Marital and separate property

Broadly, property acquired during the marriage is treated as marital property and is divided between you. Property one of you owned before the marriage, or received during it as a gift or inheritance, is often treated as separate and stays with that person.

That is the general shape, and the exceptions are where the arguments happen. Separate property can lose its character if it is mixed with marital money, for example an inheritance paid into a joint account, or a house owned before the marriage that both of you then paid the mortgage on. Whether that has happened, and what follows from it, is a question of state law and of the facts.

Two very different systems

A small number of states are community property states, where marital property is generally divided equally between the spouses. Most are equitable distribution states, where the court divides property in the way it considers fair, taking into account factors such as the length of the marriage, each person’s income and earning capacity, and contributions made to the household. Fair does not necessarily mean half.

Which system applies where you live changes the negotiation substantially, so it is one of the first things to establish.

Disclosure comes first

Every workable agreement rests on both people knowing what exists. Most states require a formal financial disclosure in a divorce anyway. In mediation the same list gets assembled, usually earlier and with less friction.

• Bank and investment accounts, joint and individual
• Retirement accounts and pensions, which need their own treatment
• Real estate, including the family home and any second property
• Vehicles, and what is owed on them
• Business interests, which usually need professional valuation
• Debt of every kind: mortgages, credit cards, auto loans, student loans, tax owed

Debt is the part people forget. In most cases it is divided along with the assets, and a debt in one person’s name can still be treated as a shared responsibility if it was taken on for the family.

A practical warning about joint debt

An agreement between you does not bind your lenders. If a credit card or a loan is in both names, the lender can pursue either of you regardless of what your settlement says. Where possible, joint accounts are closed, refinanced or transferred as part of the settlement rather than simply allocated on paper. Your attorney can advise on what protection to build in.