When going through a divorce, many people worry about the state of their assets to a high degree. Where do these assets go? How do they get divided?
Understanding the division of assets is important when it comes to preparing for the asset-dividing portion of divorce.
Separate vs. community properties
The Business Professor discusses asset division in divorces. First, it is important to understand that assets usually end up in one of two categories: community or separate property.
Separate property is the property that a person can keep to himself or herself without worrying about dividing it with their spouse. This often includes things like inheritance, anything owned before the marriage, and gifts given directly to one person during the marriage’s lifespan.
On the other hand, community property typically ends up as a topic of division in divorce. These assets often include anything owned jointly by a couple, anything purchased with a joint account, or purchases that both partners contributed to, especially if it cost a lot of money. Houses, land parcels and cars often fall into this category.
Property transfers
Of course, sometimes separate property may become community property over time, depending on how a person treated it. For example, putting money from an inheritance into a joint account will turn it from separate into community property.
Understanding the differences between these two property types and what assets fall into each category goes a long way in helping a person prepare for the asset divisions that may happen in the future.
