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Understanding how equitable distribution works

On Behalf of | Jun 8, 2022 | Family Law

New Hampshire is an “equitable distribution” state when it comes to how property is divided between spouses in a divorce. Most states use this legal theory for dividing both assets and debts.  

There are some common misconceptions about equitable division. Let’s clear up a few with some basic facts.

Couples don’t have to follow the equitable distribution model

Equitable distribution applies when a court is making the decision regarding how assets and debts are divided. Most couples are able to negotiate their own property division agreements, and they can typically do that in any way they choose.

Some couples address property division in either a prenuptial or postnuptial agreement. If they do that, a court doesn’t have to step in unless one party argues that the agreement or that provision in it isn’t valid for some reason.

“Equitable” typically isn’t the same as “equal”

A lot of people think that equitable division means dividing everything 50-50. That’s actually closer to the community property legal theory that the remaining states follow.

Equitable division involves consideration of multiple factors, including:

  • The length of the marriage
  • How much income and assets each spouse contributed to the marital estate
  • The current financial needs of each spouse
  • The spouses’ ages, health and ability to earn a living

There are many more factors that a judge can consider if they’re the one splitting up the assets and debts.

Equitable distribution only applies to marital property

In divorce, there is separate property and marital or joint property. Separate property is typically anything a spouse had when they got married or acquired during the marriage and kept separate (like an inheritance or gift). It’s theirs to keep in full unless it becomes commingled with the other spouse’s assets or marital assets. Marital property is anything the couple acquired together during the marriage. This typically includes things like homes, cars and joint bank accounts. 

Separate property can become marital property if it’s commingled. A common example is when one person owns a house when they get married, but the other spouse’s income is used to do repairs and renovations. That home is likely to be treated as marital property if the couple divorces. The same is true if one spouse inherited money and used it to help buy the couple’s home.

There’s a lot to think about. It can feel overwhelming at first. That’s why it’s crucial to have legal guidance to protect your rights and work toward the best agreements for you.

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