What Is the Difference Between Separate and Community Property in a Nevada Divorce Settlement?

When a Nevada couple divorces, child custody and property division are the two issues most likely to cause disputes that the court needs to resolve. In property distribution, a confusing issue is the difference between separate and community property, and how that affects the division of assets. The statutory process in Nevada provides an outline for resolving property ownership issues.

Nevada’s Community Property Laws

The State of Nevada has detailed statutes that establish the property rights of spouses in a  legal separation or divorce. When a married couple divorces in the state, those laws determine the division of property between the spouses.

State law provides that all property acquired by either spouse during a marriage is community property that is owned equally by both spouses and most often equally divided, unless:

• The spouses have a valid prenuptial agreement, postnuptial agreement, or other contract that provides to the contrary;
• A court issues a contrary ruling; or
• The property is the separate property of one of the spouses.

In most Las Vegas divorces, community property is divided equally between the spouses. There may be an unequal division of community property in certain circumstances, including where a valid prenuptial or postnuptial agreement provides for a specific division. Uncontested divorces may include a mutually agreeable property agreement. Advice from an experienced divorce lawyer is strongly recommended if you consider an uncontested divorce or a property settlement agreement.

In a Nevada divorce, the parties must also divide debts on the basis of whether they debts are separate or community property. That division is part of the settlement agreement. The same analysis applies in making the decision of which spouse is the owner of the debt.

Separate Property

One of the most confusing concepts in a divorce property discussion is what constitutes separate property. Simply put, it is property that belongs to and is controlled by only one spouse and is not subject to division. Generally, property separately owned by a spouse before marriage must not have been converted to community property after the marriage, which can happen in a multitude of different ways. Separate property also may include property acquired by a spouse as a gift, inheritance, or personal injury award during the marriage.

If there is not an agreement by the spouses on the identification of the separate property of each, the divorce court will decide the nature of the property. It is each party’s responsibility to advocate the separate property status of assets.

Community Property

The basic rule is that all property acquired by either spouse during the marriage is community property, which must be equally divided in most cases. For some assets, like retirement accounts, which often have significant value, only the added value that accrued after the marriage is considered community property.

All types of retirement and pension plans are subject to the Nevada community property law, unless the parties have a valid written agreement excluding retirements from division in the event of divorce. It doesn’t matter what type of plan the spouse has. Employer benefit plans, IRAs, 401(k)s, and SEPs are all subject to Nevada’s community property laws. Your retirement account is community property, generally to the extent of contributions and increase in value during a marriage. Making a precise analysis in that regard can be complex.

If a retirement account must be divided, accomplishing the division is complicated, because of the laws that apply to retirement and pension accounts. The proper method of division depends on the type of retirement account. If you or your spouse attempt to divide a retirement account without professional help, you can easily create substantial tax liability, resulting in depletion of your assets.

Business ownership and debts may be another difficult issue in a divorce settlement.

Avoiding a Decision by the Judge

Divorcing spouses can — and often do — avoid the uncertain outcome of having the court divide property by negotiating an agreement that provides for the allocation of assets and debts after the divorce. Help from lawyers on both sides can facilitate such an agreement. The judge in the divorce proceeding typically makes a written property settlement agreement part of the divorce degree, as long as the agreement is reasonable.

Reaching agreement is preferable to asking the judge to divide property in many cases. However, there are situations where an agreement simply is not possible. In that case, the judge will decide property division issues according to the provisions of Nevada law.

Schedule a Free Consultation With an Experienced Las Vegas Divorce Attorney

If you are considering filing for divorce in Nevada, Las Vegas family law attorney Joseph Gersten is here to help. He draws on his extensive experience in domestic matters to protect your interests and pursue cost-effective resolution of all issues, including the division of property.

Attorney Joseph Gersten works with clients in Las Vegas, Henderson, and elsewhere in Clark County. Your initial consultation is always free-of-charge at The Gersten Law Firm. Call 702.857.8777 or complete our online form to schedule an appointment.