When you have substantial assets, divorce can negatively affect your ability to hang onto them. Whenever you go through divorce, you should expect to lose a substantial amount of your assets in most cases. Here are the basics of what to expect in regards to your assets when you file for divorce.

State Differences

You should understand that the rules regarding your assets will be dependent upon the laws of the state in which you reside. Some states have community property rules that will apply in divorce cases. This means that any debts or assets that were accumulated during the marriage will be divided equally between the spouses. Other states are equitable distribution states. This means that many different factors will go into awarding assets to both parties. For example, the judge will take a look at how long the marriage lasted, how much money each spouse makes and factors that involve children. Therefore, you need to first determine which type of state you live in when it comes to determining how your assets will be distributed during a divorce.


Typically, the biggest asset involved with a divorce is the house. If you own a house jointly with your spouse, there will be issues when it comes to dividing it. In some cases, one spouse will remain in the property, while the other one moves out. If this is the case, the spouse that continues to live in the house will have to pay the other spouse for his or her rights to the property. Many times, if children are involved, the judge will recommend that the children stay in the house with the spouse that has custody rights. If this is the case, you will have to refinance the property in order to relieve one spouse from the mortgage debt.

In other cases, the judge will recommend that the house be sold and the profits from the sale be split equally. This is often the easiest solution when it comes to equally dividing a property. 

Dividing Assets

You and your spouse will get a chance to determine who gets which assets. If you can sit down and rationally discuss the distribution of assets, you will have the opportunity to do so. If you can do this, it will typically be the easiest way to handle the situation. You will likely have to compromise and be flexible in order for this to work. This will require you to assign values to property that you have and try to make it fair for both parties.

Court Orders

If you are unable to determine who gets what in the divorce, it will be left up to the court to decide. You and your spouse will attend a court hearing, and the judge will review all of your assets. At that point, the judge will do his or her best to divide everything equally between the two parties involved in the divorce.

Is life insurance considered community property in a divorce?

When you are filing for divorce in a community property state, a life insurance policy may be considered community property provided it was purchased during the marriage and paid with joint funds. If you or your spouse purchased a policy prior to marriage and paid for it through separate funds, it remains separate property. If the policy qualifies as community property, you or your spouse may need to surrender part of the value of the life insurance policy as part of the divorce agreement. The only way to save the value of the life insurance policy is to have one spouse removed as a beneficiary. This must be done with the spouse’s permission, or the policy will revert to community property during a divorce.

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