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Dividing Property in the Divorce Context

While laws differ in each state with regard to dividing property in the context of a divorce, two primary methods exist: community property division and equitable distribution.
Community Property Division
In community property states, each spouse is entitled to one-half of all the property acquired during the marriage. The separate property of each spouse isn't included in property division in community property states. "Separate property" typically includes the following:
  • Property or businesses owned prior to marriage or living together
  • Gifts and inheritances from family that haven't been "commingled" with community assets (such as in a joint bank account)
  • Pension proceeds of either spouse that vested prior to marriage 
Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Equitable Distribution
In all other states, courts will divide a couple's assets in an "equitable" (fair) manner. "Equitable" doesn't necessarily mean "equal," but what's fair to both spouses.
In deciding what's "equitable," a court will commonly take into account
  • The length of the marriage
  • The work history and job prospects of each spouse
  • The physical and mental health of each spouse
  • The source of particular assets
  • Expenses of the children 
Taking a Property Inventory
It's essential to obtain from your client a complete list of all property belonging to both parties, as anything left out of the property settlement will have to be dealt with later. Many lawyers use property checklists designed to jog a client’s memory regarding property he or she may have forgotten.
Assets that people sometimes forget to list include
  • Pension and retirement accounts
  • IRAs
  • Stocks and bonds
  • Certificates of Deposit
  • Money Market Accounts
  • Items from a safety deposit box 
Valuing Assets
When the parties fail to agree on the value of a particular piece of property, it may be necessary to have a professional appraiser- such a real estate broker- value the property. You should obtain from the client any information regarding the value of property, including prior appraisals and assessments from tax collectors and so forth.
Many divorcing couples make the mistake of fixating on one piece of personal property, such as an art object or something else of sentimental value, and spending many times the value of the object in arguing over who will own it. A compromise is preferable with regard to the division of personal household possessions, and a lawyer should suggest to the client to attempt to resolve this distribution without the intervention of counsel. Any major assets should be listed in a property settlement agreement, however.
A good source of information on this topic is Valuation & Distribution of Marital Property (Matthew Bender & Company, Inc.)
Tax Considerations
You may need to consult with a tax lawyer or certified public accountant regarding any possible tax consequences of holding, transferring or selling property as part of the divorce process if you are not well-versed in that area of the law. It's much better not to risk your professional reputation or malpractice premiums by assuming that no adverse tax consequences will affect your client. Working in tandem with another professional may incur additional fees for your client, but the extra expense is a good trade for the possible costs of improper planning.