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How Does Money Get Divided in a Divorce

In most cases, money and other assets, that are acquired during the marriage, are divided somewhere in the neighborhood of 50%/50%. In a minority of states, called “community property states”, 50/50 is the law. Even if you are not in one of those states, and you live in a what is called an “equitable distribution” state, you still need to be prepared for a 50%/50% division. It is very common. If you want a division other than 50/50 for your marital property (assets acquired during the marriage) you need to be prepared with some very specific and compelling arguments. Here are the steps that we go through, in divorce mediation, when settling the division and distribution of your money and other assets: STEP 1: CLASSIFICATION OF MONEY AND ASSETS. We label the assets -- which we call “property” (even if it is not real estate) as either belonging to the marriage or to an individual spouse. Some assets have characteristics of both. Those are called “hybrid assets” or “hybrid property”. Here are the most common examples of how assets are classified. Be aware, however, that different states have different ways of viewing classification. You need to consult with a professional in your state to get up-to-date legal information. The information below is applicable to my Virginia clients: • Marital Property = Acquired during marriage (with exceptions noted in bullet points below) • Separate (Non-marital) Property = Inheritances (whether acquired before or during the marriage) • Separate Property = Gifts to individual spouses (whether acquired before or during the marriage) • Separate Property = Acquired before the marriage (unless commingled with marital property, which often changes it to hybrid property, which means part marital and part separate property) • Separate property in SOME states (including VA) = Acquired after date of separation STEP 2: DIVISION AND DISTRIBUTION OF MONEY & ASSETS. The classification of an asset has a great deal of influence over how it is divided and distributed in a divorce. In Virginia, and other “equitable distribution” states (not the mandatory 50%/50% states, called “community property” states), the classification of an asset as “marital property” often results in a 50/50 division; but that is more a result of “legal culture” and not the law, per se. Here are the most common examples of how assets are divided and distributed in a divorce based on their classifications: • Marital Assets = 50/50 is the norm • Marital Assets = In “equitable distribution” states, the division of assets can be other than 50/50. This sometimes happens when there are extreme circumstances that would make an equal distribution very unfair. Factors considered are: 1. Did one of the spouses make a far greater financial contribution to the marriage? 2. Did one of the spouses make far greater non-financial contributions to the marriage? 3. What kind of lifestyle did the couple have? 4. How old are the spouses and are they healthy in body/mind? 5. What are the circumstances that led to deterioration of the marriage? Note: At the end of the day, bad behavior must be extreme to have an impact on the division of assets. This is particularly true if the biggest jerk makes the most money. 6. What will the tax consequences be related to various settlement options? 7. Did either spouse waste money knowing that a divorce was coming? • Separate Assets = Unless otherwise agreed in mediation, assets which are classified as separate (belonging to only one spouse, not the marriage), stay with that spouse. They are not divided up in a divorce. That is why you must be clear on the classification of assets before you start dividing them up. IMPORTANT: Always remember that, just because your name is on an asset DOES NOT make it yours! and … Just because you earned the money DOES NOT make it yours! Remember: Assets acquired during the marriage (by other than inheritance or gift), and money earned during the marriage, are marital assets subject to division and distribution by the court. Always check with an attorney in your jurisdiction. This video and description include general legal principals based on Virginia law. This video and description are not intended to be legal advice and they are not intended to take the place of legal advice. Helpful Blogs: How are Assets Divided in Divorce: https://www.grainemediation.com/2020/... Date Of Separation – Effect on Property Distribution – Virginia: https://www.grainemediation.com/2020/... Mine, yours, and Ours in a Virginia Divorce: https://www.grainemediation.com/2018/... What is “Equitable distribution of property”? https://www.grainemediation.com/2018/... Is Everything Split 50/50? https://www.grainemediation.com/2021/...

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