Divorce Glossary: 30 Key Legal & Financial Terms Defined

Community Property

Property acquired during marriage by either spouse, owned jointly 50/50 by operation of law in nine U.S. states.

In community property states, most assets and debts acquired during the marriage belong equally to both spouses regardless of whose name is on the title. The nine community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin (plus Alaska, South Dakota, and Tennessee as elective community property by trust). Property owned before marriage, gifts, and inheritances are generally separate property and remain with the original owner.

See e.g., Cal. Fam. Code § 760; Tex. Fam. Code § 3.002; Wash. Rev. Code § 26.16.030.

Equitable Distribution

A property-division system used by 41 states in which marital property is divided "fairly" — not necessarily equally — based on multiple statutory factors.

In equitable distribution states, courts have discretion to allocate marital property based on factors that typically include length of marriage, each spouse's economic circumstances, contributions to the marriage (financial and non-financial), age and health of each spouse, and the tax consequences of the division. "Equitable" means fair under the circumstances; it does not mean 50/50, although many courts start with a 50/50 baseline and adjust from there.

See e.g., N.Y. Dom. Rel. Law § 236(B)(5); Fla. Stat. § 61.075; 750 ILCS 5/503.

Marital Property

Property acquired by either spouse during the marriage and subject to division in divorce.

The exact definition varies by state, but marital property generally includes wages and salaries earned during the marriage, retirement contributions made during the marriage, real estate purchased during the marriage with marital funds, and the increase in value during the marriage of certain pre-marital assets. The classification "marital" vs. "separate" is the threshold question in every divorce property case.

Separate Property

Property owned by one spouse before the marriage, or received during the marriage by gift or inheritance, that is not subject to division.

Separate property typically remains the property of the original owner after divorce. Common categories: assets owned before marriage, inheritances, gifts from third parties, personal injury awards (in many states), and assets acquired in exchange for separate property. Commingling separate property with marital property — for example, depositing an inheritance into a joint account — can convert all or part of it to marital property under "transmutation" doctrines.

Commingling

Mixing separate property with marital property in a way that may convert the separate property into marital property.

Classic example: a spouse inherits $100,000 (separate) and deposits it into a joint checking account that the couple uses for marital expenses. Once mixed, the inheritance can become impossible to trace and may be treated entirely as marital. States vary in how strictly they enforce tracing — Ohio (R.C. § 3105.171(A)(6)(b)) is unusually strict, while California allows reasonable tracing methods.

Transmutation

A change in the character of property from separate to marital (or vice versa) by the spouses' conduct or agreement.

Transmutation can occur by deed (re-titling separate property into joint names), by agreement (a written transmutation agreement, required in some states such as California Family Code § 852), or by use (treating the property as marital over time). Transmutation rules are state-specific and frequently litigated.

Tracing

A forensic accounting method used to identify the separate-property portion of an asset that has been commingled with marital property.

Common tracing methods include "direct tracing" (matching specific deposits and withdrawals to specific separate funds) and "exhaustion" or "family expense" tracing (presuming community funds were used for living expenses, leaving separate funds intact). The legal standard is usually "clear and convincing evidence." If tracing fails, the asset is treated as fully marital.

Enterprise Goodwill

The portion of a business's value that is transferable to a buyer — the brand, customer lists, lease, systems, and reputation that survive the owner's departure.

Enterprise goodwill is generally treated as marital property and divided in divorce. It is contrasted with "personal goodwill," which depends on the specific owner and would not transfer in a sale. The distinction is critical for valuing professional practices.

See May v. May, 214 W. Va. 394 (2003); Yoon v. Yoon, 711 N.E.2d 1265 (Ind. 1999); Fla. Stat. § 61.075(1)(f).

Personal Goodwill

The portion of a business's value attributable to the individual owner's reputation, skills, and relationships — typically non-marital in enterprise/personal goodwill states.

Personal goodwill cannot be sold because it leaves with the owner. In states that follow Yoon v. Yoon and May v. May, personal goodwill is excluded from the marital estate. In total-goodwill states (e.g., Washington), all goodwill is divisible.

Yoon v. Yoon, 711 N.E.2d 1265 (Ind. 1999); May v. May, 214 W. Va. 394 (2003).

Alimony / Spousal Support / Maintenance

Court-ordered payments from one spouse to the other after divorce. The same concept goes by different names: "alimony" (older / Southern states), "spousal support" (Western states), and "maintenance" (some Eastern and Midwestern states).

Alimony serves several purposes depending on the state: rehabilitating a lower-earning spouse, compensating for career sacrifice, maintaining the marital standard of living, or bridging a financial gap until property division proceeds settle. Some states have statutory formulas (Illinois 750 ILCS 5/504(b-1); New York Dom. Rel. Law § 236(B)(6)); others rely on multi-factor judicial discretion. Florida abolished permanent alimony effective July 1, 2023 (SB 1416).

Child Support

Periodic payments from one parent to the other for the financial support of their children. Calculated under each state's child support guidelines, which are mandated by federal law (45 C.F.R. § 302.56).

Most states use either an "income shares" model (combine both parents' income, prorate the obligation) or a "percentage of obligor income" model (apply a percentage to one parent's income). A few use the "Melson formula" (Delaware, Hawaii, Montana). All states must publish guidelines and review them at least every four years (45 C.F.R. § 302.56(e)).

Income Shares Model

A child support calculation method (used by 41 states) that adds both parents' incomes and looks up the basic child support obligation on a published schedule, then prorates between the parents.

The model assumes the child should receive the same proportion of parental income they would have received if the parents lived together. The non-custodial parent pays their pro-rata share to the custodial parent. Florida (§ 61.30), Illinois (HFS guidelines), and most equitable distribution states use this model.

Percentage of Income Model

A child support calculation method (used by Texas, Nevada, and a few others) that applies a fixed percentage to the obligor parent's net income based on the number of children.

Texas Family Code § 154.125 is the canonical example: 20% for one child, 25% for two, 30% for three, 35% for four, 40% for five, and not less than 40% for six or more. Texas applies these percentages only to the first $11,700/month of net resources (cap effective Sept. 2025).

Coverture Fraction

A formula used to allocate the marital portion of an asset whose value accrued partly during and partly outside the marriage. Numerator = months of overlap with the marriage; denominator = total months of accrual.

The coverture fraction is the standard tool for dividing pensions, stock options, RSUs, and other deferred-compensation assets that span the marriage. For example, an option granted three years before separation that vests over four years would have a coverture fraction of 36/48 = 75% marital. The leading cases are In re Marriage of Hug, 154 Cal. App. 3d 780 (1984) (back-pay rationale) and In re Marriage of Nelson, 177 Cal. App. 3d 150 (1986) (forward-incentive rationale).

QDRO (Qualified Domestic Relations Order)

A federal court order, recognized under ERISA § 206(d)(3) and IRC § 414(p), that allows a private-sector retirement plan (401(k), pension) to pay benefits to a former spouse without violating ERISA's anti-alienation rule.

A QDRO is required to divide most ERISA-governed plans. Without one, the plan administrator cannot legally transfer benefits to a non-employee former spouse. The order must contain specific information (29 U.S.C. § 1056(d)(3)(C)) and must be approved by the plan administrator. QDROs can split account balances (defined-contribution plans like 401(k)) or assign a portion of monthly benefits (defined-benefit pensions). Government and military plans use different orders (DRO for federal civil service; military uses a USFSPA-compliant order).

DRO (Domestic Relations Order)

A court order dividing a federal civil service retirement benefit (CSRS, FERS, Thrift Savings Plan). Used instead of a QDRO for federal employee plans.

Federal employee plans are not covered by ERISA, so they require a DRO that meets OPM's specific requirements (5 C.F.R. Part 838). The TSP requires a separate "TSP Retirement Benefits Court Order." Sample language is published by OPM.

EDRO (Eligible Domestic Relations Order)

The state-government equivalent of a QDRO, used to divide state pension and retirement benefits.

State retirement systems (CalSTRS, NYSLRS, TRS, etc.) are exempt from ERISA. Each system has its own model order language and procedural rules. Some require pre-approval before entry of the divorce decree; ignoring this can void the assignment.

IRC § 1041

The federal Internal Revenue Code provision that makes most transfers of property between spouses (or former spouses incident to divorce) tax-free at the time of transfer.

Under IRC § 1041(a), no gain or loss is recognized when property is transferred between spouses or to a former spouse incident to divorce. The transferee takes the transferor's basis under § 1041(b)(2) and tacks the transferor's holding period under § 1223(2). "Incident to divorce" is defined by § 1041(c) and Treas. Reg. § 1.1041-1T(b). Section 1041 is a deferral, not an exemption — built-in gain follows the asset.

Innocent Spouse Relief (IRC § 6015)

A federal tax remedy that relieves one spouse from joint liability for tax owed on a jointly-filed return when the deficiency is attributable to the other spouse.

IRC § 6015 provides three avenues: traditional innocent spouse relief (§ 6015(b)), separation-of-liability election for divorced/separated taxpayers (§ 6015(c)), and equitable relief when the first two are unavailable (§ 6015(f)). The taxpayer files Form 8857. Equitable relief no longer has a fixed two-year deadline (per Notice 2011-70 and Rev. Proc. 2013-34).

Filing Status (After Divorce)

A taxpayer's status (Single, Head of Household, Married Filing Jointly, Married Filing Separately) on December 31 controls their filing status for the entire tax year.

If a divorce is final on December 31, both spouses file as Single (or Head of Household if they qualify under IRC § 2(b)) for that entire year — even though they were married for most of it. This makes year-end timing relevant. Head of Household requires an unmarried-equivalent status, more than half the year of household maintenance, and a qualifying child or relative (IRC § 2(b)).

Petitioner / Respondent

The party who files the divorce action (Petitioner, sometimes "Plaintiff") and the other spouse (Respondent, sometimes "Defendant").

In most states, the divorce is initiated by a "Petition for Dissolution of Marriage" (or similar). The party who files is the Petitioner; the served spouse is the Respondent. The labels are largely procedural and do not affect the substantive outcome of the divorce.

No-Fault Divorce

A divorce based on the breakdown of the marriage rather than a specific spouse's wrongdoing. All 50 U.S. states permit no-fault divorce; New York was the last to adopt it in 2010.

Common no-fault grounds: "irreconcilable differences," "irretrievable breakdown," "incompatibility." The party seeking divorce does not need to prove the other spouse did anything wrong. Some states also retain fault grounds (adultery, cruelty, abandonment), which can affect property division or alimony in some jurisdictions.

Discovery

The pre-trial phase in which each spouse formally requests financial documents, sworn answers to questions, and depositions from the other spouse and third parties.

Standard discovery devices in divorce: interrogatories (written questions), requests for production (documents), requests for admission, depositions, and subpoenas to third parties (banks, employers, exchanges). Sanctions for failing to disclose assets can include adverse inferences, monetary sanctions, and award of the undisclosed asset to the other spouse.

Mediation

A non-binding settlement process in which a neutral third party (the mediator) helps the spouses negotiate the terms of their divorce without going to trial.

Mediation is voluntary in most states (mandatory in some, like California for custody disputes). The mediator does not decide anything — the spouses retain control. Mediation typically costs $3,000–$8,000 per couple total, compared to $20,000+ per spouse for litigation. Most divorces settle at some stage; mediation just front-loads the negotiation.

Date of Separation

The date the marital economic community is treated as ending. State law varies on whether this is the date of physical separation, the date one spouse formed the intent to divorce and communicated it, or the date of filing.

The date of separation is critical because earnings and acquisitions after that date may be treated as separate property in community property states (e.g., California Family Code § 771). Equitable distribution states use various cutoffs — Pennsylvania uses the date of final separation; Illinois uses the date of judgment for valuation.

Domestic Support Obligation (DSO)

A federal bankruptcy term (11 U.S.C. § 101(14A)) for support owed to a spouse, former spouse, or child. DSOs are nondischargeable in both Chapter 7 and Chapter 13 bankruptcy.

The DSO designation matters in bankruptcy. Under 11 U.S.C. § 523(a)(5), a debt that meets the DSO definition cannot be discharged. DSOs also receive priority claim status (§ 507(a)(1)) and are exempted from the automatic stay (§ 362(b)(2)). Property settlement debts (not in the nature of support) are also nondischargeable in Chapter 7 under § 523(a)(15) but may be dischargeable in Chapter 13.

USFSPA (Uniformed Services Former Spouses' Protection Act)

A 1982 federal statute (10 U.S.C. § 1408) authorizing state courts to treat military retired pay as marital or community property in divorce.

USFSPA was Congress's response to McCarty v. McCarty, 453 U.S. 210 (1981), which held that state courts could not divide military retired pay. USFSPA does not require division — it permits it under each state's own divorce law. It also created the DFAS direct-pay mechanism (subject to the "10/10 rule") and the Frozen Benefit Rule (added by NDAA 2017).

10/10 Rule (Military Divorce)

Under 10 U.S.C. § 1408(d)(2), DFAS will pay a former spouse's share of military retired pay directly only if the marriage lasted at least 10 years that overlapped with at least 10 years of creditable military service.

The 10/10 rule controls direct payment by DFAS — not the right to division. State courts can divide military retired pay regardless of marriage length; the 10/10 rule only determines whether DFAS will mail the check or the spouses must enforce it themselves.

UCCJEA (Uniform Child Custody Jurisdiction and Enforcement Act)

A uniform act adopted by all 50 U.S. states (and D.C.) that determines which state has jurisdiction to make initial and modification custody decisions and requires sister-state enforcement.

Under the UCCJEA, the child's "home state" — the state where the child has lived for the past six months — generally has exclusive jurisdiction to make initial custody decisions. The state that issued an initial custody order has continuing exclusive jurisdiction to modify it as long as one parent or the child remains in that state. The UCCJEA replaced the older UCCJA in most states between 1997 and 2009.

UIFSA (Uniform Interstate Family Support Act)

A uniform act adopted by all 50 U.S. states that determines which state has jurisdiction over child support and spousal support orders when parents live in different states. Federal mandate under 42 U.S.C. § 666(f).

UIFSA establishes the "one order" rule: at any time, only one state's child support order is controlling and enforceable. The state that issued the order has continuing exclusive jurisdiction (CEJ) to modify it as long as either parent or the child still lives there. UIFSA also created the Income Withholding for Support (IWO) form for cross-state wage garnishment.