THE BLOG

Why Where You Divorce Matters: Equitable Distribution vs. Community Property

08/28/2013 12:20 pm ET | Updated Oct 28, 2013

Where you divorce matters. Each state has its own unique rules governing the allocation of assets during the divorce process, and these rules can vary significantly. A court in New York and a court in California will follow strikingly different rules in dividing the assets of divorcing couples. This sharp divergence between state laws is somewhat unusual -- in other areas, such as business law, the laws of each state tend to conform to a single norm.

Equitable Distribution States

Most states use a set of rules called "equitable distribution" to divide a couple's assets. When a court follows equitable distribution rules, it divides assets between the couple fairly, in light of the couple's circumstances. The equitable distribution standard is very loose, and invests considerable power in the judge.

Judges in equitable distribution states generally consider a number of different factors when they divide a couple's assets. Typically, they consider the ability of each spouse to support him or herself after the divorce. In particular, if a spouse has forgone career opportunities to raise children, that spouse will often receive a greater share of assets.

Courts also consider the duration of a marriage. If the couple's marriage only survived a short time, the court may prove reluctant to give one spouse money earned by the other. Courts also consider the age, general health and vocational training of each spouse. Some courts consider the amount of alimony and child support paid by a partner in deciding if an award of additional marital property is warranted. Some states have rules preventing a judge from using equitable distribution principles to drive a party into poverty. Some states also urge judges to award each spouse at least one-third of the marital property.

Community Property States

In a minority of states, judges apply "community property" rules when they divide a divorcing couple's assets. In these states, judges simply divide the couple's joint assets in half. This makes for a quick and clean division of marital property. Judges do not attempt to divide assets fairly, so they do not consider the employment prospects, age or health of either party.

Of course, judges in community property states consider a party's age and employment prospects when they award alimony and child support. In a community property state, a spouse that stayed home and cared for the children may receive extremely generous alimony and child support payments. Some community property states have extremely generous alimony laws.

There are only nine community property states. California and Texas both follow community property rules. Other western states, such as Nevada and Idaho, also follow community property rules.

Divorce Negotiation

If you don't feel your state's divorce laws are fair, you can always try to negotiate a divorce settlement with your spouse. Couples that elect to create a post-marital agreement can divide their assets in the manner that best fits their situation because they aren't bound to follow the laws of their state when they divide assets privately. State rules are used by courts to divide assets, but couples can elect to divide their assets as they see fit.

The vast majority of divorces end in a negotiated settlement. Very few divorces actually go all the way through trial. Obviously it's in your best interest to hire an experienced divorce attorney who can negotiate a favorable settlement for you and also be prepared to litigate if necessary. Trying to negotiate your own divorce can have devastating results as you may unwittingly be relinquishing your rights in the process.

Conclusion

In a society where divorce is common, divorce laws play an important role in all of our lives. Those who understand the basics of equitable distribution and community property laws better understand the inherent risks of marriage and the reality of divorce.