Asset division is one of the most difficult parts of divorce for many couples. To that end, how do assets even end up divided?
They often fall into two categories: community and separate property. But what are these categories, and what do they mean for a divorcing couple?
Defining properties
The Business Professor discusses property and asset division in divorce. This is the process by which all shared assets end up divided equitably or equally between both members of a marriage.
Community property include all shared assets, which will serve as the main subject of the asset division. This often includes things like homes, cars, anything bought with money from a joint bank account, and anything with both of the couple’s names on it.
Separate property, on the other hand, revolves around property unique to an individual. This usually includes inheritance, gifts given directly to one person, and anything that a person owned before the start of the marriage.
Looking at property changes
In some cases, separate property might become community property over the course of the marriage. For example, say a person inherited a sum of money. If they put that money into a jointly owned bank account, then it becomes community property.
This is why it is important for couples to understand how assets work well before the possibility of divorce crosses the horizon. Having this understanding can allow a couple to keep their assets organized and separated in whatever way works best for them. This also makes things easier in the event of a divorce.
