Whats Your Pension Worth?
FAQs
How is property divided at divorce?
In the event that a divorcing couple cannot effectively divide up their
own assets and property, they can submit their property dispute to the
court, which will use state law to determine the division.
Division of property often does not mean a physical division, rather the
court awards each spouse a percentage of the total value of the property.
(It is illegal for either spouse to hide assets in order to shield them
from property division.) Each spouse will receive numerous items that
will amount to the percentage they were granted.
Courts divide property under one of two schemes: equitable distribution
or community property.
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Equitable distribution. Assets and earnings accumulated during marriage are divided equitably
(fairly). In practice, often two-thirds of the assets go to the higher
wage earner and one-third to the other spouse. Equitable distribution
principles are followed everywhere except in the (9) community property
states listed just below.
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Community property. In Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington
and Wisconsin, all property of a married person is classified as either
community property, owned equally by both spouses, or the separate property
of one individual spouse. At divorce, community property is generally
divided equally between the spouses, while each spouse keeps his or her
separate property.
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How do we distinguish between community and non-community property?
Very generally, here are the rules for determining what's community
property and what isn't:
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Community property includes all earnings accrued during marriage and everything acquired
with those earnings. All debts incurred during marriage, unless the creditor
was specifically looking to the separate property of one spouse for payment,
are community property debts.
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Separate property of one spouse includes gifts and inheritances given just to one spouse, personal injury
awards received by that spouse, and the proceeds of a pension that had
been vested (the pensioner became legally entitled to receive it) before
marriage. Property purchased with the separate funds of a spouse remain
that spouse's separate property. A business owned by one spouse before
the marriage remains his or her separate property during the marriage,
although a portion of it may be considered community property if the business
increased in value during the marriage or both spouses worked at it.
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Property purchased with a combination of separate and community funds is part community and part separate property, so long as a spouse is able
to show that some separate funds were used. Separate property mixed together
with community property generally becomes community property.
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What is "equitable distribution"?
Equitable Distribution means a court divides marital property as it deems
fair. States applying principles of equitable distribution also view marriage
as a shared enterprise in which both spouses usually contribute significantly
to the acquisition and preservation of property. The division of property
could be 50/50, 60/40, 70/30, or even all for one spouse and nothing for
the other (although that would be very unusual). Under equitable distribution,
courts consider a variety of factors and need not weigh the factors equally.
This permits more flexibility and more attention to the financial situation
of both spouses after the divorce. However, it also makes the resolution
of property issues less predictable. Here are some examples of factors
that are considered by states applying principles of equitable distribution.
(1) Nonmarital property. If one spouse has much more nonmarital property
than the other, that could be a basis for giving more marital property
to the less wealthy spouse.
(2) Earning power. If one spouse has more earning power than the other,
that could be a basis for giving more marital property to the spouse with
less earning power.
(3) Who earned the property. That can be a factor favoring the party who
worked hard to acquire or maintain the property.
(4) Services as a homemaker. Courts recognize that keeping a home and
raising children are work. In addition, those services often enable the
spouse who is working outside the home to earn more money. Thus, services
as a homemaker are a factor in favor of the homemaker. Some courts also
apply a related concept of considering whether one spouse had impaired
her or his earning capacity because of working as a homemaker. That factor
also would favor the homemaker-spouse.
(5) Waste and dissipation. If a spouse wasted money during the marriage,
that could count against him or her when it comes time to divide property.
This factor is sometimes labeled "economic fault," and may be
considered even by courts that do not consider other kinds of fault.
(6) Fault. Non-economic fault, such as spousal abuse or marital infidelity,
is considered in some states, but many states do not consider it relevant
to property division.
(7) Duration of marriage. A longer marriage may be a factor in favor of
a larger property award to the spouse with less wealth or earning power.
(8) Age and health of parties. If one spouse has ill health or is significantly
older than the other, that factor could favor a larger award to the sicker
or older spouse.
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How do judges decide disputed property issues?
Laws vary from state to state. As a starting point, many states allow
parties to keep their "nonmarital" or "separate" property.
Nonmarital property includes property that a spouse brought into the marriage
and kept in his or her own name during the marriage. It also includes
inheritances received and kept separate during the marriage. It also may
include gifts received by just one spouse during the marriage. Some states
permit division of separate as well as marital property when parties divorce,
but the origin of the property is considered when deciding who receives
the property. After allocating separate property, the court divides marital
or community property.
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Pension Evaluators & QDROS Of Troyan, Inc Associates Group
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Red Bank, New Jersey 07701