Dividing Property in a Nevada Divorce

In the United States, there are two ways for a court to divide property in a divorce action. The first way is known as equitable distribution. Equitable distribution. In that circumstance, the court divides property of a marriage based upon each party's contribution to acquire it. So in that circumstance, the court has the ability to divide property unequally based upon who earned the money to buy it or who maintained it, or where the property is located, etc. Thus, in that circumstance, based on equitable distribution, it may not be a 5050 division of assets and debts. The second way to divide property in a divorce action is known as community property. And it's important to recognize that Nevad is a community property. State community property requires that property acquired during the marriage is divided equally amongst the parties, regardless of who acquired it, regardless of who maintained it, regardless of where it is. In that circumstance, property is equally divided unless it fits into one of the four exceptions of community property. The first exception to community property is separate property, which means property that you bring into the marriage with you. Thus, if you brought a valuable asset into the marriage with you and you still have it, and you've not commingled it into the marital community, then when you get divorced, that is an exception to community property. You will receive that asset and all of its value when you get divorced. The second exception to community property is marital gifts. If a spouse, say, gives a diamond necklace to their wife for an anniversary gift, and that diamond necklace is worth $20,000 when it's time to get divor, that $20,000 diamond necklace belongs to the wife because it was given as a gift. The third exception to community property is inheritance. If a party receives inheritance from a friend or family member and they can keep it separate and segregated, they don't put their spouse's name on it, or they don't commingle it into a marital bank account, then they're entitled to receive 100% of that asset when the party's divorced. The final exception to community property, personal injury settlements, with the caveat that if you make a claim for lost wages, that piece of a personal injury settlement is a divisible community asset. So if you receive a check for a million dollars in personal injury damages, and 200,000 of that million dollars is attributable to lost wages, the marital community is entitled to divide half of that $200,000 doll, $200,000 piece as a divisible community asset. So if your assets don't fit into one of those four exceptions, under Nevada Community Property Law, it's a 5050 division of assets or the property will be divided equally. One thing I often get asked frequently is, you know, I have bled and sweated for my retirement savings and I don't want to divide them when I get divorced. It's not fair, they shouldn't be to have half of my retirement. Under Nevada community property law, retirement savings must be divided equally amongst the parties, unless a portion of those were earned before marriage. That piece or the part of the retirement saving that was acquired before marriage is the sole and separate property of the person that acquired them. Any retirement savings that were acquired after the parties marry, the marital community is entitled to divide those equally though. So for example, if a person has a 401k account and they had $200,000 in their 401k account before they got married, and upon divorce, there's a million dollars in the 401k account. The first $200,000 is the separate property of the owner of that account because it was acquired before the party's married. The 800,000 that was acquired after the parties marry should be divided equally amongst the parties. Thus 800,000 do should be divided equally amongst the parties. Also the question becomes how do you divide those accounts? In essence, a qualified domestic relations order would have to be prepared which would divide the account and that is a tax free transfer under the IRS tax code. Thus under my hypothetical example here, of the million dollars, the $800,000 would be divided equally. So a qualified domestic would be prepared at $400,000 would be transferred from that account tax free to a like kind account though. So if a spouse doesn't have one, you'd create a rollover IRA or a 401k if you have it and can transfer the 400,000 in via a qualified domestic relations order, tax free. One thing that commonly occurs when parties divorce is how to deal with certain debts when they divorce. More specifically, it's common for parties to have joint debts like a joint credit card or a auto loan with both of their names on it, or a mortgage to a home. In those certain circumstances, the parties are going to be required to unwind or remove names from those joint debts. Thus, the decree of divorce that is prepared at the conclusion of the divorce action must clearly delineate or spell out whose debt is whose obligation and who is responsible to pay it. In those certain circumstances. For example, with a mortgage, if a person is going to keep the marital residence and buy out the other party, then they must refinance the home to get the other party's off of the mortgage and remove their credit and their credit borrowing ability from that house. If there's a vehicle that is jointly owned or, you know, jointly indebts the parties, then you're going to have to qualify for a new auto loan and remove the other party's name. Credit cards can be a little tricky sometimes, preferably that the parties would pay off any community debts and close those joint accounts. Sometimes it occurs that people don't have enough money to completely satisfy those debts, and in that circumstance the debt would be awarded to one party and they would be required to service that debt until it's clear. And if they fail to pay that debt, generally speaking, they would be required to indemnify the other party if the other party is called in by the creditor to pay that debt on their behalf. Thus they can seek indemnification and be paid back if the other party is required to pay on debts that was not awarded to them.