Property Distribution
Depending on how the parties work together, and the length of the marriage, the determination of which spouse gets what property can be extremely easy or difficult and acrimonious. Couples who have been married a short time and have not acquired much property together usually take what they brought to the marriage and go their separate ways. Even if a home was purchased, it can be sold and the proceeds divided or one spouse can pay the other for her half.
On the other hand, couples in lengthy marriages have typically acquired a large amount of property and debt. One or both may have a vested interest in staying in the family home. Substantial employment and retirement benefits have usually accrued. The wife may have stopped working to raise the children and have no retirement benefits. Furniture, art and jewelry may have been purchased throughout the marriage. Gifts have been exchanged between the spouses; one or both may have received an inheritance.
Standard of equitable division
"Equitable" is a term often used in the law. It refers to a fair result when the law in question is applied. Laws concerning the division of property when a divorce occurs require an equitable, or fair, result.
There is no set formula for the division of property when couples divorce. In order to achieve an equitable or fair result, the court divides the property among the spouses in a just and right manner. "Just and right" does not mean an equal division of property. Courts divide the spouses' property according to the rights each spouse has in the property and considering the needs of any children born during the marriage. For instance, if the wife used her inheritance to purchase the family home, the court may determine she has a larger interest in it than the husband (it is not automatically her separate property since she contributed it to the marriage as the family home.)
Factors in determining distribution
If the couple can agree as to how their property should be divided, they enter into a marital settlement agreement or property settlement agreement, file it with the court and distribute the property according to the agreement. However, if there is a dispute, the judge decides what property each spouse receives when the divorce is finalized.
Generally, property owned jointly by the couple is valued and divided equally. However, one spouse may be entitled to a larger share based on several factors the court considers, including:
- the disparity in earning capacities or incomes;
- the spouses' abilities and education;
- the spouses' relative financial conditions (debts owed and future expenses);
- the difference in spouse's ages;
- the value of separate property;
- the type of property being divided;
- the fault of one spouse in causing the divorce; and
- the waste by one spouse of money or property.
Based on these factors, the more dependent and less financially well-off spouse generally will receive a larger share of the property.
Spouse's fault in divorce
One spouse's fault in causing the divorce is usually irrelevant because divorces are typically granted on "no-fault" grounds. However, the court can find fault with one of the spouses and grant the divorce on that basis. In those instances (and even in no-fault divorces), the wrongful actions by one of the spouses may be a factor in determining that the innocent spouse is awarded a larger share of the property.
SIDEBAR: Because the judge has broad discretion in dividing marital property, even where a no-fault divorce is granted, the fault of one spouse can be taken into consideration by the judge.
SIDEBAR: In community property states, the courts overwhelmingly find "fault" when highly disproportionate property divisions are ordered. Since all income earned and property acquired during the marriage belongs equally to both spouses, it is not typical to give one of the spouses little or no property unless his behavior was egregious.
TIP: A finding of fault is not required to divide the property unequally.
Does an equitable division of property mean that the judge will order a 50/50 split of our assets?
No. To the contrary, a 50/50 split is never presumed. Under some fact patterns, an equitable division can be an award of all property to one spouse.
Who determines the value of the property that is going to be divided?
The judge makes the final determination of the property's value. Evidence is presented that establishes what certain property may be worth and, based on this evidence, the court places a value on it.
Who gets the keep the house in a divorce?
The parent with custody of the children is generally entitled to keep the house. The court may order the spouse with the greater income to make all or a portion of the mortgage payments for a time. However, if the spouse living in the house cannot afford its upkeep and mortgage payments, the home will likely have to be sold at some point in the future.
TIP: The spouse who wants the family home often "buys out" her ex-spouse's interest in the house, rather than selling it and dividing the proceeds.
Can I testify as to the value of my stamp collection?
Yes. You are not required to hire an expert. Your testimony is evidence on which the judge can rely in determining the value of the stamp collection. However, your spouse, or an expert he or she hires, may dispute your testimony regarding the value of the collection.
TIP: Do not assume that the court will agree with the value that you place on the property.
Can the judge punish my husband for his cruelty by requiring him to donate all the money in his bank account to charity?
No. The court may not punish your husband for his behavior. However, the judge may compensate you by awarding the cash in the account to you.
During our marriage, my husband bought his mistress many expensive gifts and gave her large sums of cash. Will I get a larger share of our property?
Most likely. The court will generally consider your husband's spending on his mistress as a frivolous and unjustified use of marital assets. However, if the expenses were paid out of your husband's separate property, they may not factor into the division of property.
SIDEBAR: In a community property state, any income spent on extravagances, especially on another person, without the other spouse's knowledge and consent is considered to be a waste of the community's assets. The innocent spouse will get a larger portion of community property to compensate for the other spouse's waste. If the expenses were paid out of the husband's separate property, they may not factor into the division of property.
I'm not happy with the way that the court divided our property during the divorce. Can I appeal the judge's order?
Yes - but you will probably be unsuccessful. The court has broad discretion in the way property is divided among the spouses. Unless the judge acted without any regard to the facts, a higher court will not overturn her order.
SIDEBAR: The judge also has discretion in the monetary value she places on the property.
TIP: You must offer any and all evidence you have to the judge in support of how you want the property divided. If you fail to present relevant facts in your favor, you cannot later complain that the property was divided unfairly. For instance, if you've been informed that your company is going to lay you off, testify to the situation.
My attorney's fees are enormous. Will the court consider the fees when making the property division?
Yes. The judge can factor in your attorney's fee and award you a larger portion of the property to offset your expenses.
TIP: Attorney's fees that have been increased due to any failure on your part to cooperate with the court or follow the judge's order will likely not be considered.
Since we separated, my husband received a $10,000 bonus from his employment. Will the bonus be considered when the court divides our property?
Yes. Increases or decreases in income or to the value of property since you separated can be considered by the court.
I lied to my wife about my prior divorces before we married. Will my lies affect the property division?
Yes. Since the judge has broad discretion, she can factor in the misrepresentations you made to your wife before you married when she makes a property division. Depending on the judge, your lies may have a little, a lot, or nothing at all to do with the court's final decision.
SIDEBAR: Courts are not limited by the time frame in which certain events occurred. In other words, your actions before the marriage may be considered along with your behavior during the marriage.
My wife lied to get me to marry her. Since there wouldn't have been a marriage but for her lies, can she be awarded any property?
Yes. Although the marriage might not have occurred except for her fraud, she is not legally barred from receiving a portion of the property. It will be up to the judge to decide what weight, if any, to give to the fact that your wife fraudulently induced you to marry her.
TIP: Even where a marriage is annulled because of one spouse's fraud, the judge is not required to award all the property to the innocent spouse.
My wife and I, and our respective attorneys, have agreed to a property settlement dividing our property. Will the judge change it?
Probably not. Although the court has the authority to change the agreement, the court does not have the time or any reason to upset an agreement between the parties. It is not the place of the judge to insert herself into issues that have already been resolved.
TIP: A party that is not represented by an attorney should not expect the judge to review the agreement. Even if the agreement is one-sided in favor of the party with legal representation, a red flag won't go up with the court.
However, the judge will review, and may refuse to accept, settlement agreements if there are children and one of the parties does not have an attorney. The court's view is that the children's' interest must be represented by an attorney before any issues concerning them are settled.
My wife and I came to a marital settlement agreement but the judge is awarding her a larger share of the assets than we agreed on. Can the court change our agreement?
Yes. Theoretically and legally, the judge can change your agreement in any way she believes will be fair to both parties. However, it is unusual for the court to change it. It is simply not practical for the court to refuse agreements when there are cases with disputed issues waiting to be heard.
SIDEBAR: Generally, the court would need to find that the agreement is unconscionable to one of the spouses, i.e., completely unfair, before setting it aside and entering her own order dividing the assets.
Does the amount of alimony I may be ordered to pay have any bearing on the property division?
Yes. The amount of alimony is considered, together with the property division. In other words, you may get "credit" for the alimony you are paying and your spouse may be awarded a lesser portion of the property.
Currently, my wife and I have approximately the same amount of income. However, she just received a major industry award. Will the award effect the property division?
Yes. Since courts consider the potential for earnings or income and your wife's award has a great impact on her future earnings, you may receive a larger share of the property.
We don't have any assets, just a lot of debt. How will the court divide our liabilities?
Debts are divided the same way assets and property are allocated to the spouses - in an equitable manner. In this case, a spouse who is responsible for running up the credit cards bills to buy expensive but unneeded items may end up owing most of the debt, since an equal split would not be fair.
Some of our property was overlooked and not included in the divorce decree. Who gets it now that the divorce is final?
Both spouses are entitled to a half-interest in the property because it is owned jointly. Since the divorce is final, one or both of you must file a suit to partition or divide the property, so that it can be sold or distributed without impinging on the other spouse's rights.
Qualified Domestic Relations Order (QDRO)
Retirement or pension benefits typically must be distributed to the employee only. However, a QDRO (pronounced "quadro") is a special court order directing the retirement plan to distribute the benefits, or a portion of them, to someone other than the employee. Since retirement benefits that accrued during a marriage are often divided among the divorcing spouses, a QDRO is necessary. It is a separate order from the final divorce decree.
The QDRO must meet certain federal requirements. The U.S. Department of Labor has more information about QDROs on their website at www.dol.gov/ebsa/faqs/faq_qdro3.html.
TIP: Social Security benefits are automatically distributed to divorced spouses under different rules, and a QDRO is not necessary.
TIP: QDROs are routine for retirement and pension plan administrators. Most plans have QDRO specialists. Contact their office for forms and information relating to the retirement plan from which you will be receiving benefits.
SIDEBAR: Until the plan administrator approves the QDRO, the retirement benefits cannot be distributed to the employee's former spouse. Under federal law, a divorce decree from the court that orders a division of retirement benefits is not authority for paying out the benefits to the ex-spouse.