Distribution Systems Applied Courts When Dividing Properties, Assets and Debts

There are times when the only remaining way to get out of a trouble-filled marriage is through divorce. Divorce, no doubt, is a painful process, especially if the process through which all issues related to it are settled in the courtroom (this refers to contested divorce, which is also known as traditional courtroom divorce), where spouses, through their respective attorneys, discredit one another, bring to the open each other’s weaknesses and wrongdoings, and recite before an audience made up of strangers, all their assets, properties and debts. The final decision regarding the issues that need to be settled, however, will not be made by them, but by a judge presiding over their case. The issues that may need settlement are child custody, child support, visitation rights, spousal support or alimony, and division of properties, assets and debts. The more issues there are that need to be settled, the longer the divorce case goes and, the longer the divorce case drags, the more expensive things become due to court fees, attorneys’ fees, and fees paid to experts, like accountants and property evaluators.

Besides child custody and alimony, another issue that is often hotly argued about in a divorce case is division of properties,assets and debts.

Dividing properties, assets and debts can be a source of too much stress for divorcing couples. But while some individuals think that everything can be divided, the law says otherwise, meaning, not everything may be up for division. This is because only marital assets and properties can be divided; thus, before a judge can decide “who gets what,” he or she will first need to identify which assets and properties are considered marital and which are not.

Personal or non-marital assets and properties include: all properties mentioned in a pre-marital or prenuptial agreement; inheritance or gift to a spouse at the time of marriage; profits earned by a spouse from properties which he or she already owned before the marriage; and, properties bought by a spouse using the money that he or she earned before marriage.

In dividing properties and assets, the courts may apply equitable distribution or community property. Community property distribution is based on equality. Under this system, all the properties and assets earned and acquired during marriage, even if only one of the spouses worked, will be distributed equally since the spouses are considered equal owners of. This is also applied to debts, thus, rendering both spouses equally liable for unpaid balances on all debts, such as car loan, home mortgage, credit cards, and so forth.

Equitable distribution, on the other hand, divides all marital properties and assets between spouses in a fair and reasonable manner. It is the court which determines what will constitute fair and reasonable distribution: it can be a 50/50 division or one spouse may be awarded a greater percentage of the marital properties and assets. To determine what is fair and reasonable, the court considers the following factors:

  • The age and health condition of each spouse
  • The earning potential and financial condition of each spouse
  • The properties and assets mentioned in a premarital or prenuptial agreement
  • The amount of the properties if liquidated
  • Future liabilities and financial needs of each spouse
  • The degree of contribution made by each spouse in the acquisition of all marital properties
  • The value of of each spouse’s personal property, like business, retirement plans, stocks, bonds, 401(k) plans, financial incentives
  • Amount of child support paid and alimony obligations.

It is legally allowed for divorcing couples to negotiate a property settlement by themselves; however, as mentioned in the website of The Maynard Law Firm, PLLC, failure to reach an agreement will require a court to make the decisions for them. Wisconsin, Washington, Texas, New Mexico, Nevada, Louisiana, Idaho, California and Arizona are the states where the community property distribution system is observed; all other states observe the equitable distribution system. In whatever state a couple may be living in, when it comes to division of property, assets and debts, it is always advisable to settle or go to court assisted by a skilled attorney.

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