Splitting Property in Divorce

 Getting a divorce requires both parties to make a number of decisions that have the potential to create a profound impact on their futures: one big decision focuses on how to divide property.

According to the American Bar Association, “most property that is acquired during the marriage is marital property.” Therefore marital property, also sometimes referred to as community property, can entail the home, an established business and the wages of each spouse. Along with the term marital property, the ABA defines “separate property.” This term refers to the property owned by each spouse prior to his or her marriage. Separate property is not marital property.   

“Some people are unaware of what property is subject to distribution,” said New Jersey-based family law attorney Mark Guralnick. “It’s not just the house, the cars, the furniture, and the pots and pans. Pensions, 401Ks and other retirement assets are also up for grabs in a divorce.''

“When a person is planning on getting divorced, he should quietly make an inventory of all property. Write it down, take photographs, photocopy bank records and credit card statements. Keep a detailed record of everything there is,” Guralnick said. “Once a divorce begins, property tends to disappear.” 



COMMUNITY VERSUS EQUITABLE

Each state has law governing the division of marital property, Guralnick said They are usually based on what's called community property or equitable distribution laws. Gurlanick, who also authored “The Portable New Jersey Equitable Distribution Handbook,” said certain states such as Louisiana, Texas, New Mexico, Arizona, Nevada, California, Washington and Idaho are community property states.
 
“A community property state sees all property as being owned in common by husband and wife, with each of them having an undivided one-half interest in the property,” Guralnick said. “This right is far-reaching and applies to all kinds of property. For example, a California wife would have a one-half ownership interest in the earnings of her husband.”

Equitable distribution states are heavily located on the East Coast and sprinkled through the rest of the country. According to Guralnick, these states “sees all property owned or acquired by the parties during their marriage as being subject to a fair and equitable division at the time of the divorce.” Furthermore, Guralnick said it doesn’t matter which spouse has the title to the property. Distribution is also not necessarily equal, but instead equitable.
 
Finally, Guralnick adds there is a third option -- called a “title” state -- in which the state law awards marital property to whomever holds the title of that property. “Title states see property distribution as being based on who has legal title. If husband and wife occupy a house that husband bought before the marriage, and assuming that house remained in husband’s name throughout the marriage, a title state would award the house to the husband,” Gulanick said.

Because states vary in terms of law, Gurlanick said it is important for individuals preparing for a divorce to determine which law applies in his or her state.


TYPES OF PROPERTY

Beyond the house and money in the bank, there are other types of property the the court can examine when dividing the marital assets.  Pets, for instance, are considered property -- like the dishes or the TV set. "There's technically no such thing as custody of a pet," said Guralnick.

Royalties, trademarks, patents, license rights and other intangibles are also subject to distribution, according to Guralnick.

And if the couple has a business partnership, goodwill -- the name or reputation of a business and the ability to produce or market it --  is also subject to distribution in a divorce. “Property gets complicated when there is a business involved,” said Dr. Lynne Halem, of the Centre for Mediation & Dispute Resolution Online in Massachusetts.

So can the process of dividing that property.