What Constitutes Marital Property and Debt

• Each state's ED statutes contain criteria for classifying property and debt as marital or separate. In general, any property acquired after date of marriage and before date of separation -- although some states use date of divorce as the second bookend -- will be considered marital, with the same criteria applied to indebtedness. Marital property also includes property acquired after date of separation but earned during the marriage -- paychecks, bonuses and royalties are all items people can earn through their own efforts during marriage but not receive until later. Under modern law, title doesn't matter; regardless of the name that appears on an item of property or debt, if it falls under the definition of marital property or debt, the other spouse is presumptively entitled to half of it.
  
  

Separate Property and Debt

• Separate property is any property owned by either party to a divorce that does not constitute marital property. Generally, if a party earned or acquired a debt or item of property before marriage or after separation -- or divorce, in some states -- it will be that party's separate property and therefore not divisible by the court. Although a debt or asset may be separate, it can still influence the outcome of an ED proceeding in that the size of a party's separate estate is often considered a distributional factor -- something that can justify an unequal division.
  
  

Division of Assets

• Once the contents of the marital estate are established, the court must equitably divide the estate between the parties. As a general rule, courts prefer to distribute assets to a party in a manner so as to maximize their value and the overall benefit to the estate. Courts favor an in-kind distribution of assets, which means that they will first attempt to achieve an equitable distribution by distributing assets intact to each party before liquidating assets and achieving a desired division using money. Where an equitable distribution cannot be satisfied in-kind, courts may order the sale of assets or order one party to make distributive payments to the other until the desired balance is achieved.
  
  

Division of Debt

• In tandem with a division of assets, courts must make an equitable distribution of a couple's marital debt. The negative value of this debt will be subtracted from the positive value of the assets in balancing the distribution between the parties. Wherever possible, courts will distribute debt to the party in whose name it appears. If a joint debt is secured by a lien against property such as a house or car, the court may order the party receiving the asset to refinance it to absolve the other party of future liability to the creditor.