Divorce property division refers to the manner in which a couple’s property and money are distributed between the two parties during the process of getting a divorce.
In determining who will get what assets, the first consideration is who owns the item of property. To decide that, the initial critical consideration is whether the couple lives in a state that divides marital property up by “equitable distribution” or “community property” laws.
Equitable distribution is the more popular method and is followed by 41 states. Equitable distribution requires a court to look at a number of factors and variables when deciding which party should get what property. The most important principle to know about “equitable distribution” is that it does not mean dividing equally. Instead, the focus of the decision for property division is based on overall fairness to the parties.
For instance, some factors that a court may consider in order to reach a fair result include:
- How long the couple’s marriage lasted;
- Whether a prenuptial agreement existed that includes information about property division;
- The employment, skills, and financial background of each party;
- Whether there will be any issues related to child custody and child support;
- The age and health of each party, including any existing medical conditions;
- Whether one of the parties will require spousal support or alimony;
- What each person’s individual estate offers compared to the marital estate;
- Whether there are any jointly or independently owned businesses .
In contrast to equitable distribution states, the following nine states have community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. According to community property rules, the couple’s property is considered to be owned half by each spouse. The property in a community property state will usually be split 50/50 between the parties.
In both equitable distribution and community property states, property that is owned separately by one party will be granted solely to them at the end of the divorce process. Classifying property as separate property is one of the primary considerations at the center of most divorce cases. Any separate property belonging to one spouse cannot be considered to be community property.
Separate property includes:
- Any property owned in one spouse’s name prior to marriage;
- Gifts and inheritances that are given to one specific spouse;
- Personal injury awards received by one specific spouse;
- Pension proceeds that vested prior to the marriage;
- Family heirlooms;
- Property acquired through a trust.
What if There Is a Dispute Over the Divorce Property Division?
In most cases, when a dispute over the division of divorce property occurs, it usually has to do with ownership of the property item in question. One spouse may claim full ownership of a piece of property, while the other asserts that it belongs to them or both of the parties. In such instances, the court will have to conduct additional analysis to determine whose property it is.
The court might examine particular documents, such as a copy of a title, a will, a trust document, or a receipt. The court will ask for evidence to help determine who the original owner was, how that person acquired the property (e.g., was it a purchase or a gift), and whether or not the parties intended the property to be shared during the marriage.
For example, if a car was specifically given to one of the spouses before the marriage, then the car will likely be deemed to be separate property. Documents or records, such as a title deed, loan documents, or a receipt, would make this fact even more certain.
In contrast, if the couple received a gift during their marriage with both of their names written on the title or property that gift will likely be considered shared marital property, and, as such, will need to somehow be distributed equally.
If one party had an item of individual property at the time of the marriage, and then it was used by both parties during the marriage, the property has become joint property. Joint property is particularly common in 3 cases:
- Marital home: If one spouse individually owned a house before the marriage took place, but then both parties lived in it, it has likely become joint property, especially if joint funds (e.g., money from a joint bank account) were used to pay the mortgage or the real estate taxes.
- Automobile: If one spouse had a car before they were married, but both parties used it after the marriage, the car has likely become joint property. Again, this is particularly true if joint funds were used to pay off a car loan, for repairs or other upkeep on the car, or to pay annual registration fees or taxes.
- Bank account: If one spouse had their own bank account before the marriage, but during the marriage, both parties made deposits and withdrawals, the bank account will be deemed joint property.
What Does “Concealment of Assets” Mean?
Hidden (concealing) assets in a divorce case is another legal issue that can complicate a divorce matter.
In a divorce, there is a legal requirement that each spouse must disclose all assets, income, and debt as part of the financial disclosure process. Each party must submit a signed financial disclosure affidavit. When signing it, that person is swearing under penalty of perjury that they are telling the truth about the current state of their finances. A financial disclosure affidavit is a very important part of divorce proceedings since complete financial disclosure is required to divide assets and debts properly and determine appropriate alimony and child support.
Most of the time, both spouses comply, but sometimes a spouse will inadvertently or deliberately be less than completely forthcoming. Some spouses may try to hide assets simply to deprive their spouse of having the asset. Vindictive behavior can lead to some poor choices, and it’s easy to imagine that sometimes a spouse will act irrationally simply out of spite.
Intentionally concealing assets may be done by simply not reporting an asset (e.g., a hidden separate bank account). It can also be done by transferring the asset to someone else, intending to take it back after the divorce process is concluded: selling a car to a friend at an artificially low price or draining a bank account and giving the money to a friend to hold.
In addition, divorcing business owners have been known to classify personal expenses as business expenses, falsify records, or make significant adjustments to their salary during the divorce.
- Legal consequences can result from being held liable for the concealment of assets. The judge can:
- Issue a contempt order;
- Require the offending spouse to pay the other’s attorney’s fees;
- Impose a fine;
- Award the entire amount of the undisclosed asset to the victimized spouse as a penalty;
- If the lies are especially egregious, incarcerate the spouse for perjury.
Do I Need a Lawyer for Help With Dividing Divorce Property?
Dividing property during the divorce process usually requires the assistance of a divorce lawyer. An experienced property division lawyer can help you prepare your own financial disclosure, help interpret your spouse’s disclosure, and guide you overall through the process of a divorce lawsuit.
A local lawyer can provide legal counsel regarding the laws in your area, and any rights or protections that you may have under them. A lawyer will help you obtain a fair distribution of property.