How to split assets during divorce — what’s marital vs. separate?

The following article is provided for general information purposes only. The article is not intended to provide legal advice and should not be treated as providing legal advice. Persons considering or undergoing divorce should consult legal counsel of their choosing.

Going through a divorce can be tough, but understanding how to divide your money and belongings can make the process a little easier. One of the most important things to learn is the difference between marital property and separate property. Knowing this can help you make smart decisions and feel more confident about your financial future.

What’s the difference between marital and separate property?

Marital Property

Includes most things you and your spouse got together during the marriage. This can be money, a house, cars, or even debt like credit card bills. If you bought it or earned it while you were married, it probably counts as marital property.

Separate Property

Usually includes things you owned before the marriage, gifts given just to you, or inheritances. For example, if your grandmother left you money in her will, that’s likely separate property—as long as you didn’t mix it with shared money.

However, there’s an important caveat: separate property can sometimes become marital property. This happens when assets are “commingled.” For example, if you deposit inheritance money into a joint bank account used for household expenses, those funds may lose their separate status and be considered marital property

How are assets and debts divided?

How things are divided depends on where you live. In the U.S., states follow one of two main systems:

Community Property States

There are nine community property states including Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, everything earned or bought during the marriage is usually split 50/50, no matter who earned it.

Equitable Distribution States

This includes all remaining 41 states are equal distribution states like Florida, New York, Illinois, and more. Judges divide marital property in a way that is fair, but not always equal. For example, if one spouse earns more or has more childcare responsibilities, they might get a larger share.

Now imagine you live in Florida, an equitable distribution state. A judge might decide that one spouse keeps the car, while the other gets something of equal value, like part of a retirement account. In California, a community property state, the car’s value would likely be split evenly.

How can you split up your assets?

While laws and courts guide the division process, there are practical steps you can take to smooth this transition.

Create a Comprehensive Inventory

Start by listing all assets and debts, separating them into marital and separate categories. Include everything from real estate and vehicles to savings accounts, retirement funds, and personal belongings. The more detailed your inventory, the easier it will be to negotiate or present to a court.

Identify Value and Ownership

Next, determine the value of each asset and clarify who legally owns it. For complex items like businesses or pensions, consider hiring appraisers or financial experts to ensure accurate evaluations.

Consider Mediation

If possible, work with your spouse to reach agreements outside of court through mediation. Mediators can help facilitate discussions, ensuring both parties feel heard and respected. This approach often saves time, money, and emotional energy compared to lengthy courtroom battles.

Plan for Future Financial Stability

Think past the immediate split of your assets. Consider how decisions made now will impact your financial future. For example, while receiving the marital home may sound like the best option, it also comes with property taxes and maintenance costs. Weigh these factors carefully before finalizing agreements.

Dividing your assets after a divorce might seem overwhelming, but learning the basics of marital and separate property can help you feel more in control. Every state has its own rules, but with the right information and support, you can make smart choices and start your next chapter with confidence.