When dealing with assets during divorce, it is important to note that not every asset will go up for division.
At the same time, you might feel surprised to see what types of assets the law considers exempt or not exempt.
Equitable versus equal splits
The Business Professor discusses assets and their division in divorce. Assets typically end up divided in ways considered either equitable or equal, depending on the state in question. Equal divorces focus on equal 50/50 splits of assets. Equitable divorces generally focus on the collective worth and emotional worth of items and divide things in a way that feels even, despite not necessarily equaling out to a neat 50/50 split.
Thus, it is important to understand what categories assets get divided into. Two main categories exist: community and separate properties.
Separate vs. community properties
Separate properties tend to include things like inheritances, gifts given to you directly, and anything you may have owned before the marriage.
Community properties often include anything purchased with a joint bank account, items that you and your spouse bought together, and anything with both of your names on it even if only one person paid.
Community properties typically get divided in divorce situations, while separate properties tend to remain with the individual person they initially belonged to.
Do note, however, that some instances exist where a person’s separate properties might become community properties over time. As an example, if you put your own savings money into a joint account, it then becomes community property. This is crucial to keep in mind.