Divorce can be a legal nightmare, especially if these are contentions in the agreements between the couple involved. One of the most common issues involve division of property and debt, which is understandable, because each person will fight for his or her best interest in mind.
It is a good thing that there is a legal way to divide assets and liabilities, preventing unfair distribution. There are two legal concepts that can be utilized – community property and equitable distribution.
According to the website of Holmes, Diggs & Sadler, there are two separate categorizations of property in divorce – namely community property and property of a single spouse.
Community properties are properties owned by both the husband and wife. These include the earnings and everything that has been acquired with those earnings in the span of the marriage. Debts that have accumulated during the marriage are also considered community properties, unless the debts are specified to be for one spouse only. Generally, community properties are equally divided upon divorce.
Properties of a single spouse are properties owned by only the husband or wife. These include acquired assets prior to marriage, such as pension proceeds and even entire businesses. Assets that have been meant for one spouse only, like gifts and inheritances, are also included. These properties are kept by its rightful owner upon divorce.
Equitable distribution is another way to divide property. It ensures that the division of marital assets is fair for either spouse. But this does not necessarily mean that the division is on a fifty-fifty basis. There are a lot of factors to consider, but they have the same core idea – looking at the future financial situation of either spouse to create a fair and just division of properties. The factors may include each spouse’s earning capability, level of contribution to acquired marital properties, and future financial needs.
Depending on what state you are in, division of property and debt may be done either through community property or equitable distribution.