Ever heard the saying, "She/he gets half in the divorce?" Well, that's kinda only true in nine states (these are known as "Community Property" states). The rest of the country goes by a framework known as "Equitable Distribution," which is the division of assets in an equitable way that is not necessarily equal. Here is a breakdown of the two property division frameworks the US utilizes to divide up property in a divorce:

• Community Property (9 states): Assumes assets acquired during the marriage are owned equally by both spouses. The division is a 50/50 split (with a few exceptions).
• Equitable Distribution (41 states): The court divides assets fairly but not always equally. Factors like earning capacity, contributions to the marriage, and individual circumstances are considered, but each state has its own list of what to consider.

This article will discuss how your state's laws dramatically impact how your property is divided in a divorce. With a prenup, you can override your default state laws.

Community property: Understanding the 50/50 rule

The community property rule exists in nine states, and the general framework is that all assets accumulated during marriage are split 50/50, regardless of who contributed what. Let's dive a little deeper into the community property legal concept:

• Which States are Community Property states? Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin follow community property laws.
• The Core Principle: Assets acquired during marriage are split 50/50 upon divorce. This applies regardless of who earned the income to purchase these assets. There are a few exceptions to the 50/50 rule, which vary by state.
• Separate vs. Community Property:
  • Separate: In Community Property states, generally, property owned before marriage is considered "Separate Property" and typically not subject to division.
  • Community: In Community Property states generally, any property acquired during the marriage is subject to the 50/50 split.
• Example: If you already owned a boat before the marriage and then purchased a home during the marriage– which one is separate and which one is community? The boat is generally considered separate property (bought before the marriage), while the house is generally considered community property (bought during the marriage). This means that the house is subject to the 50/50 split, but the boat is not.
• Important Note: Exceptions to the 50/50 rule exist and vary by state. Always seek legal advice about your specific situation.

Equitable distribution: It's about fairness, not just a 50/50 split

Equitable distribution is exactly what it sounds like: distributing assets equitably, not necessarily 50/50. This is the framework that most U.S. states utilize when dividing up property in a divorce. Here's a quick run down of everything you need to know about equitable distribution:

• Which states are Equitable Distribution states?: Alaska, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia, and Wyoming.
• The Core Principle: This framework focuses on what is fair under the circumstances, not always a strict 50/50 split. This could mean a 60/40 division, 70/30, and even 50/50, depending on the situation. A judge takes into consideration the factors laid out by state law, giving a level of judicial discretion to determine how assets should be split.
• Factors Matter: Courts consider specific factors outlined by state law when deciding how to divide assets. These factors might include:
  • Length of marriage
  • Each spouse's contributions to the household
  • Age and health of each spouse
  • Earning potential.
• Example: If a couple in New York (i.e., an equitable distribution state) divorces after a long marriage (20+ years) in which one spouse was the primary breadwinner and the other stayed home to raise children, the court may award a larger share of the assets to the stay-at-home spouse to help them get back on their feet and maintain the ability to support themselves until they are able to find a job (if that is a possibility for them).

Examples of different property division outcomes

Below are two examples of Equitable Distribution divorce scenarios (they are typically more nuanced and complicated) and one example of a Community Property divorce scenario.

Equitable distribution divorce* Scenario 1:

Let's walk through an example of how a state with Equitable Distribution laws might settle a divorce. Let's say there is a house, car, and bank account. Based on the circumstances, the court decides to split everything 50/50 because they both worked, had similar incomes, and equally contributed to all of the assets. Just because it's equitable distribution and doesn't mandate a 50/50 split by law doesn't mean that an equal division isn't awarded.

Property (purchased during the marriage)

Wife

Husband

House Split 50/50 Split 50/50 Car Split 50/50 Split 50/50 Bank account Split 50/50 Split 50/50 *Outcomes can be extremely variable depending on your state and your circumstances.

Equitable distribution divorce* Scenario 2:

As another example, let's walk through what another divorce might look like in an Equitable Distribution state. Let's say there is a house, 2 cars, and a bank account. Based on the factors at hand, the court might decide to award:

• Each person keeps their respective cars,
• 70% of the bank account goes to the wife,
• 30% of the bank account goes to the husband, and
• The house goes to the wife. However, the wife has to buy out the husband's 50% portion of the home.

The court decides this based on the circumstances--perhaps the wife contributed more to the bank account, so that is why she was awarded more. Or maybe she was a stay-at-home mom who needed a bit more money to get back on her feet. It all depends!

Property (purchased before or during the marriage)

Wife buys out husband

Wife gets

Husband gets

House Yes N/A N/A 2 Cars No Her car His car Bank account No 70% 30% *Outcomes can be extremely variable depending on your state and your circumstances.

Community property* divorce example

Community Property states are much more straightforward. Let's say there was a house, car, and bank account--all of which were accumulated DURING the marriage. In most situations, these assets will be divided 50/50. There are exceptions based on different state laws, but this is the blanket rule.

Property (purchased during the marriage)

Wife

Husband

House Split 50/50 Split 50/50 Car Split 50/50 Split 50/50 Bank account Split 50/50 Split 50/50 *Outcomes can be extremely variable depending on your state laws and your circumstances.

Community Property vs. Equitable Distribution: Pros and cons

Let's dive a little deeper into the difference between equitable distribution and community property laws and some pros and cons to boot:

• Community Property: Focuses on equal division. Assets acquired during marriage are typically split 50/50, regardless of individual contributions. Misconceptions about Community property states include
• Equitable Distribution: Focuses on fairness. Courts strive for a just division considering various factors like earning potential, length of marriage, and individual circumstances.

Framework

Pros

Cons

Equitable Distribution

More flexible, considers individual circumstances Can be complex, less predictable, and have more potential for disputes

Community Property

Simpler, more predictable outcome Can result in unfair outcomes in some cases

How a prenup can help

Now, if any of the above information concerns you, never fear-- a prenup can help. But how does a prenup play into these two legal frameworks (community property and equitable distribution)?

• A Prenup Overrides State Laws: A valid prenuptial agreement allows you to customize how assets are divided, replacing the default laws of your state (i.e., the community property (50/50) or equitable distribution rules).
• A Tailored Solution: Whether you want a 60/40 split or a different arrangement, a prenup offers flexibility in planning for the future.
• Creates Predictability: Leaving your assets up to your state laws leaves so much room for unpredictability. With a prenup, you can have peace of mind knowing exactly what will happen to your stuff in the worst-case scenarios.

The bottom line on community property and equitable distribution

Community property and equitable distribution are the two ways that states split up property in a divorce. They are very separate and distinct legal frameworks that should be understood before getting married, during a divorce, and when considering a prenup, as it will have a great impact on your life! Luckily, prenups can override these laws and make sure your assets are divided in a way that you and your partner feel comfortable with!

Frequently Asked Questions (FAQs) about community property and equitable distribution states

Still confused? We get it; these concepts can be dense and hard to wrap your head around (people go to law school for a reason, right?!) We've gathered some of your most commonly asked questions below. Q: Is my state community property or equitable distribution? A: Below are all of the property division laws by state: Community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Equitable distribution states: Alabama, Alaska, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia, and Wyoming. Q: Is community property always divided 50/50 in a divorce?A: Most of the time, but not always. There may be certain exceptions in your community property state that alter this rule. Q: Do prenuptial agreements override community property laws?A: Yes, they can override certain aspects of community property principles as long as it's a valid and enforceable agreement. Q: How does the length of a marriage affect equitable distribution?A: The longer the marriage, the more likely that a judge will see all of your property as joint property, even if it was purchased before the marriage, kept completely separate, etc. The court may see a longer marriage as blurring the lines of "this is mine, and that's yours" because you've been a "team" for so long. Q: What do spousal contributions mean? A: In the context of an equitable distribution divorce, a court may take into consideration the contributions of each spouse to the marriage. This may be raising the children, taking care of the home, supporting the other spouse while they obtain a degree, financial support, etc. Q: Can separate property become community property?A: Yes, through things like commingling and transmutation. In a few words, commingling is the mixing of funds to the point of no return (i.e., mixing your separate property funds with community property funds to the point that they can't be separated out). Transmutation is the act of changing the character of property through things like a contract, title change, etc. Q: Can I opt out of community property laws?A: With a prenup, you can override the general 50/50 split rule in community property states.