Asset division is one of the most stressful parts of the divorce process for a large number of couples. Many simply do not know what to expect, either.
A good place to start is understanding community versus separate property, which will play a big role in asset division.
Defining community and separate property
The Business Professor discusses community and separate properties in divorce. What are they? These are the two categories that all assets divide into during the divorce process.
Community property includes all of the assets jointly owned by both members of the marriage. This can include cars and houses, land parcels, expensive electronics and more. Typically, anything purchased with a joint account, purchased with funds from both parties or owned under the names of both parties counts as community property.
On the other hand, separate property includes the assets owned by each person individually. This typically includes the assets owned by the person before their marriage, any inheritance they received, and any gifts given to them directly during the course of the marriage.
Keeping separate property separate
It is important to note that separate property is not always considered separate, though. For example, say a person has $10,000 in their individual bank account before marriage. They then deposit that money into a joint account with their spouse after marriage. Despite the fact that they owned this $10,000 before the marriage, it being part of a joint account makes it community property.
Understanding this nuance is crucially important, especially for those who want to keep their individual assets safe.