How Is Money Split in a Divorce?


A divorce is potentially a financially disruptive event. According to CNN, The National Marriage Project at Rutgers University notes that a partner's standard of living can drop by more than 25 percent following a divorce, making careful planning and an understanding of the process especially important.

Mutual Consent

The easiest way to split money during a divorce is through mutual consent. This requires both partners to agree to a detailed, specific division of all money and property, including property in only one person's name and common property acquired during the marriage. Partners can use attorneys, mediators or representatives to help negotiate a mutual consent financial divorce settlement, but once both parties sign the settlement, it is legally binding and determines who receives what property, cash and debt.

Community Property

Several states have community property laws that control how a court splits money in a divorce when partners can't agree to a settlement. Community property laws allow the court to determine which money is community property and which is separate property. For example, income earned during marriage for both partners is community property and is split evenly regardless of who earned it. Property acquired by one partner before the marriage, or acquired during the marriage as a gift or inheritance granted to one partner alone, is separate property and usually goes entirely to that partner in a divorce.

Equitable Distribution

The majority of states do not have community property laws, which means they allow courts to determine how to split money in a divorce based on perceived fairness. For example, if one partner serves as the primary income earner, that partner stands to receive a much higher amount of money during a divorce. If, however, the court discovers that much of the money in a joint account came from savings that the other partner had before the marriage, the partner with the lower income may receive a larger portion of the joint account money.

Tips and Advice

Planning for a divorce can seem weird, especially for couples who do not foresee marital issues. However, the high number of divorces makes it a reasonable decision to keep track of personal and mutual finances through a marriage. This means keeping accurate records of where income comes from, and what a couple chooses to spend it on.

For couples with pre-existing debts or assets, a prenuptial agreement can provide a basis for dividing money in a certain way during a divorce. Partners who stay at home to raise children can also protect themselves by asking their spouses to sign agreements that assign value to their family activities and help balance their relatively low incomes. Without such an agreement, partners who can't reach an agreement of mutual consent are subject to their states' laws and a court's decisions.

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