In a divorce case, the court divides all property owned by spouses into two categories according to its state law: 1) marital property owned between spouses, and 2) separate property of each spouse.
Marital property
Marital property is all property acquired by spouses during their marriage, no matter whose name is on the title of the property. However, in most states, if the property acquired before the marriage by one spouse has risen in value due to the efforts of the other or both spouses, the actively appreciated value of the property is considered marital property. Future expectancies or even contingent expectancies of it created during the marriage are also deemed to be marital property, even if the payment is received after the marriage ends. (e.g., copyrights, payment for books written during the marriage but published after divorce.)
Generally, once the spouses are separated permanently, property acquired is no longer marital property. However, in some states only a final divorce court decision can end it.
Separate property
Separate property is the property spouses acquired before the marriage. It is the individual property that courts have no authority to distribute during the dissolution of a marriage. Under the Consolidated laws of New York § 236, separate property not only includes property acquired before marriage but also property acquired by bequest, devise, descent, or gift during the marriage. Property that spouses agree to exclude from marital property by signing a prenuptial or a postnuptial agreement will be separate property. The passive increasing value of the above property is also considered separate property, as such appreciation is not caused by the time or efforts of either spouse. Professional degrees or licenses are deemed separate property, but most states will require reimbursement for any support provided by the other spouse contributed to the education or licensing. The minority of states consider a degree as marital property and divide the value of it based on that spouse’s estimated potential future earnings.
Division of property
Equitable distribution
The equitable distribution of marital property approach is used by the majority of states, which divides all marital property equitably or fairly between spouses.
A court will put all marital property together then fairly allocate that property between spouses, even if that may not be equal.
In distributing marital property, the court will look at a list of factors such as the duration of the marriage, the value of the marital property, spouse’s contribution to the property, spouse’s income or earning capacities, age of the spouses, and so on. See N.Y. Dom. Rel. L. § 236. In addition, the services provided by one spouse who stayed home or put a career on hold will be considered to reach an equitable division. Some states will distribute property equally between the primary breadwinner and primary homemaker.
Generally, the marital fault (e.g., adultery) of either party is irrelevant to the allocation of marital property. However, economic misconduct (e.g., dissipation of assets) will be considered when dividing property.
Community property
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin apply the community property approach. Alaska allows spouses to choose to use which approach. In these states, both parties are assumed to equally share all community property acquired during the marriage. Thus, before division, the court should decide which property is community property. Then, community property will be allocated equally between spouses.
At the death of one spouse, the other will get half the community property of the decedent, and only half left is subject to disposition or devise.
Whichever approach is applied, in most jurisdictions, separate property cannot be divided by courts.
Modification
A property division award cannot be modified unless exceptional circumstances exist (i.e., fraud or duress). A property distribution award, including the valuation of assets, is evaluated at the time of divorce, and a court is unlikely to reconsider that evaluation.
[Last updated in March of 2022 by the Wex Definitions Team]