A decision to divorce generally creates major changes in an individual’s life. Everything from where they live to who they interact with may abruptly change. Typically, divorce proceedings require negotiation between spouses or litigation in family court.
Divorcing couples have to divide their property and possibly also their debts. They may have to address parental responsibilities and support obligations in some cases. Property division can be relatively difficult to manage.
People may not know what to expect. They may not even understand what assets they have to divide. What resources are subject to division when married couples divorce?
Many resources might be marital assets
Sometimes, people have inaccurate ideas about property division during a divorce. They assume that any assets or accounts held in one spouse’s name are separate property. They believe that they only need to divide resources held jointly by both spouses.
However, the marital estate typically consists of any assets acquired during the marriage or with marital income. Regardless of who earned more or whose name is on a financial account, both spouses may have an interest in the marital estate when they divorce. The marital estate may include debts as well. Credit card balances, car loans and other financial obligations can play an important role in the property division process.
Spouses can exclude certain resources and debts if they made prior plans to do so in a prenuptial or post-nuptial agreement. Resources acquired before the marriage are often the separate property of one spouse. People can also protect gifts and inherited assets as their separate property.
If spouses can reach an agreement with one another, then they can set their own terms for asset distribution and responsibility for debts. In scenarios where they struggle to agree, they may need to litigate. Judges must try to divide marital resources and debts in an equitable manner. The focus is on achieving a fair outcome when looking at the totality of the marital estate and unique spousal circumstances.
In scenarios where people have very specific property division goals, working to settle outside of court often gives spouses more control than trying to ask a judge to establish specific terms at their request. Learning more about equitable distribution rules can help people feel confident as they prepare for an upcoming divorce.
