Property Division

Question 1

Property division scheme of most states

Answer 1

Most states follow an equitable distribution scheme to divide spousal property upon divorce

Question 2

Steps for equitable distribution

Answer 2

(1) identify divisible property
(2) value the property
(3) divide it

Question 3

Kinds of property distributed after divorce

Answer 3

(1) marital property
(2) separate property
(3) mixed character, commingled, transmuted

Question 4

Marital property

Answer 4

Jointly owned and jointly acquired through the labor of the parties

Marital property is divisible

Question 5

Property acquired DURING marriage

Answer 5

Property acquired during the marriage is presumed to be community (or marital) property

Question 6

Separate property

Answer 6

Is owned only by the person who holds title (NOT divisible)

Question 7

Examples of separate property

Answer 7

(1) Property owned before marriage,
(2) Acquired after dissolution of the marriage, or
(3) acquired by gift or inheritance to one spouse during the marriage

Question 8

How to classify separate property that appreciated that appreciated during marriage

Answer 8

Classification of increased value of separate property typically depends on the reason for the increase in value

o If increase is due to passive appreciation →increase = separate property
o If increase is due to labor during the marriage → increase = marital property

Question 9

How to treat mixed property

Answer 9

▪ If separate property can be traced: Treat as part separate and part marital property
▪ If tracing is not possible: Separate property can transform into marital property

Question 10

Treatment of marital residence

Answer 10

If purchased prior to marriage but marital earnings were used to pay off mortgage and build equity in house → can be both separate property and marital property, and reimburse marital estate for mortgage payments

Question 11

Treatment of pension/retirement accounts

Answer 11

Whether accounts are vested or unvested they are subject to equitable distribution but not premarital contributions or post-separation increases

Question 12

Treatment of stock options

Answer 12

o Options granted to a spouse during marriage whether vested or non-vested
and whether or not their value is ascertainable are presumed to be marital property
o If stock options are earned as employment compensation, their status as marital or non-marital property depends on when acquired and whether the work for which the options are compensation was performed during the marriage

Question 13

Treatment of professional degrees/licenses

Answer 13

Most states have held that a professional degree or license is not a property interest subject to equitable distribution

Question 14

Treatment of personal injury claims

Answer 14

Use the replacement theory:

• Lost Wages: To the extent the damages replace lost wages that would have been earned during marriage or medical expenses that were incurred during marriage, those damages are marital property
• Future Wages or Expenses: To the extent the damages replace future wages or future medical expenses, those damages are the separate property of the injured spouse

Question 15

Treatment of lottery winnings

Answer 15

Presumably, lottery winnings during the marriage are marital property

Question 16

Treatment of debts

Answer 16

Generally, debts incurred during marriage are marital debts, while those incurred before or after are separate debts of the spouse who incurred them

Question 17

Valuation determined at which date

Answer 17

Valuation is determined at the date the parties separate

Question 18

Division under equitable distribution

Answer 18

Division is based on what is fair under the circumstances, not necessarily 50/50

Question 19

Equitable distribution factors

Answer 19

Factors that may generally be considered in determining what division would be equitable include:
▪ Financial status of need of the parties; and
▪ Contribution