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Property After Divorce

Community Property

Nevada is a community property state which means that most property acquired during the marriage AND while the parties lived in Nevada or another community property state belongs to both parties.

Property and debts acquired while the parties were married are community property except:

  1. Property inherited in one party’s name.
  2. Funds acquired by one of the parties through a personal injury award or settlement.

Both spouses might have an interest in real property acquired by one party before the marriage if payments were made on the real property during the marriage.

Separate Property Becoming Community Property

Separate property may “transmute” to become community property if:

  1. The property becomes so commingled with marital property that it becomes untraceable;
  2. The title has the names of both parties; OR
  3. The parties use the property to support the marriage or in some other way to show that the parties intent to make it marital property.

When one party owes a business, that business MIGHT be subject to partial division. If there is a business to divide in the divorce, an attorney should be consulted to determine how much, if any, of the business each spouse is entitled to. 

Property Acquired in Another State

Nevada does NOT have a “quasi-community property statute” to deal with property acquired in another state.

Nevada follows the “pure borrowed law” approach which means that when there is property that the couple obtained while they were living in a non-community property state, the court will divide those assets according to the law of the state where those assets were obtained.

When dealing with retirement benefits, however, courts will often apply only Nevada law and ignore the pure borrowed approach.

Mortgage

When the parties have a mortgage together, it should be addressed in the divorce but note that mortgage companies are NOT bound by the divorce decree.

The divorce decree should reflect which party is awarded the marital residence and, if applicable, the mortgage on the property.

Simply ordering one spouse to assume responsibility for a mortgage does not necessarily mean that the other party has no financial responsibility. The only way to remove one spouse from a mortgage is for the other spouse to assume the loan or to refinance the loan in his or her name alone. The court does not have the authority to force the mortgage company to refinance or grant a loan assumption and mortgage companies often refuse to release one spouse if the other lacks sufficient income or credit to qualify. However, having the divorce decree reflect that one party is awarded the home and the obligation for the debt may be necessary if the other spouse wishes to purchase a home later on.

**Transferring the property deed to the one spouse will NOT release the other spouse’s financial obligation to the mortgage-it will only take away that party’s ownership interest in the home!!**

Retirement Benefits (401k, Pensions)

If one or both spouses has retirement benefits such as a 401k, a pension plan, etc and ANY contributions to the plan were made during the marriage, the benefits are considered community property to the degree at which they were accrued during the marriage. (Division of retirement benefits is VERY complicated.)

***If you or your spouse has retirement benefits and you would like to divide those benefits in the divorce, it is best to speak with an attorney. The following information should NOT take the place of consulting with an attorney qualified in family law.***

Retirement benefits are usually the most valuable (and sometimes the only) asset of the marriage.

Some retirement benefits must be divided in the initial divorce decree or the nonemployee spouse will forever lose his or her claim to a share of the benefits.

Retirement benefits do not have to be divided if the parties so wish and because division of retirement benefits can be costly and complicated, they may be used as a bargaining chip in the divorce. The employee spouse may consider giving the other spouse additional property or alimony payments in lieu of dividing retirement benefits, which sometimes is an easier and more economical alternative for both parties.

If there is a retirement benefit that is subject to division, a special order called a QDRO (qualified domestic relations order) will be needed. A QDRO creates or recognizes the right of the spouse, called an alternative payee, to receive part of the pension OR assigns an alternate payee to receive all or a portion of the benefits.

  • Determining the amount subject to community property rules can get very complicated, and usually involves determining what percentage of the plan was paid in during the marriage. 
  • QDROs can also be used to recover child support and alimony payments.
  • Expert assistance should be obtained in preparing a QDRO and the cost for preparation can be split between the parties.
  • Pension plan administrators will require a QDRO and plans have varying requirements.
  • Who pays for the QDRO will have to be determined in advance.

A spouse may have their share of the pension benefit paid much later after the divorce, when the other spouse retires and begins to draw on the pension benefit