Property Division

Question 1

Property is presumed to be marital unless:

Answer 1

1) It is acquired by gift or inheritance;
2) Acquired in exchange for property acquired before the marriage;
3) Acquired by spouse after judgement in legal separation;
4) Excluded by agreement of the parties;
5) Acquired before the marriage;
6) All property acquired solely by the use of non-marital property;
7) Increase in value of non-marital property;
8) Income from property acquired via a-g if the income is not attributable to the personal effort of a spouse.

Question 2

What are the 4 things that should be considered when dividing property?

Answer 2

1) Non-marital property goes to owner spouse;
2) Marital property in just proportions;
3) Without regard for marital misconduct;
4) All other relevant factors. (See the notes, I am not writing these in here).

Question 3

What is dissipation?

Answer 3

Refers to the use of marital property for sole benefit of one of the spouses for purposes unrelated to marriage at the time that marriage is undergoing irreconcilable breakdown.
Usually for a bf/gf on the side.

Question 4

What is required to prove dissipation?

Answer 4

1) Notice of intent to claim;
2) Date marriage began undergoing breakdown;
3) ID of property dissipated;
4) Date or time of period of dissipation;
5) No dissipation prior to 3 years after claiming party knew or should have known.

Question 5

How to rebut the presumption that gifts are marital property?

Answer 5

Factors to consider:

1) What is the size of the gift relative to the estate?
2) Who paid the purchase price, paid taxes, controlled property, etc.
3) When was the asset purchased?
4) How did the parties handle the financial dealing and was there changes with this property?
5) Evidence regarding donative intent.

Question 6

Are lottery winnings marital property?

Answer 6

Yes.

Question 7

Are health and life insurance payouts marital property?

Answer 7

No. These belong to the individual.

Question 8

Is income generated by non-marital property, marital property?

Answer 8

Yes.

Question 9

How to rebut the presumption of marital property on property purchased in contemplation of marriage?

Answer 9

Factors to consider:

1) Totality of the circumstances (big one);
2) Proximity of time between purchase and marriage;
3) Source of funds used to acquire property;
4) Who signed the purchase documents;
5) Who looked for the property;
6) Manner in which title is held;
7) Intention of the parties.

Question 10

Non-marital property’s value increases. Is this non-marital or marital?

Answer 10

Factors:

1) Was there an increase in value?
2) Was the increase passive or active?
(a) Passive - an increase that just happens without any work on the part of either spouse;
(b) Active - An increase in value that is attributable to the efforts of one or both spouses.
3) Increase is active = marital; increase is passive = non-marital.

Question 11

What is transmutation?

Answer 11

Property transferred between spouses during the marriage with intent to change beneficial ownership may be transmuted from separate to marital.

Question 12

What is the standard required to overcome the presumption that transmuted property is marital?

Answer 12

Clear and Convincing evidence.

Question 13

What is Commingled property?

Answer 13

Separate and marital property are inextricably intermingled so the contributions of the two separate estates can no longer be traced.

Question 14

What are the two theories regarding commingled property?

Answer 14

1) Source of funds theory - tracing of funds, classification as marital and non-marital can un-commingle funds;
2) Separate Property Theory - Classification depends on the source of funds used rather than the title of the funds.

Question 15

Is a pension a marital or non-marital asset?

Answer 15

Generally a marital asset, however, it can be both. It will only be a marital asset for the portion it was accruing while the parties were married.

Question 16

What are the three valuation methods to determine marital portion of a pension?

Answer 16

1) Net Present Value - Immediate distribution and then offset against other assets;
2) Deferred Distribution - Distribution is delayed; court decides the % non-employee spouse will receive if and when the benefits are received.
3) Reserve Jurisdiction - Court waits until benefits are actually received and then divides them.

Question 17

What is the Hunt Formula?

Answer 17

Used when the present value of the payments at the time of divorce is determinable.
Allocate the payments between marital and non-marital property by multiplying the value of the payments at the time of the divorce by a fraction, the numerator of which is the number of years of marriage during which the benefits accrued, then the denominator of which is the total number of years during which they accrued. (whatever the hell this means?)

Question 18

Is Social Security marital property?

Answer 18

No. Not divisible upon divorce.

Question 19

Are stock options marital property?

Answer 19

Depends on why they were given. If they were given because of employees excellent performance, they might be marital if the spouse can prove by clear and convincing evidence their contribution helped him get it.

Question 20

Are professional degrees and licenses marital property?

Answer 20

No. However, a spouse can claim more assets during the division if they worked to help support the other spouse while they attended school.

Question 21

What is the general rule for what a business is valued at? and what is it based on?

Answer 21

It is based at what a reasonable person would pay for it.
Based on:
1) Values such as goodwill;
2) Ability to generate an ongoing dividend stream;
3) Earning capabilities;
4) Type of business;
5) Economic outlook;
6) Condition of the market;
7) Size of the stock requiring evaluation.

Question 22

What is “goodwill” as it applies to business evaluations?

Answer 22

The ability to acquire future income; value of a business or practice that exceeds the combined value of the physical assets.

Question 23

What are the two types of goodwill?

Answer 23

1) Personal Goodwill - People go to the company because they like someone at the company. Personal goodwill can go towards maintenance;
2) Enterprise goodwill - company has name recognition.

Question 24

Are Personal and Enterprise Goodwill marital assets?

Answer 24

Personal goodwill is not a marital asset; Enterprise goodwill is a marital asset.