Property division is one of the most complicated aspects of getting a divorce, and can be emotionally charged if you and your spouse own a significant amount of assets, such as retirement and pension plans, homes and rental properties. Even if you and your spouse are simple, it could still be a challenge to determine who should get what.
If you’re considering a divorce, you should know that, unless you’ve signed a prenuptial agreement, she will get half of everything – and that includes your retirement account.
Marital vs Separate Property
While the details vary from state to state, separate property generally includes:
- Any inheritance you or your spouse received before or after the marriage.
- Any property that you or your spouse own before the marriage.
- Gifts from third parties.
- Payments from the “pain and suffering” portion of a personal injury award.
But here’s the thing about separate property: it can lose its “separate” status if you do not keep it separate from your marital property. For instance, if you decide to re-title your condo, which was separately owned before your marriage, and decide to make your wife your cosigner, that condo becomes marital property. If you decide to deposit your inheritance into your joint bank account, that money will not be considered marital property.
In short, if you want to keep your separate property separate, do not commingle it with your marital property.
All property that’s acquired during marriage is typically considered marital property no matter which spouse owns it or how it is titled. Many people are unaware of this. Even your 401K and retirement saving are considered marital property, and your wife may be awarded half of it in the divorce.
Marital property includes all assets and income acquired during the marriage, and will include: IRAs, 401(k)s, pension plans, stock options, deferred compensation, bonuses, annuities, life insurance, bank accounts, real estate, tax refunds, art, cars, businesses – you name it, it’s likely considered marital property if it was acquired during the marriage.
Equitable Distribution and Community Property States
Before filing for divorce, it’s important to understand whether you live in a community property state or an equitable distribution state. Altogether, there are nine states that are considered community property, including: Texas, Arizona, Idaho, California, Louisiana, New Mexico, Nevada, Wisconsin and Washington. In these states, both spouses are considered equal owners of all marital property. In other words, these states impose a 50-50 split rule.
The remaining states are considered equitable distribution states. In these states, settlements do not need to be equal, but rather equitable and fair. Several factors are taken into consideration when determining what’s fair, including:
- The property or income brought into the marriage
- The length of the marriage
- The age of each spouse and his or her emotional and physical health
- Each spouse’s financial situation once the divorce is finalized
- Each spouse’s income and earning potential
- The contribution each spouse made to the others for training, education or earning power
Courts may also consider any other factors that they feel are relevant. This can make it difficult or impossible to predict the outcome of divorce in the states.
Regardless of which state you live in, it’s important to remember going into the divorce that she will likely get half of everything, including your retirement accounts.
The Micklin Law Group, LLC is a New Jersey law firm focusing on family law. Attorney Brad Micklin was recently named to The National Advocates list of Top 100 attorneys from each state. To set up a consultation, call 973-562-0100.