Property Division Flashcards
Approaches to Property Division
- community property
- equitable division of all property
- equitable division of marital property
Community Property Approach
- all property acquired during the marriage is deemed owned one-half by each spouse
- all property brought into the marriage or acquired by gift or bequest is separate property
Equitable Division of All Property Method
- 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
- court divides only the property acquired during the marriage
Two-Step Property Division Process
1 - Classification -> determine what is marital property + what is separate property
2 - Division -> make an equitable division of the marital estate no matter how the property is titled
-> note that equitable division does not necessarily mean equal
Property Distribution Decrees - Modifiable?
- NO, not modifiable
Separate Property
Includes:
- property owned before the marriage
- property acquired by gift or inheritance
- property acquired in exchange for separate property
- income + appreciation of separate property
- pain and suffering awards
- personal damages (ex: future lost wages or future medical expenses)
- property acquired after an order of legal separation that includes a final disposition of property
Marital Property - General Concept
- all other property acquired during the marriage
- some jurs use date of separation as end of marital estate, vs others use date of filing for divorce
- subject to equitable distribution by the court
Marital Property - Things Included
- property acquired during the marriage
- earnings
- employment benefits, pensions, + stock options
-> note that majority rules says they’re marital property even if they won’t be exercised/vested until after the marriage - lost wages
- reimbursement for medical bills incurred + paid w/ marital property
- recovery for damages to marital property
Lost Wages + Marital Property
- many courts hold that if a cause of action for lost wages due to personal injury accrues between the date of marriage + final separation, then the proceeds from the settlement or award are marital assets subject to distribution
Property That Changes Character
Separate property can become marital property through either:
- commingling
- transmutation
Commingling
- occurs when separate property is inextricably intertwined w/ marital property or w/ the separate property of the other spouse to the extent that it can no longer be traced
Transmutation
- occurs when separate property is treated in a way that evidences an intention for the property to be marital property
-> ex: placing separate property in the names of both spouses
-> ex: husband uses separate property as down payment on a house for him
+ wife titled in both of their names -> presumption of gift based on joint title + the $10,000 would be classified as marital property
Improvement of Separate Property
- when separate property is improved by the use of marital funds or the efforts 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
- increase in value due to market factors would remain separate property
Property Acquired Before Marriage But Paid for After
- courts are split on the treatment of property acquired before marriage but paid for after marriage
- majority view seems to be that property should be apportioned between separate + marital estates in proportion to the contribution of separate + marital funds to pay for the property
- other states focus on the inception of title + allow a reimbursement remedy
Pensions
- portion of a pension earned during a marriage is marital property subject to distribution
- courts use different formulas to calculate the share of the pension that was earned by the party during the marriage + the amount will be subject to division
- some courts will give the non-earning spouse other funds from the marital estate to offset the amount of the pension plan
Professional License or Degree
- most jurs have held that professional license or ed degree is not distributable property
- BUT to avoid unfair results, some jurs use alimony to compensate supporting spouses for their contribution during the other spouse’s education or training
Tax Consequences of Property Division
- property division is not considered a taxable event
Equitable Division - General Concept
- not necessarily equal
- trial court has a ton of discretion -> make sure to mention in essay q!!
- court’s division of the property isn’t subject to modification once the divorce is final
Equitable Division - Factors
- age, ed, background + earning capabilities of both parties
- duration of the marriage, + whether any prior marriages
- standard of living during marriage
- present incomes of both parties, their vocational skills, + employability
- source of the money used to purchase the property
- health of the parties
- assets, debts, + liabilities of the parties
- needs of the parties
- child custody provisions
- whether distribution is in addition to, or in lieu of, alimony
- each party’s opportunity to acquire future income + 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 unity
- economic fault (i.e. whether either party has dissipated marital property)
- marital fault typically NOT a consideration, but can be in some states
- MEMORIZE THESE
Methods of Division
- can divide the property in kind -> actually dividing the assets
- can divide by contribution (awarding assets to one spouse + money to other
