Division of Assets & Liabilities

Part of the divorce process is dividing the marital property, but what constitutes marital property? Marital property is any property acquired during the course of the marriage except:

• Property acquired by gift, bequest, devise, or descent;
• Property acquired in exchange for property acquired prior to the marriage or in exchange for property acquired by gift, bequest, devise, or descent;
• Property acquired by a spouse after a decree of legal separation;
• Property excluded by valid agreement of the parties.

Property acquired during the marriage is marital regardless of how it is titled or financed unless it meets the above exceptions. Taking marital property during the marriage and keeping it in a separate name or bank account does not create separate property. In addition separate property can be converted to marital property if it is comingled with marital property.

Comingling occurs when a spouse takes separate property and mixes the separate property with marital funds. If the separate property cannot be easily traced back to its separate source then it will be considered to have been comingled with marital property and as a result be considered marital property and is essentially gifted to the marital assets. A common issue of comingling is when a spouse sells a home owned prior to marriage and puts some or all of those funds into a home that is purchased during the marriage. If the other spouse contributes funds as well those previously separate monies have now been comingled and likely gifted to the marital estate.

Separate property is also property that was owned or purchased prior to the marriage. However, an increase in value to separate property during the marriage is considered marital property. For example if a party owned a home prior to marriage and during the course of the marriage the house went up $30,000 in value, the $30,000 increase in value would be considered marital property and is subject to be divided in the divorce.

Marital property is divided equitably without regard to marital misconduct, in such proportions as the court deems just after considering all relevant factors including:

• The contribution of each spouse to the acquisition of the marital property, including the contribution of a spouse as homemaker;
• The value of the property set apart to each spouse;
• The economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the spouse with whom any children reside the majority of the time; and
• Any increases or decreases in the value of the separate property of the spouse during the marriage or the depletion of the separate property for marital purposes.

Equitably does not mean equally; rather it means fairly and justly. Oftentimes an equitable division will be an equal division of marital property, but the court is not required to create a perfectly equal division of assets.

As part of the property division the court can require the sale or liquidation of marital property in order for it to be divided by the parties. The Court can also require professional valuations be conducted to determine the value of marital property for purposes of dividing the property appropriately.