Property Division

Question 1

General Principles

Answer 1

1-3 main approaches to divide property at divorce:
i-community property (all property acquired during marriage is owned one-half by each spouse and property owned before marriage is separate)
ii-equitable division of all property owned by either spouse
iii-equitable division of marital property–each spouse takes his separate property and the property acquired during marriage is divided equally (MOST POPULAR)
2-in any case, property distribution decrees are not modifiable
3-typically, 2 step process in property division:
i-Classification (determine what is marital property and what is separate property)
ii-Division (make an equitable division of the marital estate no matter how the property is titled)
NOTE-equitable division doesn’t necessarily mean equal–courts have discretion

Question 2

Separate Property

Answer 2

1-separte property includes:
i-all real and personal property owned by a spouse before marriage, including assets held in individual retirement accounts
ii-property acquired by a spouse at any time by gift, bequest, devise, or descent
iii-property acquired in exchange for property acquired before the marriage
iv-income from and appreciation of separate property
v-pain and suffering awards, victim of crime compensation awards, future medical expenses, and future lost wages
vi-property acquired by a spouse after an order of legal separation where the court has made a final disposition of property

Question 3

Marital Property

Answer 3

1-marital property includes:
i-all property acquired by either or both supposes during marriage up to the final divorce decree
ii-includes value of vested and unvested pension, vested/unvested stock option rights, retirement or other fringe benefit rights relating to employment that carried during marriage
iii-includes recover in personal injury, workers’ comp, social security disability actions, and other similar actions for wages lost during marriage, reimbursement for medical bills incurred and paid w/ marital property, and property damage to marital property

Question 4

Special Issues in Classification of Property

Commingling

Answer 4

1-separate property can become marital if the property is inextricably intertwined
2-courts will attempt to trace property

Question 5

Special Issues in Classification of Property

Transmutation of Separate Property

Answer 5

1-separate property can become marital property based on the intent of the parties

Question 6

Special Issues in Classification of Property

Improvement of Separate Property

Answer 6

1-when separate property is improved by the use of marital funds OR the efforts of the non-owning spouse, courts in most jurisdictions will grant the marital estate or non-owning spouse reimbursement for the value added

Question 7

Special Issues in Classification of Property

Property Acquired Before Marriage But Paid for After Marriage

Answer 7

1-courts are split
2-majority view seems to be that property should be apportioned between separate and marital estates in proportion to the contribution of separate and marital funds to pay for the property

Question 8

Special Issues in Classification of Property

Pensions

Answer 8

1-considered to be marital property subject to division
2-courts use different formulas to calculate the share of the pension that was earned by the party during marriage and the amount will be subject to division

Question 9

Special Issues in Classification of Property

Professional License or Degree

Answer 9

1-NOT considered to be marital property subject to division
2-to avoid unfairness, some jurisdictions consider it when awarding spousal support
3-minority of jurisdictions value the degree then award more property or alimony to the other spouse based on the valuation

Question 10

Special Issues in Classification of Property

Tax Consequences

Answer 10

1-property division is NOT a taxable event

Question 11

Equitable Division

Answer 11

1-once court identifies and values the marital property, the court will make an equitable division–not necessarily equal
2-factors to consider in making equitable division: age, education, background, earning capabilities; duration of marriage; standard of living during marriage, present income, source of money used to purchase property, health; assets, debts liabilities; etc.