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

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. Separate property is not divided. Each spouse keeps 100% of all debts or assets considered separate property. In order to understand this more, you first have to understand what community property is. Everything which is not community property is separate property.

Separate Property Examples

  • 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

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.

Community Property Examples

  • 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

Separate Property Awarded Solely to the Owner

  • 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.

Commingling Property

Commingling can be a dirty word. Seriously, it’s when you dirty separate property by mixing it with community property. You have contaminated the separate property and now may need to divide it equally.

If a spouse has separate property, the spouse must keep it separate. Whether property has been kept separate is a factual issue which must be proven. The court requires clear and convincing evidence the separate property has been contaminated.


Debt can be classified as community or separate as well. Debts will need to be divided the same way property or assets are divided. Community debts are divided equally. Separate debts are not divided. Separate debts can give you legal protection from your spouse’s creditors. Nevada law says that “Neither the separate property of a spouse nor the spouse’s share of the community property is liable for the separate debts of the other spouse”.

Community Debt

  • 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 bankruptcy then you need to review your situation with an attorney.  Extinguishing debts through bankruptcy can have significant effects on how to divide debts during a divorce. Read Divorce & Bankruptcy to learn more.

Contact RIGHT Divorce Lawyers at (702) 914-0400