Types of Property in Divorce
One of the most significant and often contentious factors in divorce is the division of property – splitting items (and debt) between the two of you before you part ways. But if you understand the different types of property there are, you get clarity and may have an easier time with this daunting task.
Why different types of property matter in divorce
Before you get divorced, you will need to create a property settlement with your spouse. How you divide property in a divorce depends largely on the state laws where you live. These laws can be categorized broadly into two types: equitable distribution laws and community property laws.
Equitable distribution states
If you live in an equitable distribution state, the assets and earnings accumulated during your marriage will be divided equitably but not necessarily equally.
In an equitable division, a 50/50 split is not guaranteed. The court will look at factors such as how long you were together, each person’s age and health status, and your standard of living before approving – or mandating – a property split.
Community property states
If you live in a community property state, it’s a little different. In your state, all assets and debts acquired during your marriage belong equally to both of you. It doesn’t matter who earned or paid for them. Property and debt are split 50/50 in a divorce.
What is marital property?
You will undoubtedly see the term “marital property” as you prepare for divorce. Marital property refers to all assets and debts you acquired during your marriage. This could include a piece of property such as your family home, vehicles, cash, savings accounts, retirement accounts., and businesses. It also includes debts like mortgages, car loans, and credit card balances.
In some states, the increase in value of separate property during a marriage may also be considered marital property.
It's important to note that marital property is not the same as community property. While all community property is marital property, not all marital property is community property. Community property is a specific type of marital property that exists in community property states, where all property acquired during the marriage is considered equally owned by both spouses.
Not sure how to divide the benefits included in your retirement plan? Read about qualified domestic relations orders, or QDROs, here.
What is sole property?
Sole property – also known as separate property, personal property, and non-marital property – refers to any asset and debt belonging to one spouse alone.
This typically includes things that were owned by either spouse before the marriage, gifts received by one spouse alone, inheritances, and personal injury awards.
The status of sole property is usually determined at the time of acquisition. For example, if a spouse owned a house before getting married, it would generally remain their sole property after marriage, unless the house is used as the marital home or a regular vacation home. What’s more, if the other spouse contributed significantly to the upkeep or improvement of the property, it could potentially be considered marital property.
Commingled property
In some states, separate property becomes marital property if it's commingled with marital assets. For example, if one spouse inherits money and then deposits it into a joint bank account, it may lose its status as separate property and become marital property.
Therefore, if you want to maintain the status of your separate property, it's important not to combine it with marital assets.
Who gets the house? Read our article, Common Questions about Divorce and the Marital Home.
What if we can’t agree on who gets our property?
If you and your spouse cannot agree on the division of property during a divorce, there are several options available. You could hire attorneys to negotiate on your behalf. Or, you could take the matter to court where a judge will make the decision for you. Both these options can be time-consuming, emotionally draining, and expensive.
There's another option that is often more amicable and cost-effective: mediation.
In mediation, a neutral third party (the mediator) helps you and your spouse communicate and negotiate to reach a mutually acceptable agreement. The mediator doesn't make decisions for you. Instead, they guide the conversation and ensure it remains productive.
Mediation can help reduce conflict and preserve relationships, which is particularly important if you have kids and plan to co-parent. It also allows for more flexibility and creativity than you would probably get if a judge who doesn’t know you determined your property division.
Suggested: Who Pays Credit Card Debt in Divorce?
Uncontested divorce
The most significant advantage of mediation is that it can lead to an uncontested divorce. In this type of divorce case, both parties agree on all issues, including property division. An uncontested divorce is typically faster, less expensive, and less stressful than a contested divorce.
FAQs About Property Types
What are the main types of property in a divorce?
Most divorces categorize assets and debts as either marital or community property, separate property, or a mix of both when funds have been commingled.
What counts as marital or community property?
Income earned during the marriage and anything bought with that income is typically marital or community property. This often includes homes purchased after the wedding, vehicles, savings, investment growth during the marriage, and debts taken on while married.
What counts as separate property?
Separate property generally includes assets owned before marriage, inheritances or gifts given to one spouse alone, and some personal injury awards. In many cases, appreciation can remain separate if it can be clearly traced.
What is commingled or mixed property?
When separate and marital funds are combined—like depositing an inheritance into a joint account—the result can be mixed property. Tracing may be needed to determine each spouse’s share.
How are debts handled?
Debts are typically classified the same way as assets. Debts from the marriage are usually marital or community, while premarital debts are often separate. Classification affects who is responsible after divorce.
Do all states divide property the same way?
No. Community property states generally split marital property roughly equally. Equitable distribution states aim for a fair division based on factors like length of marriage, income, and needs. The basic concepts are similar, but the details vary by state.
Step-by-Step Guide: How to Classify Property
Create a complete inventory
List all assets and debts for both spouses, including real estate, vehicles, cash accounts, investments, retirement, businesses, and personal property.
Collect documents and dates
Gather statements, deeds, titles, and loan records. Note when each item was acquired and how it was funded.
Assign a preliminary classification
Mark each item as marital/community, separate, or mixed based on the timing and source of funds.
Trace mixed or commingled items
Use bank and investment statements to follow separate and marital contributions and growth where funds have been combined.
Estimate current values
Rely on recent statements, online valuation tools, or appraisals to set practical, up-to-date values.
Document agreements and exceptions
Record any mutual decisions to offset values, trade assets, or treat certain items as separate. Capture notes about state-specific nuances that apply.
Incorporate the classification into your settlement
Transfer your final inventory and classifications into your agreement so the division is clear, enforceable, and easy for institutions to follow.
At Hello Divorce, we offer flat-rate mediation sessions, online divorce plans, and other services to help you get divorced with the least stress and expense possible. To learn more, schedule a free 15-minute phone call.
