A concern among divorcing couples is how property will be divided. Two terms often heard are “community property” and “equitable distribution.”
Both systems govern how property is divided during a divorce, but they operate differently. Understanding the distinction can help people know what to expect if their marriage ends and help ensure they get what they are rightfully entitled to.
Two different approaches
Community property considers most assets and debts acquired during the marriage as jointly owned by both spouses. When the marriage ends, all marital property is divided equally, with each spouse receiving 50 percent.
Georgia is not a community property state. Instead, it follows the doctrine of equitable distribution, which seeks to divide property fairly rather than have each spouse receive 50 percent.
When determining equitable division, courts look at several factors, including:
- Length of marriage
- Each spouse’s financial circumstances
- Contributions to the marriage
- Future earning potential of each spouse
As a result, one spouse may receive a larger share of the marital assets if the circumstances warrant it.
Before property can be divided, the court must determine whether the asset is marital or separate property.
Anything acquired during the marriage is generally considered marital property. This can include homes, retirement accounts, bank accounts, real estate or a business.
Separate property may include assets owned before the marriage, as well as property one spouse receives, such as an inheritance or gifts. However, separate property can sometimes become partially marital. For example, an inheritance received by one spouse is deposited into a joint account or used to improve the family home. Or, a 401 (k) one spouse started before they were married can be partially marital due to contributions made throughout the marriage.
Determining the classification of property is often one of the most contested issues in a divorce.
The distinction between community property and equitable division can impact the outcome of a divorce. For example, in a community property state, marital assets worth $200,000 would generally be divided so that each spouse receives $100,000. But equitable distribution offers more flexibility as courts consider the unique facts of each marriage.
Property division can have long-term consequences on your financial security. A legal professional can help you understand your rights and pursue a fair outcome.