When some married couples divorce, one of the most contentious issues is the division of the marital property. Both spouses stand to lose a sizable percentage of the possessions they have accumulated over the course of the marriage. As a result, in many cases, the parties will be far from amicable. When dividing marital possessions after a divorce, the couple can either come to an agreement on the matter, or contest each other’s ownership of various assets.
This article will explore different ways an agreement can be forged between the spouses. The approach taken by the divorcing couple and their attorneys will reflect their circumstances, feelings toward one another, and their ability to compromise.
Not every divorce is a contentious nightmare. Ninety percent of all divorcing parties resolve the issue by mutual assent. The spouses can work with one another and their own counsel to determine whether an asset is a marital asset, what the value of that good is, and who should retain custody of it. If necessary, they may attend mediation to work out ownership of important items and craft buyout agreements for jointly-owned businesses, land, and investments.
Mutual assent is the most cost-effective way to effect a distribution of assets after a divorce. This is due to the expense of litigation and the fact that courts rarely have enough insight into the marriage to understand what specific possessions are useful to which party. Privately working out an agreement ensures that the parties exchange an appropriate level of assets in the manner least disruptive to their lives.
If the divorcing spouses continue to contest the marital holdings, the court will divide them in accordance with its state’s laws. State laws vary on how different holdings are treated during the divorce. States generally follow one of three different rules: the community property rule, the common law equitable distribution rule, and the all property rule.
Nine U.S. states follow the community property rule. Under this rule, marital assets are divided equally between the parties while premarital assets are excluded from division. Marital assets are those that were acquired during the marriage, regardless of title or who was the principal user of that asset. Premarital assets that have been commingled during the marriage may also be subject to division.
Most states follow the common law rule that calls for an equitable distribution of the value of marital possessions. An equitable distribution is not the same as an equal distribution. Equitable distribution simply means that there is a fair distribution of the value of the goods between the spouses.
Courts will consider various factors in determining what constitutes an equitable distribution. These factors vary between states, but tend to examine the entire picture. For example, courts in Connecticut will consider the duration of the marriage, income, age, health, occupations, employability, and various other factors to determine what constitutes an equitable distribution. Courts normally award greater assets to individuals with disabilities or employability issues and greater liabilities to those with significant income.
A few states follow the all property rule. It extends the equitable distribution rule to all holdings owned by both parties, regardless of whether the item in question was acquired during the marriage or commingled. In those states, a judge may order one spouse to provide the other with separate possessions in order to achieve an equitable distribution. The fact that goods were acquired during the marriage may weigh against their transfer, but it is not dispositive of the issue.
Compliance with court orders is not guaranteed. Upon learning that a divorce is impending, some unscrupulous individuals attempt to sell expensive holdings to friends and family members for trivial sums either to harm the other party or with the intent to buy the property back after the settlement. If a court feels that goods were conveyed with the intent of defrauding the other party, the court may order that the goods be returned or include the full value of the possessions in the divorce. Other sanctions may also follow.
Although most divorcing couples are able to negotiate a fair distribution of their marital assets, many are unable to do so. In such cases, it’s useful to work with experienced divorce attorneys who recommend mediation over costly litigation.