How to Divide Personal Property in a Divorce

How to Divide Personal Property in a Divorce

Once the documents are signed, and the spouses are legally divorced, that is when the hard part begins. If they are lucky enough not to have children involved, reaching a property settlement is the next thing on their plate. It can bring up some emotions, change their life circumstances and take a lot of their time. This is why each party can benefit from clearing their head and having an objective approach to the matter. The process is only as difficult as they want it to be.


Look into the options first

When considering the ways of reaching a property settlement in a divorce, the more peaceful it is, the better. If you can come to an agreement with your ex-spouse, you will gain more than you think. Peaceful communication, as well as the trust between ex-spouses, is often hard to achieve. When this is the obstacle, the two sides are more likely to get a favorable outcome if they hire a divorce mediator. Taking this matter to a court could be a lengthy and costly process. The bottom line is that more could be lost through the legal fees incurred than it could be gained through the court settlement.


What is there to divide?

When discussing property in a marriage, there are two categories to consider. The first one is the separate property, while the second one is the marital property. The separate property is everything the partners individually obtained prior to the marriage. It is also the property they have gained during the marriage but in one partner’s name only such as a gift, inheritance, or a personal injury payout. Everything else obtained during the marriage, regardless of who obtained it, used it, or whose name is on the title, is the marital property. This also includes retirement funds, all income, as well as debts.

The separate property as a subject of division

During the length of the marriage, separate property can become marital property, and both partners may be entitled to it. This happens if a property is retitled to list the other partner as a co-owner. Also, investing inheritance into a mutually-owned property can make it a part of the marital property.

Furthermore, a separate property may increase in value during the marriage. In this instance, it is important to establish whether it was due to active or passive appreciation. If it was the active appreciation that caused the increase in value, the difference is considered to be the marital property.

Active vs passive appreciation

Active appreciation happens as a direct consequence of the influences that one spouse had on the property of another spouse. This can include investments, business ideas, or any other efforts on the spouse’s part.

On the other hand, passive appreciation has nothing to do with marriage. It happens due to outside influences and it would have happened regardless of whether the person was married or not. These are factors such as inflation and market demand.

Create a list

Create an inventory of the marital property. The list should also include the value of the items agreed upon by both spouses. This can often be difficult to achieve but is of crucial importance. Another problem that may arise in the process of making a list is its complexity. Depending on the agreement between the spouses, this list could potentially include quite a few items. The making of it could, thus, be lengthy.

Another list could be created. This list is simpler, and it includes only the items that the spouse who is leaving the home wants to take along. If both spouses are satisfied with the list, apart from the items on it, the one spouse receives an equalization payment. The payment is an estimated value of the remaining part of their share in the property.


Estimate the value

This part is particularly difficult for the spouses. This is why they should agree to have several most important items appreciated and share the cost. What makes this process difficult is the difference between the reality and expectations. People often get confused by the emotional value of an item, as well as its original price. The only factor affecting the value should be its current market price. This is usually done by analyzing the prices of other similar items. One more thing you can factor in the value is how much it would cost to replace the item, in case you did not win it in the settlement.

What if there is no value?

If the two sides cannot agree on the value of their property. The court may order to auction the items in question. This way, they can know exactly how much they can get for each of the items and they can split the profit from the auction. The main issue for the spouses is that very often one could get more for a used item through the classifieds than they could at an auction.

There are items which are truly priceless and irreplaceable, such as memorabilia and children’s drawings. These items are split by allowing each party to pick one of them at a time and take turns until there are none left.

The legal entitlement

Withstand Lawyers recommend looking into the laws and regulations first, as well as seeking a legal consultation to ensure the understanding of the entitlements.
The type of division depends on the governing laws of your country or state. There are two types of division, communal property and equitable distribution. According to the communal property, all marital assets are divided in half and each of the spouses gets an equal share.

Equitable distribution is based on a number of factors including the financial situation of spouses before and after the marriage, their standard of living, earning potential, the length of the marriage, their health, custody over children etc.

When entering the property settlement process, question your motives. A fair settlement is only reached when neither of the two sides is overly emotionally involved. It is in your best interest to settle this as quickly as possible. Therefore, purely economic motivation also leads to a dead end. Find moderation, be realistic and willing to negotiate.

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