When going through a divorce, you will come to a point where you and your spouse need to work on asset division.
It may benefit you to know how assets classify. This makes it easier to tell what assets you have to divide.
Community and separate properties
The Business Professor discusses classifications in divorce. Assets typically fall into one of two categories: separate or community properties.
Community properties are the ones you have to worry about dividing. This typically includes things like houses, cars and joint bank accounts. Anything that has both of your names on it and most things purchased with both of your money will also fall into this category.
Separate property usually is exempt from division. This includes things like gifts given directly to a person, assets they owned before the marriage and inheritance they receive.
However, some exceptions exist. If you end up putting money from an inheritance into a joint bank account, for example, then it becomes community property.
The benefits of prenuptial agreements
This is why many people benefit from prenuptial agreements, as it helps cut down on the confusion of determining what counts as separate property and what counts as community property. It allows a couple to decide in advance how they want to divide their assets in the event of a divorce.
However, many people still avoid prenuptial agreements due to various stigmas surrounding them. This means you will have to deal with determining asset placement and division during the divorce itself, without any predetermined guidelines.