Economics of Dissolution

Question 1

Property Division at Divorce

What system of property division is used in common law?

Answer 1

• A title-based system
• during marriage title determined who has power and control over the property
• after marriage, title-based approach also determined who gets it
• system created unequal/harsh effect of distributing property to women, since women unlikely to own separate property

Question 2

Property Division at Divorce

What is the alternative to a title-based approach to division?

Answer 2

• Equitable Distribution approach considered non-economic and domestic contributions in marriage as valuable as well economic contributions
• Community Property Principles: each spouse acquires a present, one-half interest in the property acquired through labor of either spouse, regardless of who earned it
• at divorce, community property is divided and separate property remains with its owner.

Question 3

Property Division at Divorce

What do courts and legislatures mean by “equitable” distribution?

Answer 3

1. property should be allocated in proportion to the spousal contribution to its acquisition
2. property should be allocated to relative spousal need.

Question 4

Ferguson v. Ferguson

What factors are considered in dividing marital property in an equitable distribution system?

is ED common law or statutory?

Answer 4

• substantial contribution to the accumulation of property (including contribution to the stability and harmony of the marital and family relationships as measured by quality, quantity, and time spent on family duties and duration of marriage. also including contribution to education or training bearing on the earning power of spouse accumulating assets)
• the degree each spouse has expended, withdrawn, or disposed of marital assets
• the market and emotional value of the assets
• tax and other economic consequences
• extent to which equitable distribution will eliminate periodic payments and other potential sources of future friction
• need of parties for financial security
• any other factor in equity that should be considered

equitable distribution is common law jurisdiction. replaced title-based approach.

Question 5

Ferguson v. Ferguson

What was the holding?

Answer 5

• Domestic contributions are to be considered, when determining how to divide marital property.
• the wife is entitled to a share of his pension plans + savings because of her contribution to the household.

Question 6

Analysis Framework

What property is distributable under common law?

Answer 6

• Marital property
• must determine what is MP and whats separate property.
• separate property stays with owner
• marital property gets apportioned – but this does not tell you how to apportion it, simply that its available for separation.
• the apportionment is dependent on spousal contribution to acquisition + relative spouse need. (equitable)

Question 7

Analysis Framework

What property is distributable under a community property state?

Answer 7

• Community property aka marital property (any property earned or acquired during marriage, unless inherited or gifted to individual spouse)
• similarly, separate property goes to owner
• but community property is divided 50/50.

Alt. B in Uniform Marriage and Divorce Act (1973) UMDA §307 (majority of states)

Question 8

Analysis Framework

What system does the minority of common law states use?

Answer 8

• all property system
• divides all property regardless of whether its marital or separate

Alt. A in Uniform Marriage and Divorce Act (1973) UMDA §307

Question 9

Identifying and Characterizing Property

What kind of property is marital and what kind is separate?

Answer 9

1. Marital property includes property acquried during marriage, or while the spouses were in a relationship that immediately preceded their marriage.
2. Separate property includes inheritances and gifts, property received in exchange for separate property, and property acquired after parties started living apart even while married.

for the purpose of this section “during marriage” means after the commencement of marriage and before the filing and service of a petition for dissolution (if that petition ultimately results in a decree dissolving the marriage), unless there are facts, set forth in written findings of the trial court, establishing that use of another date is necessary to avoid substantial injustice

Question 10

Identifying and Characterizing Property

What does ALI’s definition of “during marriage” include?

Answer 10

• after the commencement of the marriage and before the filing and service of petition for dissolution; courts would use the date of marriage to mark time
• date of service marks end of marriage.

Question 11

Identifying and Characterizing Property

What date is used for valuation of property?

Answer 11

• statue may establish date of trial, divorce action filing, date of separation, some jurisdictions leave the valuation date to judicial discretion

Question 12

Identifying and Characterizing Property

How does an increase in property value of separate property affect division of property?

Answer 12

• active - when one spouse increases the value of separate property, w/labor to improve property can be treated as marital property
• passive appreciation – increased in market value – can be treated as separate property

Question 13

Allocating Property

How do Courts consider allocating property?

Answer 13

• depends on the state, some require 50/50 split. while others offer broad discretion to courts to consider other factors like fault, economic contributions and length of relationship
• the court has discretion to reach overrall fairness.
• needs of spouse taken into account, including general financial situation, age, and employment. some consider future need.
• economic and non-economic contributions
• duration of relationship
• fault can be considered for allocation of property

Question 14

Arneault v. Arneault

what was the holding?

Answer 14

• innappropriate to consider only economic contributions in dividing property
• divorce code presumes that all marital property should be divided 50/50, with consideration to party’s contributions to acquisition.
• wife’s contributions allowed for husband to succeed in his work, and did not detract value from marital estate

Question 15

Wendt v. Wendt

Was the wife entitled to a 50/50 split of property or equitable split?

Answer 15

• equitable distribution
• courts considered non-monetary contributions by wife and the equal efforts and sacrifices made by both parties (human capital theory)
• contribution of domestic labor
• courts did not want to put an economic value to her non-monetary contributions because does not want to move away from sharing and sacrifice of marital relationships

Question 16

Special Issues in Property

are pensions and retirement funds marital or separate property?

Answer 16

• marital
• courts will try to hold off on distribution of pension/retirement until retirement age, but may require splitting now to provide a “clean break” for both parties.

Question 17

Allocating Property

are professional licenses or degrees marital or separate property?

Answer 17

• separate
• degrees and licenses belong to those who earned it.

Question 18

Allocating Property

are damage awards from PI cases marital or separate property?

Answer 18

• sometimes marital
• will look at components of settlement or recovery to determine the purpose of each component
• courts rarely treat damage awards as entirely separate property

varies across jurisdictions

Question 19

Allocating Property

are debts marital or separate property?

Answer 19

• sometimes marital
• marital debt is any debt incurred during the marriage of parties joint benefit
• medical debt may be marital property if the event causing the medical services occurred during the marriage

varies across jurisdictions

Question 20

Orr v. Orr

is Alabama’s alimony statute which provides that husband must be required to pay alimony upon divorce constitutional?

Answer 20

• No, it violates the equal protection clause because it discriminates on the basis of gender.
• to withstand scrutiny, must serve important governmental objectives and must be substantially related to achievement of those objectives
• court found Alabama’s objectives to be outdated and sex as a proxy is unnecessary to achieve their objectives of compensating women for past discrimination and reinforce family model where husband must support wife.
• looking directly at need or discrimination will help achieve these objectives.

Question 21

Gnall v. Gnall

What are the different types of alimony?

Distinction between long-term and short-term marriages for alimony should not be arbitrary.

Answer 21

• permanent alimony
• limited duration alimony
• rehabilitative
• reimbursement

Question 22

Gnall v. Gnall

What does the court consider when determining whether PA is appropriate

PA = permanent alimony

Answer 22

• permanent alimony = intent to allow dependent spouse to live same lifestyle
• the actual needs of the wife and actual means of husband along with others; fixed amount is what the wife would have expected if living with H.

Question 23

Gnall v. Gnall

What does the court consider when determining whether LDA is appropriate

LDA = limited duration alimony

Answer 23

• limited duration alimony = support dependent spouse’s post-divorce needs following a short-marriage.
• duration of marriage is the distinction between PA and LDA; if should be PA, then LDA should not be given. No exact duration = short marriage.

Distinction between long-term and short-term marriages for alimony should not be arbitrary (25 vs. 10 years)

Question 24

Gnall v. Gnall

What does the court consider when determining whether RA is appropriate

RA = rehabilitative alimony

Answer 24

• Rehabilitative = short-term award to support spouse while they reenter the workforce through training or education;
• can be awarded alone or with another form of alimony.

Question 25

Gnall v. Gnall

What does the court consider when determining whether REA is appropriate

REA = reimbursement alimony

Answer 25

• reimbursement alimony = awards a spouse who made financial sacrifices to allow the other spouse to secure an advanced degree.

Question 26

Contracting for Dissolution

what is a premarital agreement?

pre-nup

Answer 26

• agreements between individuals intending to marry, with the goal to set terms for how financial obligations and rights will be sorted out at the time of dissolution;
• include altering organization of default approaches with these agreements
• the court is concerned with evidence of coercion, inequality in power/money

Question 27

Contracting for Dissolution

what is a post-nuptial agreement?

Answer 27

• spouses who intend to stay married but wish to modify their rights during marriage or upon separation, death, or divorce

Question 28

Contracting for Dissolution

what is a separation agreement?

Answer 28

• made in anticipation of imminent marriage separation or dissolution;
• enforcement only possible if followed shortly by the separation or dissolution of the marriage

Question 29

Contracting for Dissolution

What kind of agreements will the Court usually not enforce?

Answer 29

• those that deal with child support or custody;
• court is likely to also exclude terms about conduct during the marriage, due to the marital privacy doctrine of non-intervention;
• also concerned with allowing too much private ordering

did not want to recognize pre-nups bc believed it encouraged divorce. now, courts think it brings stability to marriage bc it forces parties to consider terms of marriage

Question 30

Simeone v. Simeone

What was the holding?

Answer 30

• premarital agreements are like any other contract;
• should be reviewed under traditional contract terms and the court will not make special inquiries such as reasonableness or informed understanding;
• the contract does require a full disclosure of assets and will create a rebuttable presumption overcome only by clear and convincing evidence of misrepresentation or fraud

arguments of duress and unfairness not successful bc courts treated this as a typical contracts case.

Question 31

Simeone v. Simeone

what was the prior rule in these jurisdictions?

Answer 31

• premarital agreement enforceable if:
  makes reasonable provision for spouse; OR
• entered after full and fair disclosure of general financial positions of the parties and statutory rights being relinquished
• considers the party’s understanding of the rights being relinquished

Question 32

Simeone v. Simeone

What are the differences between the UPAA approach and the UMPAA?

Answer 32

• UPAA = resonates the most with Simeone, with a pro-enforcement approach; allows courts to reject only if (1) not voluntary OR (2) was unconscionable at time of execution and individual was not given sufficient financial disclosure and expressly waived in writing the right to financial disclosure
• UMPAA = takes a less pro-enforcement position and instead provides greater protections to the party in the weaker financial position; (procedural requirements)
• according to this one an agreement is unenforceable if
• (1) the party seeking to avoid enforcement proves that consent to the agreement was involuntary or the result of duress
• (2) the party didn’t have access to independent legal representation (different)
• (3) unless the party had independent legal representation, the agreement didn’t include a waiver of rights or an explanation in plain language of the rights or obligations modified or waived by the agreement
• (4) the party didn’t receive adequate financial disclosure before signing the agreement

Question 33

Marvin v. Marvin

Can non-marital partners adjudicate claims related to property?

Answer 33

• can recover under contract or equity theories
• as long as the only consideration isn’t sex
• sex = void as a matter of public policy
• other parts of contract with proper consideration = enforceable

Question 34

Marvin v. Marvin

what interest is the court trying to protect by allowing unmarried couples to contract regarding economic matters?

Answer 34

• Court interest in protecting couples’ creation of private ordering of their Ks

Question 35

Marvin v. Marvin

If they had been married, could she recover? What if they were unmarried, but she tried to recover during relationship?

Answer 35

• Cannot recover if married bc of principles of non-intervention
• Court did not say whether timing of enforcement is relevant in a nonmarital relationship

Question 36

Marvin v. Marvin

What are the three theories of recovery in Marvin?

Answer 36

• Express contract → his statements “what I have is yours and what you have is mine” and “I’ll take care of you always” – should this be evidence sufficient? What are the difficulties?
• Implied contract → roots the contract not in explicit promises but instead in the behavior of the parties – “parties own tacit understanding” of their agreement – ex. she gave up her career- how much weight should the court give?
• Equitable remedies → even in absence of an agreement, court may rely on equitable principles to impose a remedy if necessary to avoid unjust enrichment “ quantum meriut” is an equitable remedy by which one may be entitled to compensation for the reasonable value of services provided – equitable remedies often involve an assessment of fairness- how can fairness be determined in this type of relationship.

Question 37

Marvin v. Marvin

What if there is no express agreement, but the couple runs relationship similarly, with one party supporting, one party being a homeworker, and both treating all property common. Can party A argue a claim without the existence of an agreement?

Answer 37

• determine if there is an implied agreement, by looking at significance of their actions and each party’s expectation to their agreement
• if no implied, then equitable relief is possible for unjust enrichment. must claim entitlement to support bc of contribution and service provided
• if thats unavailable, then find whether there’s a common law marriage: if so, then usual divorce dissolution to determine division of marital property

Question 38

Non-Marital Relationships

What does Uniform Cohabitants Economic Realities Act do?

Answer 38

• UCERA provides standardized approach for cohabitant rights, allowing contracts and equitable claims.
• Recognizes the value of non-sexual contributions in cohabitant relationships
• promotes fairness and consistency in property division.
• UCERA supplements any existing laws and does not replace them
• UCERA also protects creditors and good-faith purchasers.
• States have options for protecting the spouse of a married cohabitant from property transfers to the other cohabitant.
• UCERA does not address child-support or create a legal status