Equitable Distribution vs. Community Property: Divorce Division Insights

Equitable Distribution

Divorce? Your property division is about to get complicated!

The best way to summarize your upcoming divorce is this:

When most couples go from “married” to “single,” their divorce paperwork creates more property division questions than they ever imagined.

How exactly is everything from the house to the stock options divided? Will your retirement savings really be cut in half? (Spoiler: Sometimes, yes).

Many people falsely assume that “community property” states automatically split everything 50/50. That’s only partly true. The other 41 states use equitable distribution. Courts will split your belongings, but not always in half.

That’s just one important distinction in one of the two main systems used by the 50 states to do the math on your property division. Understanding which system your state uses – and why it matters – will help you prepare, protect your assets, and avoid divorce division surprises.

Ready to make sure you’ve got it covered? Keep reading to get all the lowdown on community property and equitable distribution before it’s too late.

What you’ll learn:

  • Property Division: Why Your State’s Lawsuits Control Everything
  • Community Property: The “50/50 Split” States
  • Equitable Distribution: The “Fair” Division System
  • How To Protect Yourself Right Now

Property Division: Why Your State’s Lawsuits Control Everything

Want to hear something that will really blow your mind?

41 states use equitable distribution, while only 9 states practice community property. That’s the system that splits things 50/50.

And that’s just the beginning.

The differences between these systems can significantly affect how much you walk away after divorce. But most people don’t realize that until they’re knee-deep in the process. (Hint: If you’re reading this, it’s not too late!)

See, according to some recent stats, 70% of divorce cases include at least one big decision regarding the house alone. That doesn’t include bank accounts, retirement funds, stocks, and even business assets.

When you’re staring down property division, it’s crucial to hire an experienced divorce lawyer in Boise, ID that knows the ins and outs of your state’s laws. Get the wrong end of the stick, and you could see your settlement suffer in the end.

Community Property: The “50/50 Split” States

Community property is fairly simple…

These 9 states automatically divide everything you got while married into two equal parts. Literally.

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Here are the states that follow this community property system:

  • Wisconsin
  • Arizona
  • New Mexico
  • California
  • Idaho
  • Nevada
  • Louisiana
  • Washington
  • Texas

If you purchased a house, car, or opened a savings account while married, it’s community property, which means when you divorce, it’s divided 50/50 between you and your spouse.

But wait – it’s not always that cut-and-dry…

For one, some community property states allow the judge to consider factors like:

  • Fault in the marriage breakdown
  • Each spouse’s economic circumstances
  • Future earning capacity

And, Washington is the real curveball here: It actually permits judges to include separate property in the property division if it will result in a more fair outcome.

That’s a big loophole for a “50/50” system if you ask me.

So, What Qualifies As “Separate Property”?

Good question, see, not everything is 50/50. Separate property usually includes:

  • Things you had before getting married
  • Gifts received by one spouse only
  • Money or property left to you by relatives (including while you were married)
  • Items you got after officially separating from your spouse

The important part is, the assets have to be kept completely separate. Co-mingle separate property with marital funds, and it may become community property, too.

Equitable Distribution: The “Fair” Division System

And then there are the other 41 states that follow equitable distribution…

The big difference here is, instead of a hard 50/50 split, judges have leeway to divide the assets in a way they see as “fair.” And it’s not always equal.

See, here’s the thing:

Judges in equitable distribution states consider a whole host of factors. Here’s just some of them:

  • Length of the marriage
  • How much money each person makes and could make in the future.
  • How old each person is and their physical condition
  • What each person gave to the relationship (money and other ways of helping)
  • The lifestyle you both lived during your time together
  • Tax consequences of division

And here’s the kicker…

A stay-at-home parent that gave up their career could get MORE than 50% of the assets. And if one spouse wasted marital funds, they could get a smaller share.

The goal is fair, not mathematically equal.

For example, consider a 20-year marriage where one spouse built a business, and the other stayed home with kids. Community property states automatically divide business worth equally between both people, period.

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But in an equitable distribution state, the court could award the stay-at-home spouse 60% or more, considering their non-financial contributions and challenges in future earning capacity.

Which system is best for you?

Well, that depends on your situation.

Community property is more predictable, but doesn’t allow for much nuance. Equitable distribution provides more flexibility, but can be more uncertain and contentious.

The important takeaway is, understanding which system your state uses allows you to plan. When your state splits everything equally, try your best to find and keep safe anything that’s only yours. If you’re in an equitable distribution state, gather evidence of each spouse’s contributions and future needs.

How To Protect Yourself Right Now

These are ways to safeguard your belongings no matter where you live

  • Keep records of all separate property, contributions to joint assets, and any asset waste by your spouse.
  • Get professional valuations on significant assets like the house, business, and investments. Don’t guess at values.
  • Try mediation first. 95% of divorce cases settle, and mediation is cheaper and more private than going to trial.

But what’s really important is, know your state’s specific rules on property division. Some community property states have moved towards a more equitable approach, and some equitable distribution states start from a presumption of equal division.

Getting The Division Right

Mistakes in property division can come back to haunt you for decades…

The house you get to keep might become an albatross around your neck. Your retirement account division could cost you hundreds of thousands. The business valuation may be way off.

That’s why getting expert legal help isn’t just optional, it’s essential.

With 43% of first marriages ending in divorce, understanding property division is more important than ever before.

Last Words

Knowing if your state splits things equally or fairly helps you prepare properly for divorce court.

The bad news is, even within each system, individual circumstances matter a lot. The length of the marriage, your contributions, your future needs, they all influence the outcome.

The bottom line?

Knowledge is power in divorce. Knowing your state’s property division system and what it means gives you an advantage that can help you protect your financial future.