DIVISION OF PROPERTY AND DEBTS
There can of course
be unique circumstances in cases but here is a rough idea of the division of property in a divorce:
The division of property in a divorce should be fair and equitable. This is usually close
to a 50%-50% division. This would include all items that have been acquired by the parties during the marriage.
This is referred to as a division of the “marital property”.
Regardless of the incomes of the parties, each spouse under Ohio law is considered to have contributed equally to the production and acquisition of marital property.
When all items are added together, are the items of property of the husband and the wife roughly equal?
The value of one item to one spouse might offset the value of another item to the other spouse. For
example, one party might be keeping their 401(k) and a joint bank account but the other party might be keeping the house of
the parties. The main question is whether the total division is fair.
The division of debts should also be fair and equitable. If the debt was incurred for the benefit
of both parties it is a marital debt regardless of whether the loan or the credit card is in the name of one party.
If a debt was incurred exclusively for the benefit of one party that party should usually take that debt.
In considering a fair division of assets and
debts, one looks at the net value of every asset. For example, one party may have a car that is valued
at $5,000 that is free and clear of any debt. The other party may have a car that is worth $20,000
but has a loan with a payoff balance of $20,000. It is the net value that is important.
With regard to real estate, what could it be sold for? How much, if any, is the mortgage and second
mortgage or any liens on it? Once again—the net value or equity of the property is important.
This can get more complicated when the parties have different incomes and especially when they have been married for
a substantial length of time because there are then issues of spousal support (what used to be called alimony) to be considered
in deciding what is a fair and equitable settlement. In such cases it is always
best to consult an attorney who is familiar with divorce law and who is familiar with the particular tendencies of the judge(s)
in your county.
SETTLING DISPUTES OF PROPERTY
If there is a dispute
between husband and wife in the dividing of personal property such as furniture, furnishings and appliances, here is a simple
method to resolve the matter: a list of all disputed items is made; there is a flip of a coin—the
winner gets to pick the first item on the list, the other spouse picks the next item and each party alternates thereafter.
If there is a dispute over the value of real estate, the parties may pay for an appraisal of the real estate.
If there is the issue of what a pension is worth, an appraisal of the current value of the pension will be made by
a qualified expert.
The easiest way for
a court to resolve a dispute over real estate is to order that the property be sold and the proceeds split. Especially
in today’s difficult economy, where the values of real estate have fallen, this may hurt both parties.
Needless or protracted disputes over property will increase the time and the cost of divorce.
RETIREMENT ACCOUNTS
Retirement accounts, deferred compensation, and pensions are considered marital property for the period of the marriage.
They are not separate property. Sometimes the value of the retirement accounts of each party are
roughly equal, and hence each party waives any interest in the retirement of the other. Other times the
retirement account of one party is offset by the value of another asset that the other party is getting (such as one party
keeping a 401(k) or pension but the other party keeping the house).
If
a retirement account must be divided, a separate court order is prepared to accomplish this—known as a Qualified Domestic
Relations Order (QDRO) or in the case of a public pension or public retirement account, a Division of Property Order (DOPO).
(In Ohio this would include the Public Employees
Retirement System; the State Teachers Retirement System; the School Employees Retirement System; the Police and Fire Pension
Fund; the Highway Patrol Retirement System; and the University/College Alternative Retirement Plan.)
If it is a 401(k) or similar retirement plans, one-half of the value of the plan which was accrued
during the marriage will be transferred to a separate retirement account for the other spouse. In
the case of a pension, one half times the years of the marriage will be credited to the spouse. For example,
if there has been a 10 year marriage and the working party eventually retires with 20 years of service, the other spouse would
get one-fourth of the value of the pension when it is paid out.
SEPARATE PROPERTY
There are some items which are not considered marital property but “separate property” and are not subject
to division but are separately the property of one spouse. Here is what is considered to be separate property:
* An inheritance
to one spouse.
* Real estate or personal property that was acquired by one spouse prior to the date of the marriage.
* Any real estate or personal property that is excluded by a valid prenuptial agreement.
* Compensation to a spouse
for the spouse’s personal injury, except for loss of marital earnings and compensation for expenses paid from marital
assets.
* A gift of real estate or personal property that is made after the date of the marriage and that is proven by
clear and convincing evidence to have been given to only one spouse.
Even
though real estate was brought into the marriage by one party and is their “separate property”, perhaps the other
party has financially contributed to that property or has improved the property through their labor. The
appreciation in the value of the property as a result of this financial contribution or labor can be considered in the division
to be made in the divorce.
The commingling of
separate property with other property of any type does not destroy the identity of the separate property as separate property,
except when the separate property is not traceable.
