What Counts as Marital Property?
Marital property generally includes income and assets acquired by either spouse during the marriage, regardless of whose name is on them, such as earnings, homes, retirement contributions and businesses. Separate property usually includes what each spouse owned before marriage and gifts or inheritances to one spouse. Nine community property states generally divide marital property equally; other states divide it equitably, which may not mean equally.
Dividing property is one of the biggest parts of most divorces. The first step is deciding what is marital and what is separate.
Marital property
Usually includes assets and income acquired during the marriage by either spouse (Cornell LII):
- Wages and savings
- Homes and real estate bought during the marriage
- Retirement and pension contributions made during the marriage
- Businesses started or grown during the marriage
- Vehicles, furniture and investments
Debts incurred during the marriage are usually marital too.
Separate property
Typically:
- Property owned before the marriage
- Gifts and inheritances given to one spouse
- Personal injury awards for pain and suffering in many states
- Property excluded by a valid prenup
Community property vs. equitable distribution
| System | States | General rule |
|---|---|---|
| Community property | Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin (IRS Pub. 555) | Property acquired during marriage is owned equally; division is often equal, with some state variations |
| Equitable distribution | Most other states | Courts divide marital property fairly considering factors like length of marriage, each spouse's income and contributions, and needs (Cornell LII) |
Alaska and a few other states let couples opt into community property by agreement.
Commingling and transmutation
Separate property can become marital if it is mixed with marital funds or used for both spouses, for example depositing an inheritance into a joint account or adding a spouse to a deed. Increases in value of separate property due to marital effort may be divided in some states.
Retirement accounts
The marital share of retirement plans is often divided by a qualified domestic relations order (QDRO) or similar order, which avoids early-withdrawal penalties when done correctly.
Can a spouse sell marital property during divorce?
Many states impose automatic orders when a divorce is filed that prohibit selling, hiding or transferring property without consent or a court order. Violations can lead to sanctions and an unequal division.
What to do
List every asset and debt, gather statements, and track the source of separate funds. A family lawyer can explain how your state would classify and divide them. See also prenups.
Sources
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This article is general legal information, not legal advice, and reading it does not create an attorney-client relationship. Laws differ by state and change over time; talk to a licensed attorney in your state about your situation.