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UNDERSTANDING DIVISION OF PROPERTY AND ASSETS

Nevada is a community property state. Community property is, generally speaking, property acquired after the date of marriage by either spouse. Although there are some caveats to the rule, community property is to be divided equally between both parties upon divorce.

Community property in Nevada is defined under NRS 123.220;

All property, other than that stated in NRS 123.130, acquired after marriage by either husband or wife, or both, is community property unless otherwise provided by:

1. An agreement in writing between the spouses.

2. A decree of separate maintenance issued by a court of competent jurisdiction.

3. NRS 123.190.

4. A decree issued or agreement in writing entered pursuant to NRS 123.259.

Property which is not deemed to fall under the penumbra of community property is "separate property". Separate property is defined under NRS 123.130:

1. All property of the wife owned by her before marriage, and that acquired by her afterwards by gift, bequest, devise, descent or by an award for personal injury damages, with the rents, issues and profits thereof, is her separate property.

2. All property of the husband owned by him before marriage, and that acquired by him afterwards by gift, bequest, devise, descent or by an award for personal injury damages, with the rents, issues and profits thereof, is his separate property.

Thus, there is a presumption that property acquired prior to the marriage is separate property and property acquired after the marriage is community property. After the marriage commences it is possible for a spouse to keep property purchased as their own separate property if that spouse uses her own separate funds or own separate credit to purchase such property. However, if a spouse fails to keep such funds segregated from the other spouse's funds then any purchases made with such funds will be deemed community property and thus subject to equal division upon divorce.

It should also be noted that a spouse may record a written "full and complete inventory of the separate property of a married person, exclusive of money." Recording the inventory serves as notice that such property is separate property of which that spouse has exclusive title to. See NRS 123.140.

The acquisition of community property and community debt ceases upon the dissolution of marriage. Although there may be some ambiguity as to whether this date is the date the Decree of Divorce is entered or whether it is at the date trial commences it is accepted in Nevada that the date of "Divorce" is the date of trial and thus assets acquired after trial do not become community property.

Although the general rule is that community property is to be split equally between the spouses upon divorce, there are some exceptions to the rule. NRS 125.150(1)(b) provides that the court:

(b) Shall, to the extent practicable, make an equal disposition of the community property of the parties, except that the court may make an unequal disposition of the community property in such proportions as it deems just if the court finds a compelling reason to do so and sets forth in writing the reasons for making the unequal disposition.

Therefore, based on this statute it is possible for courts to deviate from the general 50/50 community property division of assets. The statute is vague but dictates that a court can deviate from the general rule where it "deems just" if it finds "compelling reason" and must "set forth in writing" its reasons for doing so.

There is some case law which helps identify some scenarios where a court may make a deviation. In Putterman v Putterman The Nevada Supreme Court held that a husbands refusal to account to the court concerning his earnings and other financial matters provided compelling reasons for an unequal disposition of community property. The court also noted that other reasons for an unequal division of property would include negligent loss or destruction of community property, unauthorized gifts of community property and even, possibly, compensation for losses occasioned by marriage and its breakup. In the case of Lofgren v. Lofgren, the Nevada Supreme Court held that financial misconduct by one of the parties, such as waste or secretion of community assets in violation of court order, would constitute a "compelling reason" to justify unequal division of assets.

It should be noted that Nevada case law dictates that separate property placed into joint tenancy is presumed to be a gift of one half interest to the other party. This presumption can be overcome by clear and convincing evidence. Furthermore, when separate funds are used to acquire property in the names of husband in wife as joint tenants then that property is likewise presumed to be a gift of one-half interest in that property which is acquired.

Therefore if an individual wishes to keep her separate property as her own in the event of divorce it is important that she not comingle her funds with her spouse after marriage. For instance it would be wise for her to keep a separate bank account under her own name which holds her separate finances as acquired prior to the marriage. If she uses such funds to help purchase a house with her husband and such deed carries both of their names then such property is deemed a community asset. Her husband would take a one half interest in her financial contribution to the house unless she could prove by clear and convincing evidence that the parties intended such contribution to be separate. Clear and convincing evidence cannot be proven through opinion of the spouse, there must be substantial evidence demonstrating this intent.