What This Article Covers:
This article covers the character and types of property subject to division between spouses in divorce proceedings. The two major legal categories that govern the division of property in divorce are Separate Property and Community Property, also referred to as marital property.
We will first cover the legal difference between community and separate property. Second, we will cover the type and character of properties subject to division in divorce, including examples of what is considered real property, personal property, and intellectual property.
Separate and Community Property
Separate Property
Separate Property (non-marital property) is a property that you or your spouse (1) separately owned before the marriage or (2) received individually as a gift or through inheritance during the marriage.
Separate Property remains separate and is not considered part of the marital estate. Therefore, it remains the exclusive property of the spouse that owns it.
Examples of separate properties include:
• Money deposited in bank accounts before marriage
• Property you owned before marriage
• Vehicles you owned before marriage
• Assets you inherited before marriage
Community Property
The property you or your spouse earned during marriage is generally treated as community property. Community property covers all the possessions and ownership interests a couple acquired during the marriage.
The net result is that both partners have a 50% ownership claim under community property laws. This means property that does not qualify as separate is equally divided between the parties.
Examples of Community Property
- Any personal or real property purchased during the marriage
- All work income earned by either spouse during the marriage.
- All real or personal property purchased with community funds.
- All assets are placed in a joint bank account during the marriage.
How Courts Determine Community Property From Separate Property
In general, all separate property will be given to the person who owns it, and all community property states will be divided so that each person receives the same net amount. Likewise, the court will divide and assign the debts to each party in a way that makes the net value of the property received less than the debts assigned the same for both spouses.
Property Subject To Division In Divorce
Real Property
Real property includes undeveloped and developed land, vacant lots, plus:
- Commercial Property
- Residential Property
- Condominium Units
- Residential Development
- Agricultural Property
- Easements
- Long Term Leases
- Self Storage Facilities
- Mobile Home Lots
- Timeshare Ownership
- Special Purpose Property
Personal Property
Personal property includes automobiles, clothing, computers, jewelry, furniture, and cash, plus:
- Documents, such as stock certificates, bonds, and certificates of deposit.
- Contracts or agreements, such as pensions, stock options, royalties, and insurance policies, describe intangible personal property.
- Even more intangible assets, such as “goodwill” of a business or professional practice, a license to practice a trade or profession, or even a degree from an educational institution. State law varies significantly regarding this type of property.
- Money one receives due to a personal injury claim is usually considered the injured spouse’s separate property unless otherwise agreed upon.
Intellectual Property
Intellectual property rights come from intellect and imagination and are considered legally protected original works. The law provides the creator of such property an exclusive right over its use for a certain period of time.
Examples of intellectual property include:
- Patents
- Trademarks
- Copyrights
- Trade Secrets
Property Rights To Artificial Intelligence
In 2023, ownership of Artificial Intelligence (AI) as a form of intellectual property is proving to be a slippery slope. Under intellectual property, more than one person will claim ownership of an idea or work. When this happens, the court must determine who owns the intellectual property from the evidence presented.
Divorce – Tax Impact
