and the money is used for marital purposes, such as home improvements.

Placing Values on Marital Property

In order for there to be an equitable distribution, the property has to be given a value. Key issues involved in determining value are:

  • The date used, and
  • Evidence of value

State equitable distribution laws vary on the date to used to determine value. For example, some laws use:

  • The date the parties' separated
  • The trial date of the equitable distribution itself, or
  • The date of the divorce decree

Because the value of property and assets often change over time, the date used to determine value can be very important. Often, courts are permitted to choose a date that is different from the date specified in the equitable distribution law if using a different date would be more equitable for the parties. For example, if the parties home was worth substantially less at the time of equitable distribution than it was at the time of the divorce decree, the court might be permitted to use the trial date (and the lower value) even if the law states that the date of the distribution is supposed to be used, so that the final distribution is fair.

Often, the parties agree on the value of assets and property, and the courts generally accept those values. However, when the parties can't agree, they have to give the court evidence or proof of valuation. For example, you can use bills of sale, receipts, and business records to show value. Also, on some items, like artwork, for example, expert testimony might be needed to establish value.

What about debts? Many, but not all, equitable distribution laws don't specify whether a court can divide the parties' debts at the time of divorce, and they vary on the types of debts that can be divided. Nonetheless, even when the laws are silent on the matter, some courts will apportion or distribute marital debts.

Making the Actual Distribution

Once marital property is identified and valued, the court divides the property between the parties. There are numerous factors that effect how the court determines what distribution is fair. Many equitable distribution laws specify a large list of factors to be considered, and the courts are usually free to consider other factors that are not specified. Most laws list factors such as:

  • Each spouse's financial condition at the time of the division, especially the amount and sources of their income
  • The length of the marriage, and
  • The desire to have the custodial spouse live in the marital home with the parties' children

Things like "marital misconduct and a spouse's "fault" for causing the divorce are listed in some statutes but not in others, and in addition, even when they aren't listed, some courts will consider such factors and some will not.

Because of the great differences in factors that the courts consider, it's critical that you understand both the equitable distribution laws of your state as well as the decisions of the family law courts in your area.

Questions For Your Attorney

  • My wife and I are divorcing. Just before we got married, her father gave her some money, which we used as a down payment on our house. Who will get that money when our property is divided?
  • Before we were married, my husband had a lot credit card debts, which still aren't paid off? Will I have to pay any of that debt after our divorce?
  • I'm getting divorced, and my father wants to give me some money to help pay some bills and take care of myself and kids. Can my husband get any of that money when our property is divided?