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Manual > 11 - Property and Debt > Community or Equity?

Community or Equity?

As with all issues in divorce mediation, parties make their decisions in mediation based, in part, upon their perception of their legal rights. In truth, one can only know one's "legal rights" based upon actually going to court, which itself holds substantial cost, delay, and uncertainty. For most mediation participants, sitting down to discuss how their property and debts can most constructively and fairly be divided is far preferable to litigating these issues.

As an assist to mediating parties, it may be helpful for the mediator to share information about the legal standards that might be applied to the parties' situation if the case were to proceed to court. States vary in their basic approach to property and debt division. Some states, called "community property states," take the view that the fact of marriage, unless there is fraud, duress or the like, itself creates a new equal partnership entity called "community property" that is by law subject to equal division. Most community property states allow parties to modify application of the "community property" standard, either by prenuptial, nuptial, or divorce agreement.

Other states proceed to determine property and debt division according to a more sensitive evaluation of the "equities" of the parties' situation. These "equity states" are prepared to look at all aspects of the parties' asset and debt accumulation and the parties' respective equities in determining a property and debt allocation. By case law, "equity states" typically distinguish between "short term" marriages, in which the equitable goal is presumed to be that of placing the parties back in the position they were as if they never had gotten married, and "long term" marriages, in which the presumed goal is to divide the parties' property and debts in as equal and beneficial a way as possible.

Most "equity state" courts also look at the parties' support arrangements, particularly spousal support, in determining what is most equitable to property and debt division. Thus, in a long-term marriage, a court may be prepared to give a financially dependent spouse the "long-half" of the parties' property, and perhaps no debts, as a means of limiting long-term or indefinite spousal support.

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