(US family law) One of the first things a couple in the process of divorce will need to know is if the state you live in is a community property state or an equitable distribution state. A community property state allows for all of the property acquired during the marriage to be, loosely speaking, divided in half. An equitable distribution state differs in that it aims to provide a fair and balanced approach based on many different facts about the marriage and both parties.
Not mandating equal split of the assets, but rather an informed and possibly unequal distribution can be the best way to decide these issues in some cases, which is why some most states practice equitable distribution instead of community property. Your divorce attorney should help you understand how the law works in your area, whether you live in a community property or equitable distribution state.
Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska allows couples to opt in for community property, and Puerto Rico is also considered community property jurisdiction. For couples who get married in a Community Property State, whatever they earn or acquire during the marriage is co-owned equally by both husband and wife, and will therefore be split up equally in the event that the marriage dissolves.
The only exemption to this equal split is property inherited by one party, which would stay with that party completely in the event of a divorce.
The principle behind community property states lies in the collective family unit.
While two people are married, the fruit of their labors should go toward bettering the family unit, a community pool that exists for this very reason. In this sense, the community property states do have a valid argument. Let’s examine the typical scenario that some people might think of in the event of marriage dissolution.
Consider Bob and Sally
Imagine a husband Bob with a high paying job; he is the primary financial provider. Imagine the wife Sally also has a good job, but she only works part time due to the care she provides their one year old son Bobby Jr. Sally not only spends quality time taking care of Jr., she also cooks, cleans and acts as a sort of assistant to the ever forgetful Bob. If, over the course of the marriage, Bob manages to pay off his mortgage and save some money for a total asset value one million dollars. Suppose Sally was only able to contribute 30,000 to savings over the years. What little money she made she spent on clothes and entertainment, but it didn’t matter much to the family at the time because Bob was making more than enough for the both of them. Bob really appreciated the “feminine touch” Sally brought to the house, the home cooked meals and that Bobby Jr. didn’t have to spend most of his time daycare being raised by some stranger.
Many people argue that because Bob and Sally were working as a team for the good of their family, Bob would not have been able to be where he is today without Sally’s many contributions to the family, and there is just no way to put a price tag on that. With that mindset, it should make sense to just split everything in half right? Since Bob’s and Sally’s assets equal one million dollars plus the 30,000, they both should receive $515,000. This is what would most likely occur in a community property state.
This can also be seen as very unreasonable, it really can’t be that hard to figure out that “price tag” to put on Sally’s contributions.
Equitable distribution is all about finding a more balanced division of assets based on many factors. Many things enter into the equation such as how long the marriage lasted, what the established standard of living was, and the value of childcare and homemaking that each party contributed. Even whether one party invested in the other’s education or training, and the age, health, income or future earning capacity of both parties should be considered when trying to divide property. The goal here is not to split assets and debts directly down the middle and have Bob and Sally go their separate ways, the goal is to figure out what is most unbiased and fair distribution of property considering the circumstances.
Florida, for example, is an equitable distribution state so the outcome of the divorce might be somewhat different than both receiving $515,000. The court will start at that number (equal halves) and then perfect it based on the many factors stated above. Perhaps Sally would receive a little less, but it will be her equitable share. Sally may get the home to raise Bobby Jr. in until he grows up since she has put so much effort into making the house a home, and being there for Bobby Jr. as he grows.
Florida is also a “no fault” state, meaning that the division of property is not affected by the fact that either party has been unfaithful. It would be a mistake for Sally to assume that Bob’s affair would get her more property than him in the divorce proceedings. A divorce attorney should be contacted should you have any queries.
There are a lot of factors to consider in the division of property, but ultimately each equitable distribution case will be different.