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What Is Equalization in Divorce?

When a couple decides to part ways and go through a divorce, one of the most critical aspects to address is the division of assets and liabilities. In an ideal scenario, couples would divide their belongings fairly and amicably, ensuring equality for both parties. However, this is not always the case, and sometimes an equalization payment becomes necessary to bridge the gap and achieve a more equitable division of assets. In this article, we will delve into the concept of asset division in divorce, the difference between community property and equitable distribution states, the importance of understanding separate property, and how equalization payments play a crucial role in fostering fairness during divorce proceedings.

Understanding Asset Division in Divorce

When a marriage dissolves, the assets and debts acquired during the union must be divided between the spouses. This division usually takes place through negotiation, and in amicable divorces, couples can handle it on their own with minimal professional intervention. However, there are instances where there is a significant discrepancy in asset division, requiring an equalization payment to address the imbalance properly.

Community Property vs. Equitable Distribution States

The laws regarding marital property distribution differ depending on the state. In community property states like California, there is a presumption that all marital property will be split 50/50. On the other hand, equitable distribution states aim to achieve a fair division of property, but this does not necessarily mean it will be precisely equal.

Marital property encompasses any assets acquired during the marriage, including retirement accounts, vehicles, homes, savings accounts, art, jewelry, and other items purchased by either spouse during the marriage.

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Understanding Separate Property in Divorce

Apart from marital property, it’s essential to comprehend the concept of separate property in divorce. Separate property refers to assets that are not subject to distribution during the divorce process. While most property acquired during the marriage falls under marital property and is subject to division, some assets may be considered separate property.

Identifying Separate Property

Separate property may include inheritances that were received and kept separate from marital funds, property brought into the marriage and never commingled with marital assets, and certain other assets that qualify under state laws. However, determining whether an asset qualifies as separate property can be complex and may require legal assistance to ensure accurate classification. Misclassifying property can lead to unintended consequences and affect the distribution of assets.

The Role of Equalization Payments

Equalization payments are most commonly associated with community property states. In these states, where assets are expected to be divided 50/50, equalization payments help address any disparities that arise during the division process.

Equalization Payments in Action

Let’s consider a few scenarios to understand how equalization payments work:

Scenario 1: Offsetting Home Ownership

Imagine a couple residing in California for a decade and purchasing a marital home worth $700,000 during their third year of marriage. The remaining marital assets are valued at $300,000. If one spouse wishes to keep the house, the division will not be equal, as the house’s value surpasses the other assets’ combined worth. To create a fair split, an equalization payment of $200,000 would be made to the other spouse. This way, both parties end up with $500,000 in marital assets.

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Scenario 2: Balancing Retirement Accounts

Consider another scenario where one spouse has contributed to a retirement account throughout the marriage, and the account’s value at the time of separation is $200,000. The rest of the marital assets are worth $400,000. To achieve a 50/50 distribution, the spouse with the retirement account would owe the other spouse $100,000 to balance the value.

Seeking Assistance with Divorce

Understanding property division in divorce is crucial to ensure that each party receives what they are entitled to. During this challenging time, professional support can make a significant difference.

Know law offers a range of supportive services throughout the divorce process. From free worksheets to help calculate the value of marital property to expert consultations, they provide valuable assistance tailored to each unique situation.


Divorce proceedings require careful consideration of asset division to ensure fairness and equality for both parties. While some couples can reach an agreement on their own, others may require equalization payments to address imbalances properly. Understanding the distinction between marital and separate property, as well as the laws governing asset division in different states, is essential for a smooth and just divorce process. Seeking professional support and advice can help navigate the complexities of divorce and ensure a more equitable outcome for all parties involved.


  1. Are equalization payments only applicable in community property states? While equalization payments are more common in community property states, they can also be used in equitable distribution states to address significant discrepancies in asset division.
  2. Can I determine separate property on my own? Determining separate property can be complex, and it’s advisable to seek legal assistance to ensure accurate classification and avoid unintended consequences.
  3. How can Know law help during the divorce process? Know law offers various supportive services, including free worksheets, expert consultations, and multiple online divorce options, to guide individuals through the divorce process with personalized assistance.
  4. Is mediation a good option for asset division? Mediation can be an effective approach for couples looking to maintain control over asset division and reach mutually agreeable solutions.
  5. Can equalization payments be made in assets instead of cash? Yes, in some cases, equalization payments can be made in the form of assets to balance out the division more effectively. However, this is subject to negotiation and agreement between the parties involved.
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