How Is Property Divided in Divorce? Equitable Division vs. Community Property

If you and your spouse can't agree on how to divide property and debts during divorce, a judge will divide them under your state's laws. Most states follow equitable distribution rules, while nine states use a community property system. The key difference is how they split things up. Equitable distribution means a judge divides property fairly based on different factors. Community property traditionally means everything gets split equally at 50/50.

What Is Equitable Distribution?

Most U.S. states use a system called equitable distribution. In these states, judges divide a couple's property and earnings fairly when they get divorced. But fair doesn't always mean equal.

Judges look at several things when deciding how to divide property. They consider how long the couple has been married and each person's financial situation. They look at how much money each person makes and has the potential to make in the future. They also think about what each person contributed during the marriage, including childcare and supporting their spouse's career. Depending on the state, a judge may also consider whether one spouse wasted or misused marital assets. And, in certain states, if dividing only marital property wouldn't produce a fair result, a judge has the power to award one spouse a portion of the other's separate property.

Dividing property doesn't mean literally cutting everything in half. Instead, the court gives each person a percentage of the total value. For example, one person might get the house while the other gets retirement accounts and a car. Each person receives property, assets, and debts that add up to their assigned percentage. The goal is that the total value each person gets is fair.

What Is Community Property?

Nine states use community property rules: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, all of a married couple's property is classified as either community property or separate property. Community property belongs to both spouses jointly, no matter whose name is on the title. Separate property belongs to just one spouse.

Community property includes all income and assets that either spouse acquires during the marriage, including paychecks, houses, cars, bank accounts, or retirement savings. Separate property is anything one spouse owned before getting married. It also includes property acquired after the couple separates or divorces, depending on the state. Gifts and inheritances are also separate property, even if you receive them during the marriage. Keep in mind that each state has some exceptions to these rules, and property that starts out as separate can lose that status during the marriage through commingling.

Traditionally, community property states split everything equally at 50/50 in divorce. Some states still follow this strict rule. But other community property states, like Washington and Texas, allow judges to divide property and debts in a just and equitable way, which doesn't always mean a 50/50 split.

Dividing Debts

The same rules that apply to assets also apply to debts. In equitable distribution states, marital debts are divided fairly between the spouses. In community property states, marital debts are generally split 50/50.

When Spouses Hide Assets

It's illegal to hide assets from your spouse during a divorce. Both spouses must disclose everything they own. If you try to hide assets and your spouse finds out, you could face serious consequences. A judge can punish you with sanctions (fines), order you to pay your spouse's attorneys' fees, or, in some states, award your spouse a larger share of the hidden asset as punishment.

Division of Marital Property Laws by State