Our friends at the law firm of Wilkinson & Finkbeiner, LLP in San Diego were kind enough to provide us this article on key facts about the division of marital property. It looks useful, so I’m proud to share it with you.
5 Key Facts You Need to Know About the Division of Marital Property
By: Darryl Blank
Divorce can be a difficult and emotional process, especially if both parties can’t initially agree on terms that are mutually fair. Some of the most trying decisions lie with who gets custody of the children, who gets the money, the house, the ski boat and more. And these arguments can be substantially more heated if it’s involving a significantly large volume of assets. The largest, finalized divorce settlement on record in the U.S. was with Alec Wildenstein & Jocelyn Perisse. With a wealthy estate due to high-end art dealing and horse breeding and racing, the wife Jocelyn was awarded a total of $2.5 Billion up front, plus $100 million per year for 13 years. With such a large estate, it’s no surprise that it was such a heated, drawn-out case.
When the parties can’t come to a mutual conclusion, this is where the courts, as well as family law attorneys step in to determine the best way to divide up all the assets. There are some big misconceptions about divisions of property in a divorce proceeding. Below are explanations of some important concepts about division of property.
#1. Equitable Distribution Does Not Mean “Half of Everything”
Equitable Distribution is a process for division of assets that’s used by most of the U.S. state courts. Many people believe that this practice means “equal” division. However in actuality it means fair division. So instead of a strict 50/50 split in which each spouse receives exactly one-half of the property acquired during the marriage, the doctrine of equitable distribution is used to look at the future financial situation of each spouse after the termination of the marriage.
The courts will consider many different factors when determining the amount of marital property to award to either party. Some of the most important factors for property division, as compiled by the Boston family law firm Wilkinson & Finkbeiner, LLP are as follows:
- Length of marriage
- Conduct of the parties during marriage
- Age, health, station, occupation, amount and sources of income
- Vocational skills
- Needs of each party
- Opportunity for each party for future acquisition of assets and income
- Present and future needs of children
- Contribution of each party to the acquisition, preservation, or appreciation in value of the estates of each party
- Contribution of each party as a homemaker to the family unit
#2. Not All Estate Assets are Up for Grabs in Divorce
A typical misconception of divorce is that everything of value that a person owns is subject to forfeit during a divorce trial. This belief is false! There are certain types of assets acquired outside of the time of the marriage known as “Separate Property”, like an inheritance or business venture, for example. The courts will certainly consider an individual’s amount of separate property in determining what is fair for distribution in an asset division case, but the marital property is the only thing that is distributed by the courts in a divorce.
Keep in mind that Equitable distribution is used in as a final measure. If both spouses can come to a mutual agreement about the division of the assets, then there is no need for the court to use either Equitable Distribution or Community Property.
#3. Divorce and Property Distributions Laws Vary from State to State
Getting a divorce in Massachusetts can be completely different from getting a divorce in another state. And sometimes the divorce parties decide to relocate to a different state to take advantage of certain laws and maximize their court outcome. For example, In California you have to be a resident of the state for a minimum of 6 months before you can file for a divorce. And on the opposite spectrum, in New Hampshire you don’t even have to be a resident of the state. You simply walk across the state line, pay $180 for processing fees, and you can be divorced in one day. Two other states that offer the quickest and cheapest divorce processes are Alaska and Wyoming.
The most difficult states to get a divorce are Arkansas, New York and California. New York doesn’t allow “no-fault” divorces, so this leads to lengthy, drawn out and difficult legal battles, and filing fees are $335, with a minimum of 360 days processing. Extensive time regulations make Arkansas another difficult state for separating. According to an article in Newsweek, they have a strict 540-day standard processing time for divorce, and a couple must be separated for at least 18 months before they can even file divorce papers.
Distribution rules and regulations can vary from state to state as well. For example, there are some states that don’t currently use the process of Equitable Distribution, but rather another method referred to as “Community Property.” And this process looks at an accumulation of the assets and debts that were acquired during the actual term of marriage, and then divides them evenly to each spouse.
The U.S. states that currently fall under the category of Community Property States are California, Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
#4. Financial Debts are Distributed just like Marital Property
Similar to how marital assets are awarded, debts can also be assigned to each spouse as well. Most people usually think of dividing up the money, etc. when it comes to asset division, but accrued debt is also important in the picture, as it is used to factor someone’s total net worth. And the rules about how these are divided in a divorce depend on if the state that you are filing with is a “Community Property” state or not. In states that don’t have community property, the remaining debts are divided based on who’s name the debt is tied to. However, the states that follow community property, both spouses have responsibility for all of the debts that were accrued during the marriage.
The most common types of debts during divorce include:
- Credit Card Debt
- Home Mortgages
- Car Loans
- Child Support
- Student Loans
- And more!
The courts will also determine if any of the current debts are tied to any of the existing assets, and use that to decide the distribution. For instance, if there is a large mortgage tied to a house in the division, it might be determined that the mortgage debt goes to the party that is awarded the house in the division.
#5. You Shouldn’t Handle a Divorce Case on Your Own
If you find yourself faced with a complicated divorce, including the arduous task of divvying up your current assets, it’s important to do your research and learn the ins-and-outs of the divorce process – especially regarding the specific laws and procedures of the state that you are- or planning to- file. There are many speculations and myths about the divorce process going around, so one should understand the reality of these and coordinate your divorce case for success. In most cases, and especially in those states that don’t allow “no-fault” divorces, it’s important to get an experienced divorce attorney on your side to fight for you. Not only will they know the specific laws and policies of your state, but they should have experience in divorce cases, and will know the best way to fight for your assets and compensations that you deserve.