Division of Property & Debt
When people go through a divorce, arguments can be over big property like houses, or over small things like the washer or a purple couch.
In a community property state, in which Nevada is, all property the couple acquired during their marriage is presumed to be community property. This includes income they each earned from the time of their marriage to the date of their separation. Community property is divided equally between the couple during a divorce . Property that is deemed separate property is awarded to that spouse and is not divided.
There are two things to consider when dividing property in a divorce; what is “separate property” and what is “community property”. Separate property is the property owned by each spouse prior to the marriage. It may also include property attained during the marriage such as gifts, or an inheritance.
- Property Acquired Prior to Marriage
- Inherited Property
- Gifts to a Spouse by a Third Person
- Car Accident & Personal Awards
- Portions of a Personal Injury Award or Workers Compensation Award
Community property is typically property acquired during the marriage by either spouse or both. When couples divorce, the property among them must be divided. While it is possible to agree on who gets what, a Las Vegas Family Law Judge can also divide the community property between the spouses and each party will be awarded as their separate property.
- Automobiles or Other Vehicles
- The Increase of an Asset Acquired Before Marriage
- Individual Retirement Accounts (IRA’s), Pension Plans, 401K’s or Other Funds Designated for Retirement
- Stocks, Bonds, Cash & Savings Accounts
- Real Estate
- Cash Value of Life Insurance Policies Furniture and Personal Belongings Business or Business Property
A dispute may arise when one party claims certain property is his or her separate property and the other party claims it is community property. The divorce court analyzes many factors in order to determine if the property belongs to the community or is the separate property of one of the parties.
- Property owned by one of the parties prior to the marriage.
- Income from that property if no effort or expense of the community contributed to generating that income.
- Gifts a party received during the marriage. For example, if a parent gives one party a computer for a birthday gift, the computer belongs to the recipient as his or her separate property.
- A personal inheritance bequeathed to one party.
- The pain and suffering portion of a personal injury award.
- Property acquired in the name of one party only if it was acquired with the use of separate property assets and kept separate from community property. The court will require clear and convincing evidence to support the claim that property acquired during the term of the marriage is separate property.
Determination of whether property belongs to the community for division or is the separate property of one party does not depend on whose name is on the deed or on the financial accounts. Retirement benefits, 401(k) plans, IRAs, stock options, mutual funds and other types of accounts that were acquired during the marriage are community property even if the accounts are held in the name of only one of the parties.
This is because these funds are generally the result of the labor of one party which is considered to be labor on behalf of the community. The Courts in Nevada have decided that the skills and labor of each spouse constitutes community assets. This means the income received from the skills and labor during the marriage is community property.
Courts may find that property that was initially separate property belongs to the community if there was any commingling of the separate asset with community property. For example, if inheritance money is deposited into a joint bank account, it will likely lose its separate property nature and be deemed by the court to be community property.
Businesses can be a major dividing point of a divorce. If the business is community property then each spouse is entitled to an equal share of the profits and an equal share of the value of the business. If the business was owned by one spouse prior to the marriage, the profits or growth of the business during the marriage may be considered community property. Evaluating the worth of a business or the percentage of growth is complicated and should be left to a seasoned divorce lawyer who has years of experience evaluation businesses. For more information on evaluating a business read our Valuing a Business article.
Debt is divided similarly to property, in that you have “community” debt, “separate” debt, etc.
- Any Debts Owed to Banks, Savings, or Lending Institutions
- The Mortgage Balance on a Home
- Car or Boat Loans
- Home Improvement Loan or Second Mortgage
- Credit Cards
- Loans Payable to Relatives or Friends
- School Loans (if not premarital)
- Unpaid Medical Bills
If either you or your spouse are considering bankrupty then you need to review your sitatuation with an attorney. Extinguishing debts through bankruptcy can have significant effects on how to divie debts during a divorce. Read Divorce & Bankruptcy to learn more.