In a community property state, the general rule is to divide the community property and debt in a 50/50 ratio. However, the law recognizes that there may be exceptional cases where such an even division would not do justice to one of the parties to the divorce. In such cases, the court may come up with an alternative formula for dividing the community assets and debts. Here are three examples of such exceptions:

Spouse Uses Community Money for Private Vacations

Consider a situation in which your spouse realizes that you are headed for divorce, and decides to "do something" to tilt the balance of the property division in their favor. Your partner then decides to use their annual bonus to take a romantic partner out of the country for a vacation.

This is a misappropriation of community money because the money your partner earns during your marriage is community property. Also, financing a romantic trip with another person is a clear misuse of the community property. In such a case, the court may award more assets to you to compensate for the amount misappropriated by your partner.

Inability to Pay Debts

Consider an example in which both or either of you hasn't been too disciplined with your finances. Or maybe it was just a cause of bad luck, and the business you had invested all your money in went south after a couple of years. At the time of your divorce, you realize that your available assets cannot settle all your debts.

This is known as negative community. The divorce court will way your ability to pay the debts and award more debts to the partner with a stronger ability to repay them. For example, if your partner's income is way more than yours, they may have to shoulder more debts than you. The main reason for such a distribution is to ensure your creditors don't suffer because of your divorce.

Personal Injury Award

In this third example, assume that one of you got injured in an auto accident, and the insurance company settles the award before the divorce is finalized. In this case, the award won't be split evenly between the two of you. The purpose of the settlement determines how it is divided.

For example, awards for lost wages and property damages are likely to be divided in a 50/50 ratio. However, pain and suffering award goes entirely to the spouse who actually experienced the pain and suffering; it isn't community property.

In short, you shouldn't assume that your debts and assets will be evenly divided just because you live in a community property state. Prepare yourself for any outcome because your spouse may raise any of these issues to avoid the 50/50 division if it wouldn't favor them. The best way to prepare yourself is to hire a divorce lawyer and be utterly honest with then. Contact a business, such as the Cragun Law Firm, for more information.