In 9 US states, a divorce could mean losing half of everything you own
- If you're unable to decide how to divide your assets during a divorce, the courts will do it for you.
- Most US states observe equitable distribution, meaning all property acquired during the marriage is divided fairly at a judge's discretion.
- Nine US states observe community property law, where marital assets are split 50-50.
- A financial planner can help you organize your money during and after a divorce. SmartAsset's free tool can find a planner near you »
Estimates of divorce rates in America vary, but the reality is many marriages reach this unfortunate conclusion, and the aftermath is frequently messy, both emotionally and financially.When a couple joins as one, their assets typically combine to form a marital estate, and anything they acquire thereafter becomes joint property. Upon divorce, those assets - including real estate, dependent children, income, cars, furniture, investments, and retirement accounts - get divided between the former spouses.Advertisement
If you and your spouse can't agree on how to divide all or part of your assets when you get divorced, there are two ways they could be divided, depending where you live.
Which states are community property states in a divorce?
In community property states, marital assets - and debts incurred by either spouse during the marriage - are divided 50-50. Separate property is considered anything held in only one spouse's name, including property owned before marriage, given as a gift, or inherited.The states that observe this law are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Residents of Alaska can opt-in to a community property agreement.
A court may also deem marital assets "quasi-community property" if, at the time they were acquired, the couple lived in a non-community property state but later moved to and filed for divorce in a community property state.
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All non-community property states divide assets 'fairly'If you live in a state that doesn't observe community property law and you and your spouse can't agree on how to divide your marital assets, then it's subject to equitable distribution. This means everything (except for gifts or inheritances) is divided "fairly" at a judge's discretion, taking into account each person's earning potential or income, financial needs, and personal assets.Advertisement
It's possible that a judge in one of the 41 equitable distribution states will decide to split the assets 50/50 anyway after taking a variety of factors into account, but it's not a given. And even so, couples are generally encouraged to arrive at a settlement agreement before a judge has to weigh in. Aside from dividing property, there are also alimony and child support payments to consider.
To protect personal assets regardless of where you live, couples can set up a prenuptial agreement, which establishes terms for a division of assets or continued financial support in the event of a divorce.
A financial planner can help you organize your money during and after a divorce. SmartAsset's free tool can find a planner near you »
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