Property Division Flashcards
What are the 3 Main Approaches to Property Division?
- Community Property: All property acquired during the marriage is deemed owned one-half by each spouse, and all property brought into the marriage or acquired by gift or bequest is separate property
- Equitable Division of All Property: The court divides all property owned by either spouse, whether acquired before or after the marriage
- Equitable Division of Marital Property: Each spouse takes their separate property, and the court only divides the property acquired during the marriage
No. 3 is the MOST common approach
Are Property Distribution Decrees Modifiable?
NO! Property distribution decrees are NOT modifiable
What is the Two-Step Process in Property Division
Typically, there is a two-step process in property division:
- Classification — Determine what is marital property and what is separate property
- Equitable Division — Make an equitable division of the marital estate no matter how the property is titled
Equitable division DOES NOT necessarily mean equal.
What is Seperate Property?
Generally, in a divorce, each spouse takes their separate property. Separate property includes:
- Property owned before marriage
- Property acquired by gift or inheritance
- Property acquired in exchange for separate property
- Income and appreciation of separate property
- Pain and suffering awards
- Personal damages (future medical expenses or future lost wages)
- Property acquired after an order of legal separation that includes a final disposition of property
What is Marital Property?
Marital property is all other property acquired during the marriage. Some jurisdictions use the date of separation as the end of the marital estate, and others use the date of filing for divorce.
Marital property includes:
- Property Acquired During the Marriage
- Earnings
- Employment Benefits, Pensions, Stock Options: The majority rule is that employment benefits, stock options, and pension rights earned during marriage are marital property even if they will not be exercised or vested until after the divorce.
- Lost Wages: Many states hold that if a cause of action for lost wages due to personal injury accrues between the date of marriage and final separation, then the proceeds from the settlement or award are marital assets subject to distribution.
- Reimbursement for medical bills incurred and paid with marital property
- Recovery for Damages to Marital Property
When Can Seperate Property Turn into Marital Property?
Separate property may become marital property through either:
- Commingling: The separate property is inextricably intertwined with marital property or with the separate property of the other spouse to the extent that it can no longer be traced
- Transmutation: The separate property is treated in a way that evidences an intention for the property to be marital property (for example, placing separate property in the names of both spouses)
What happens when Seperate Property is Improved Using Marital Funds or the Efforts of a Spouse?
When separate property is improved by the use of marital funds or the effort of a spouse, courts generally hold that the property remains separate property, BUT most jurisdictions grant the marital estate or the nonowning spouse reimbursement for the value added to the separate property.
- An increase in value due to market factors would remain separate property.
What happens when the Property was Acquired BEFORE the Marriage BUT Paid AFTER the Marriage?
Courts are split on this issue.
- Majority View — Property should be apportioned between separate and marital estates in proportion to the contribution of separate and marital funds to pay for the property.
- Minority View — Other states focus on the inception of title and allow a reimbursement remedy
Is a pension subject to distribution?
The portion of a pension earned during a marriage is marital property subject to distribution.
What is Equitable Division?
Once the court identifies and values the marital property, the court will make an equitable–not necessarily equal–division. The factors considered in dividing the property usually include:
- The age, education, background, and earning capabilities of both parties
- The duration of the marriage, and whether there were any prior marriages
- The standard of living during the marriage
- The present incomes of both parties, their vocational skills, and employability
- The source of the money used to purchase the property
- The health of the parties
- The assets, debts, and liabilities of the parties
- The needs of the parties
- The child custody provisions
- Whether the distribution is in addition to, or in lieu of, alimony
- Each party’s opportunity to acquire future income and assets
- Each party’s contribution to the acquisition or enhancement of the existing marital assets
- Each party’s contribution as a homemaker to the family unit
- Economic fault (whether either party has dissipated marital property)
