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How is property divided in a divorce? Community property vs. equitable distribution
Short answer
In the nine community property states, including California and Texas, what either spouse earns during the marriage belongs to both: California splits it equally, Texas in a just and right way. The other states divide marital property equitably, which means fairly, not always equally. Property owned before the marriage, gifts and inheritances usually stay separate.
Classifier · 5 states
Which of your assets are marital, and which are separate?
Each state's rule read from its statute or appellate courts · checked Oct 14, 2026
Each rule comes from the official source linked in the result. It runs on your device: nothing you type is stored or sent. General information, not legal advice.
Key points
- Two systems
- Community property in nine states, including California and Texas; equitable distribution everywhere else, including Florida, New York and Illinois.
- Separate
- What you owned before the marriage, and gifts and inheritances to you alone, usually stay yours, if you can trace them.
- Mixed
- A home paid down with marital earnings, a business that grew during the marriage, and options that vest after separation are often part of each.
- Timing
- When the estate stops growing, and the date assets are valued, differ by state, and matter most for crypto, stock and a business.
Dividing property comes down to two questions: what is marital (or community) and what is separate, and how the marital part is split. The answers depend on your state. California and Texas use community property; Florida, New York and Illinois use equitable distribution. In every state, spouses can agree on the division themselves, and a judge approves it.
Below: the two systems and the community property states, how each kind of asset is treated, stock options and the Texas time rule, crypto, businesses, the valuation date, and the steps from disclosure to judgment, each with its official source.
Community property states vs. equitable distribution states
- Community property. What either spouse acquires during the marriage belongs to both, whoever earned it and whatever name is on it. California divides it equally; Texas divides it in a way the court finds just and right.Cal. Fam. Code §§ 760, 2550 · Tex. Fam. Code §§ 3.002, 7.001
- Equitable distribution. Marital property is divided fairly in light of the circumstances, which often but not always means equally. Florida starts from an equal split; New York and Illinois weigh statutory factors.Fla. Stat. § 61.075(1) · N.Y. Dom. Rel. Law § 236(B)(5) · 750 ILCS 5/503(d)
The nine community property states, with the rule that defines community property:
| State | What is community property | Law |
|---|---|---|
| Arizona | Property either spouse acquires during the marriage, except gifts, inheritances and property acquired after service of a divorce petition that leads to a decree. | A.R.S. § 25-211(A) |
| California | Property acquired during the marriage while living in California. | Cal. Fam. Code § 760 |
| Louisiana | Property acquired during the regime through either spouse's effort, skill or industry, and everything not classified as separate. | La. Civ. Code art. 2338 |
| New Mexico | Property acquired during the marriage that is not separate property. | NMSA § 40-3-8 |
| Texas | Property, other than separate property, acquired by either spouse during marriage. | Tex. Fam. Code § 3.002 |
| Wisconsin | Marital property, Wisconsin's term: property acquired during the marriage, other than individual property. | Wis. Stat. § 766.31 |
| Idaho, Nevada, Washington | Also community property states, as listed by the IRS. | IRS Internal Revenue Manual 25.18.1 |
Marital or separate: the rules in five states
| State | How it is split | When the marital estate stops growing | Valued as of |
|---|---|---|---|
| California | Community property is divided equally unless the spouses agree otherwise; each keeps separate property. Cal. Fam. Code § 2550 | Earnings after the date of separation are separate property. | Assets are valued at the date of trial; a spouse can ask for an earlier date after separation for good reasons. Cal. Fam. Code § 2552(a) |
| Texas | The community estate is divided in a way the court finds just and right, not necessarily equally. Tex. Fam. Code § 7.001 | Texas has no separation cutoff: the community lasts until the divorce. | The statute sets no general valuation date; reimbursement claims are valued when the trial begins. Tex. Fam. Code § 3.402 |
| Florida | Equitable distribution that starts from an equal split of marital assets and debts, unless the statute's factors justify an unequal one. Fla. Stat. § 61.075(1) | Assets acquired after the earliest of a separation agreement or the filing are not marital. | Assets are valued as of the date or dates the judge finds just; the marital estate stops growing at the earliest of a separation agreement or the filing. Fla. Stat. § 61.075(7) |
| New York | Marital property is divided equitably, which means fairly, not necessarily equally; separate property stays with its owner. N.Y. Dom. Rel. Law § 236(B)(5) | Property acquired after a separation agreement or the start of the divorce action is not marital. | The court sets the valuation date or dates early in the case: any date from the start of the action to the trial. N.Y. Dom. Rel. Law § 236(B)(4)(b) |
| Illinois | Marital property is divided in just proportions after the statutory factors; equal division is not required. 750 ILCS 5/503(d) | Property acquired after the marriage and before the judgment is presumed marital. | The court can value property at the trial date, a date the spouses agree on, or another date it orders. 750 ILCS 5/503(f) |
- Separate in all five: property owned before the marriage, and gifts and inheritances to one spouse from someone else. Florida also counts gifts between spouses as marital.
- Marital in all five: what either spouse earns or buys during the marriage, whatever the title.
- Proof matters. Texas presumes everything on hand at divorce is community and requires clear and convincing evidence to prove separate property.
Asset by asset: the home, retirement, stock options, crypto and a business
| Asset | California | Texas | Florida | New York | Illinois |
|---|---|---|---|---|---|
| The home | A home owned before marriage and paid down with community earnings becomes part separate, part community, in proportion to the principal the community paid. In re Marriage of Moore (1980) 28 Cal.3d 366 | A home owned before marriage stays separate even if community money paid the mortgage; the community gets a reimbursement claim, not ownership. A home bought during marriage is presumed community. Tex. Fam. Code §§ 3.001, 3.402 | A home owned before marriage stays nonmarital, but mortgage principal paid with marital money, a share of the passive growth and any active growth are marital. Fla. Stat. § 61.075(6)(a) | A home owned before marriage stays separate, but growth due in part to the other spouse's contributions or efforts is marital. N.Y. Dom. Rel. Law § 236(B)(1)(d) | A home bought during the marriage is presumed marital; mixing separate money into it so that its identity is lost makes it marital, with a possible reimbursement. 750 ILCS 5/503(c) |
| Retirement savings | The part of a pension or retirement plan earned during the marriage, before separation, is community property. Cal. Fam. Code § 2610(a) | The divorce decree must decide each spouse's rights in pensions, retirement plans and IRAs; the part earned during marriage is presumed community. Tex. Fam. Code §§ 3.003, 7.003 | Retirement and pension benefits accrued during the marriage, vested or not, are marital. Fla. Stat. § 61.075(6)(a) | Benefits earned during the marriage, before the action started, are marital like any property acquired then. N.Y. Dom. Rel. Law § 236(B)(1)(c) | Property acquired after the marriage and before judgment, including benefits earned then, is presumed marital. 750 ILCS 5/503(b) |
| Stock options and RSUs | Options earned partly after separation are part separate, because earnings after the date of separation are separate. Cal. Fam. Code § 771(a) | Granted during the marriage and vesting after the divorce: part separate under the statutory time rule. Tex. Fam. Code § 3.007(d) | No specific rule: assets acquired during the marriage are presumed marital; the part tied to work after the cutoff may be argued nonmarital. Fla. Stat. § 61.075(8) | Acquired during the marriage and before the action: marital, whatever the title; the part earned after may be argued separate. N.Y. Dom. Rel. Law § 236(B)(1)(c) | Stock options and restricted stock granted after the marriage and before judgment are presumed marital, vested or not; the court allocates them at judgment, looking at the vesting schedule. 750 ILCS 5/503(b) |
| Crypto | No special rule: crypto bought during the marriage with earnings is community; owned before or bought with separate money, it is separate. Cal. Fam. Code § 760 | No special rule: acquired during marriage, presumed community; before marriage or by gift, separate if traced by clear and convincing evidence. Tex. Fam. Code § 3.003 | No special rule: acquired during the marriage, presumed marital. Fla. Stat. § 61.075(8) | No special rule: crypto acquired during the marriage and before the action is marital, whoever holds it. N.Y. Dom. Rel. Law § 236(B)(1)(c) | No special rule: acquired after the marriage and before judgment, presumed marital whatever the title. 750 ILCS 5/503(b) |
| A business | A business owned before marriage stays separate, but when a spouse works on it during the marriage the community gets a fair share of the growth. Beam v. Bank of America (1971) 6 Cal.3d 12 | A business owned before marriage stays separate; if a spouse's work raised its value without fair pay to the community, the community has a reimbursement claim. Tex. Fam. Code § 3.402 | A business owned before marriage stays nonmarital, but growth from either spouse's work or marital money during the marriage is marital. Fla. Stat. § 61.075(6)(a) | A business owned before marriage stays separate, but growth due in part to the other spouse's contributions or efforts is marital. N.Y. Dom. Rel. Law § 236(B)(1)(d) | Property acquired before the marriage is non-marital, along with income from it that is not due to a spouse's personal effort. 750 ILCS 5/503(a) |
| Gifts and inheritances | Gifts and inheritances to one spouse are separate, even if received during the marriage. Cal. Fam. Code § 770(a) | Gifts, devises and inheritances to one spouse are separate. Tex. Fam. Code § 3.001 | Gifts from others and inheritances are nonmarital; gifts between spouses are marital. Fla. Stat. § 61.075(6)(b) | Inheritances and gifts from someone other than the spouse are separate. N.Y. Dom. Rel. Law § 236(B)(1)(d) | Gifts and inheritances to one spouse are excepted from marital property by the statute. 750 ILCS 5/503(a) |
| Mixed accounts | Mixed money stays separate only as far as it can be traced; untraceable mixed funds are treated as community. Cal. Fam. Code § 760 | Everything on hand at divorce is presumed community; separate money mixed into an account must be traced by clear and convincing evidence. Tex. Fam. Code § 3.003 | Income from nonmarital assets becomes marital if the couple used or relied on it as marital; property held as tenants by the entireties is presumed marital. Fla. Stat. § 61.075(6)(b) | Property acquired during the marriage is marital whatever the title; separate money must be traced to stay separate. N.Y. Dom. Rel. Law § 236(B)(1)(c) | Mixing separate money into new property so that its identity is lost makes it marital; joint ownership between spouses is presumed marital. 750 ILCS 5/503(c) |
The valuation date: why crypto, stock and a business are risky
Two dates matter: when the marital estate stops growing, and the date each asset is valued. California values assets at trial; New York sets a date between filing and trial; Florida and Illinois let the judge choose. A crypto balance or a stock position can double or halve between separation and trial, so ask early which date your court will use, and keep statements for each date.
- Crypto: export the wallet and exchange history, with balances on the separation date and later.
- Stock options and RSUs: get the grant agreements and the vesting schedule.
- A business: expect a valuation by an expert, and agree on the date.
How property division works, step by step
- Exchange full financial disclosure. Each spouse lists all property and debts. California warns that leaving things out can cost you property or legal fees.
- Sort each item. Mark it marital (community), separate or part of each, and gather proof: statements, deeds, gift letters.
- Value it. Use the date your state applies, and experts for a business or a pension.
- Agree, mediate or go to trial. Most couples settle. A judge approves the agreement or divides the property after a trial.
- Carry it out. Retirement plans often need a separate court order to divide them; deeds and titles must be changed.
Do I need a divorce lawyer for property division?
Talk to a family lawyer before you agree if there is a business, a pension, stock options or crypto, a home owned before the marriage, or a prenup. Many courts also offer free self-help for property questions.
Common questions
What are the community property states?
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska, South Dakota and Tennessee let couples opt in.
Is a house bought before marriage marital property?
It usually stays separate, but the marriage can gain a share or a claim. In California and Florida, mortgage principal paid with marital money gives the marriage a share; in Texas, the community gets a reimbursement claim, not ownership.
Is a 401(k) marital property?
The part earned during the marriage is marital or community in California, Texas, Florida, New York and Illinois; contributions before the marriage stay separate.
How are stock options and RSUs divided in a divorce?
Texas uses a time rule: for awards granted during the marriage that vest after the divorce, the separate part is the time from divorce to vesting over the time from grant to vesting. Illinois presumes options granted during the marriage are marital, vested or not.
Is crypto marital property?
No state on this page has a special rule: crypto bought during the marriage with earnings is marital or community, and crypto owned before or bought with separate money is separate if you can trace it.
Are inheritances marital property?
Generally no: an inheritance or a gift from someone else to one spouse stays separate, unless it is mixed into joint accounts or names so that it can no longer be traced.
Does equitable distribution mean 50/50?
Not necessarily. Florida starts from an equal split; New York and Illinois divide fairly after weighing factors such as the length of the marriage and each spouse's contributions.
What date are assets valued in a divorce?
It depends on the state: the trial date in California, a date between filing and trial set by the court in New York, and a date the judge chooses in Florida and Illinois.
Official sources
- In re Marriage of Mohler (Cal. Ct. App. 2020): equal division, valuation at trial, Fam. Code §§ 2550, 2552 www4.courts.ca.gov
- In re Brace (Cal. Supreme Court 2020): Fam. Code § 760, community property supreme.courts.ca.gov
- In re Marriage of Morton (Cal. Ct. App. 2018): separate property, Fam. Code § 770; business apportionment courts.ca.gov
- In re Marriage of Lee & Lin (Cal. Ct. App. 2019): date of separation, Fam. Code §§ 70, 771 www4.courts.ca.gov
- California Courts Self-Help Guide: property and debts in a divorce selfhelp.courts.ca.gov
- Texas Family Code, Chapter 3: separate and community property (§§ 3.001-3.007, 3.402) tcss.legis.texas.gov
- Texas Family Code, Chapter 7: division of the community estate (§§ 7.001, 7.003) tcss.legis.texas.gov
- IRS Internal Revenue Manual 25.18.1: community property states irs.gov
- Fla. Stat. § 61.075: equitable distribution of marital assets and liabilities flsenate.gov
- N.Y. Dom. Rel. Law § 236(B): marital and separate property, equitable distribution nysenate.gov
- In re Marriage of Calk (Ill. App. 2020): 750 ILCS 5/503(a), (b), (c), (f) illinoiscourts.gov
- In re Marriage of Sarancic (Ill. App. 2020): 750 ILCS 5/503(d) and 750 ILCS 10/7 illinoiscourts.gov
- In re Marriage of Ringsby (Ill. App. 2016): 750 ILCS 5/503(b)(3), stock options illinoiscourts.gov
- A.R.S. § 25-211: community property in Arizona azleg.gov
- Louisiana Civil Code art. 2338: community property legis.la.gov
- New Mexico Courts: divorce self-help (community property, NMSA § 40-3-8) selfrepresentation.nmcourts.gov
- Wisconsin Department of Revenue Publication 113: marital property (Wis. Stat. § 766.31) revenue.wi.gov
Related
This page explains the law in general terms. It is not legal advice about your situation. Justice is not a law firm and is not affiliated with any court or government agency.