Equalization of Net Family Property
Each spouse calculates the value of the financial assets and debts that he or she accumulated during the marriage. Each spouse records ½ of the value of jointly owned assets or debts. This calculation is that spouse’s Net Family Property. The spouses add together their respective Net Family Property Values and divide by 2. Each spouse is entitled to the same amount.
If the sum of both spouses’ Net Family Property is a negative number (they collectively lost money during the marriage) then there is no division of Net Family Property. Each spouse is solely responsible for debts in his or her own name. This rule is true even the debt load was uneven or if the debt was incurred solely for the benefit of the other spouse!
One spouse often has to make a payment to the other spouse in an amount that reflects both the Net Family Property and the value of assets and debts that the spouses have already divided.
The law is only concerned with the change of each spouse’s financial condition from the first day of the relationship to the day of separation. Financial transactions made during the marriage are irrelevant, even if they benefitted one spouse over another.
It is assumed an individual spouse is solely entitled to a cash payout arising from a personal injury lawsuit or an inheritance. If the recipient intermingles these assets with those of other spouse, however, then the entitlement is lost.