Dividing Assets And Debts During A Divorce

Divorce can be a complex and emotionally charged process, particularly when it comes to dividing assets and debts. Understanding the intricacies of asset and debt division can help ensure a fair and equitable settlement. Here’s a detailed look at how assets and debts are divided during a divorce and what you can expect throughout the process.

Understanding Community Property Vs. Equitable Distribution

The division of assets and debts during a divorce largely depends on the state in which you reside. States typically follow one of two legal doctrines: community property or equitable distribution.

Community Property States:

In community property states, assets and debts acquired during the marriage are considered jointly owned and are usually divided equally between the spouses. This includes income, real estate, vehicles, and debts accumulated from the date of marriage to the date of separation. Community property laws aim for a 50/50 split, regardless of who earned or incurred the assets and debts.

Equitable Distribution States:

Most states follow equitable distribution, which divides marital assets and debts in a manner deemed fair, though not necessarily equal. The court considers various factors such as the length of the marriage, each spouse’s financial situation, contributions to the marriage (including non-economic contributions like homemaking), and future needs. The goal is to reach a fair distribution based on the unique circumstances of each case.

Identifying Marital Vs. Separate Property

A critical step in dividing assets and debts is distinguishing between marital and separate property. Marital property includes all assets and debts acquired during the marriage, while separate property includes assets and debts owned by either spouse before the marriage, as well as gifts and inheritances received by one spouse individually.

Steps To Divide Assets And Debts

  1. Inventory All Assets and Debts:

The first step in the division process is to create a comprehensive list of all assets and debts. This includes bank accounts, retirement accounts, real estate, vehicles, credit card debts, and loans. Each item should be classified as either marital or separate property.

  1. Value the Assets:

Next, determine the current value of all marital assets. This may require appraisals for properties, vehicles, and valuable personal items. Retirement accounts and investment portfolios may also need professional valuation.

  1. Negotiate a Settlement:

In many cases, spouses can negotiate a division of assets and debts outside of court, often with the help of attorneys or mediators. This process involves discussing and agreeing on how to split marital property fairly. The aim is to reach a mutually acceptable settlement that reflects both parties’ contributions and future needs.

  1. Court Intervention:

If spouses cannot reach an agreement, the court will intervene and make the final decision. The judge will consider state laws and various factors to determine an equitable distribution of assets and debts. Court decisions can be unpredictable, which is why many prefer to settle these matters privately.

Considerations During The Division Process

Retirement Accounts:

Retirement accounts can be particularly complex to divide. Depending on the type of account, a Qualified Domestic Relations Order (QDRO) may be required to split the assets without tax penalties.

Real Estate:

For the marital home, options include selling the property and splitting the proceeds or one spouse buying out the other’s interest. Deciding what to do with the marital home can be emotionally challenging, especially if children are involved.


Debts are divided similarly to assets. It’s crucial to address all debts to avoid future financial disputes. Even if one spouse is assigned a debt, both parties may remain legally responsible to creditors if the debt was jointly incurred.

A divorce lawyer from a firm like Hurst, Robin & Kay, LLC can be of assistance.