When going through divorce, asset division is one of the parts that people feel the most dread and anxiety about.
It helps to understand how asset division works, including what categories assets end up divided into.
The Business Professor discusses the difference between separate and community properties. These are the two main categories of assets during divorce.
Community property includes all of the shared assets that the couple will split during the divorce process. Things that fall into this category usually include houses, cars, land parcels and more.
Anything purchased with a joint bank account usually counts as community property. This also goes for anything signed in both of the couple’s names, even if only one paid for the item in question.
Separate property usually does not get divided in divorce. This includes inheritance, gifts given directly to one person, and anything owned before the divorce.
However, separate property does not always stay separate. Certain things can turn it into community property. An example may include putting inheritance money into a joint bank account. After doing so, this money counts as community property rather than separate property.
Understanding these divisions during the marriage is the best way of lowering difficulties during a divorce. Of course, not everyone has these contingency plans in place.
Thus, as unfortunate as it is, some assets may simply end up lost along the way due to how a person shared or stored them during the lifetime of the marriage. Understanding this is important when going through what assets to divide.