Asset division is one of the most complicated aspects of divorce. It becomes even more complex when you have many assets or your marriage lasted an extended period of time.
According to Kiplinger, determining the difference between marital and separate property is a major component of the asset division process. Here are the guidelines on dividing assets and how to navigate more complicated situations.
Marital property is all assets that came into possession during the course of the marriage. This includes homes, salaries, investments, retirement savings, vehicles, businesses, and any other assets. The court splits marital assets equitably, which does not always mean in equal portions. Instead, the court looks at things like the length of the marriage and each spouse’s individual income to determine how to split shared assets.
Any property owned or acquired prior to the marriage falls into the category of separate property. This property is solely owned by each individual spouse and is their property once the marriage ends. Along with earnings, inheritances, prizes, and employments bonuses are also separate property.
Other factors to consider
Most married couples entangle their finances quite a bit during the course of their marriages. As a result, assets that are actually separate can get included within the category of marital property. As an example, if your spouse owned a home prior to your marriage, but you used your own income or assets to pay for improvements to the property, you may have a stake in the value of the home, regardless of ownership.
Bank and investment accounts that were once solely owned but now contain funds from both spouses can also fall into the category of marital property. Additionally, couples with marriages lasting decades tend to have a more confusing asset division process ahead of them.