Equitable Distribution vs. Community Property

When there is a large marital estate, the place of filing can make a difference in how assets are divided. Generally speaking, a well-to-do spouse with a high income does better when the estate is divided by equitable distribution, as is the case in 41 jurisdictions, but a stay-at-home mother, for example, may find her share increased when the pie is cut in a community property state.

Sometimes people who have residences in two states (one an equitable distribution state and the other a community property state) can pick and choose where to file because affluent people sometimes establish residences of convenience for purposes of divorce.

Forty-one states divide the marital goods equitably, which means fair; not equal, not half. Nine others – Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington and Wisconsin – use community property, which means marital property is divided 50-50.

In equitable distribution, everything acquired in the marriage (except in some cases, separate property such as gifts or inheritances) is subject to distribution, and it does not matter whose name is on it. Equitable distribution lends itself to trading. For example, a wife might agree to swap her rights to half of the marital portion of her husband’s pension for his share of the family home.

In community property states, marital assets and marital debts are split down the middle. A spouse might use community property as a way of hiding his or her debts, so that the other spouse is responsible.

Both the laws governing equitable distribution and community property lend themselves to nuances that invite legal advice, and spouses dividing large marital estates are wise to seek it.

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