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Divorce: How Asset Division Is Done

Divorce cases are emotionally draining and if you and your spouse can’t seem to find a common ground to agree on, it can also be financially draining. As part of a divorce case, one of the most commonly contested areas is in the aspect of property and assets division. Our Family law attorney Scottsdale AZ has come across several divorce cases where the spouses have failed to reach an agreement on how property and assets should be shared among each other.

If during your divorce case, you and your partner cannot reach an agreement as to how property, assets, and debts should be shared, then a court will mandate a decision for you both. However, in most cases, people going into the divorce battle are interested in knowing how the judge comes to the final decision regarding property, assets and debt sharing, and what the concept of fair division entails. It is important in the case of property division to know whether you live in a community property or an equitable distribution state.

Whether you live in an equitable distribution state or in community property, there are a number of factors that come into play when the issue of property division arises. If you are involved in a divorce case, below are some of the things you need to be aware of.

Community Property Sales

In community property states, it is important to note that all properties are regarded as “community” property and are divided equally among divorcing spouses. With a 50/50 sharing formula, the property that was jointly purchased is shared equally. However, separate properties remain in the care and custody of the separate entity in the aftermath of the divorce.

Community property: this is a property that has been confirmed to have been jointly owned by the married couple. This can also be a property or asset that was acquired during the duration of the marriage by either of the spouse’s efforts, skills, or labor.

Separate property: this includes that which is owned separately by either of the spouses. Separate property is often treated as one that is owned by one entity and is not subject to division during divorce. In the absence of unusual circumstances, it is possible that the spouse who owns the separate property may be able to walk away from the marriage with the property intact.

When classifying separate properties, below are some of the properties that qualify to be called separate:

  • Property that was acquired before the parties became bonded in marriage. For example, if one of the parties owned a savings account that was opened and funded prior to marriage, such an account counts as separate property, same as a car or a home that was purchased and paid off before marriage.
  • Property that was inherited or received as a gift by one of the spouses also counts as separate property. This holds whether the gift or inheritance was made during or before marriage.
  • A business that was established prior to the marriage may be regarded as a separate property. However, if the other spouse had contributed to the business through skills, money, investment or other forms, the business property may be considered to have community value.
  • Pension proceeds accrued to either of the spouses.
  • Personal gifts given by the spouses.
  • Property income acquired after the separation date.

However, while the above listed are fairly universal with regards to determining separate property, there may be some exceptions. An example is that a personal gift may be recalled if one of the spouses can prove that such a gift was not intended to be a gift.

To ensure that confusion is avoided, it is important to document circumstances where valuable property like pieces of jewelry have been purchased as an investment, rather than as a personal accessory. This can go a long way in helping you make the point you wish to stress.


Sometimes during the marriage, either of the spouses may choose to keep their separate property under a joint account and this may create some sort of tension, especially when it comes to property sharing.

Commingling happens when separate property is mixed with community property. For example, a spouse may decide to deposit his or her inheritance into a joint account owned by the couple and this may cause a bit of a problem when the issue of property division arises.

Property division

When it comes to community property in divorce cases, both parties are due to an equal share of the property owned and acquired during the union. However, while in these states each party is due half of the property, the form in which these properties are divided may differ. For example, it may be impossible to split a home into two and in such cases, property division may involve the sale of the property and sharing of the proceeds. In other cases, one of the spouses may choose to purchase the property at half the cost thus settling the other party’s half of the home.

In cases of high conflict divorce, where both parties are unable to agree on a particular sharing formula, the judge will take a careful look at the marital estate, determine the overall worth of the estate and look for a way to ensure that both parties are balanced in terms of the sharing formula.

Judges and divorcing spouses may also become creative with the asset separation procedure by selling off the entire marital assets and dividing the proceeds into half for both parties.

Equitable Distribution States

If you live in a non-community property state, asset division follows a process that is known as equitable distribution. In states where equitable distribution is used, all marital assets are not necessarily divided 50/50. In such states as this, both parties will be awarded a fair percentage of the assets and debts as deemed fit by the court.

When such decisions are being made, the factors that commonly affect the overall decision to be made include:

  • The length of the marriage
  • The expenses and demands from dependents (children and pets)
  • The work history, earning capacities and job prospects of each of the spouses
  • The physical and mental state of each of the spouses
  • The source of the asset that is to be shared.

Depending on the type of property, state laws, and facts of the case, the exact method by which the property will be divided may be complicated.

Taking a Property Inventory as Part of a Divorce Proceeding

Whether you live in an equitable distribution state or a community property state, it is always a good idea to ensure that you have detailed documents regarding properties owned jointly and separately.

As soon as you initiate the divorce proceeding, it is recommended that you provide your attorney with a list of all assets and other legal documents that ascertain the ownership and individual contribution or value in such properties.

When making a submission, it is recommended that you should ensure that all property is listed including IRAs, pension and retirement accounts, stocks and bonds, money market accounts (MMAs), certificates of deposits (CDs), and any other contents of safety deposit boxes.

Most lawyers like Tiffany Fina Law have a property checklist to ensure that clients do not miss anything. For more information, visit

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