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  • What Factors Determine the Division of Assets During a Divorce Under Family Law?
Divorce Under Family Law

What Factors Determine the Division of Assets During a Divorce Under Family Law?

Debra R. SteinerAugust 19, 2023August 25, 2023

Dividing up property and assets during divorce proceedings is often one of the most complicated, contentious and emotionally-charged parts of dissolving a marriage . Different states vary widely in their family laws on how marital property should be split up when spouses are unable to reach agreement themselves. 

Some states mandate an equal 50/50 division, while others allow for more discretion based on circumstances. Getting advice from a reputable family law attorney on these variances is highly recommended.

Several key factors come into play that can impact how marital assets ultimately get divided when sparring spouses turn to the courts to make the decision for them.

Marital vs. Separate Property

The first determination is classifying which assets are considered marital property subject to division, versus separate property that belongs solely to one spouse. Marital property generally includes:

  • Assets acquired during the marriage such as house, investments, cars, furniture, jewelry, etc.
  • Income earned from work during the marriage.
  • Retirement funds like 401(k)s contributed to during marriage.

Separate property consists of:

  • Assets owned before the marriage.
  • Inheritances and gifts received by one spouse only.
  • Payments from personal injury lawsuits.
  • Property explicitly excluded in prenuptial agreements.

The timeframe for classifying property varies. Some states consider the date of separation while others use the divorce filing date. How assets are titled can also impact classification.

Community Property vs. Equitable Distribution States

In community property states, all marital property is split equally 50/50. But in equitable distribution states, division is based on what the court deems “fair” according to a range of specified factors.

Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska allows spouses to voluntarily elect community property rules.

Everywhere else uses equitable distribution, allowing for uneven splits based on circumstances like income disparity and needs of children. This discretion results in variation.

Factors Considered in Equitable Distribution

While different states have varying formulas and guidelines, some common factors judges consider when determining equitable distribution of marital assets in a divorce include:

  • Income, employment status, education level, and earning capacity of each spouse – Courts look at whether there is a significant disparity in the future earning potential and career prospects of the spouses. A spouse who sacrificed their education or career advancement to support the family may warrant a larger share. Likewise, a major disparity in future earnings could result in an uneven division favoring the lower-income spouse.
  • Contributions made during the marriage – Non-financial contributions like provision of childcare, performance of housekeeping duties, and supporting the other spouse’s education or career are considered. For instance, a spouse who worked while the other obtained a degree deserves compensation.
  • Standard of living established during marriage – Courts aim to avoid an excessive downward change in the spouses’ lifestyle. The asset split should allow maintaining a resemblance of the marital standard of living.
  • Duration of the marriage – The length of the marriage impacts distribution. Longer-term marriages warrant more equal division as assets were jointly built over time. Shorter marriages may weigh toward preserving premarital assets not built through the marital partnership.
  • Age and health of spouses – A spouse who is younger and healthier can more readily rebuild finances after divorce through working. An older or unhealthy spouse may be limited in re-entering the workforce, favoring more assets.
  • Acquisition method of property – Assets acquired through one spouse’s gift or inheritance often remain that spouse’s separate property not subject to division.
  • Needs and liabilities after divorce – Courts look at the relative assets and debts of each spouse after separation. One spouse having significantly more assets or lower expenses may impact distribution.
  • Childcare provisions – Primary custodial parents incur higher child-related costs, which could warrant favoring the custodial spouse in asset division.
  • Marital misconduct – Some states allow consideration of serious misconduct like adultery or abuse. But most states exclude fault-based factors.
  • Tax consequences – How taxes related to selling or dividing certain assets affects division.

These guidelines provide a broad equitable framework, but trial judges ultimately exercise significant discretion in dividing marital property based on the facts of each case. Always ask advice from legal professionals  such as Edwards Family Law for a successful outcome.

Valuing Assets and Debts

All assets must be identified and closely valued before the court can determine percentages. Real estate and many financial assets have clear values. Other tangible property like vehicles, jewelry and collectibles may require professional appraisals.

Liabilities like mortgages, taxes, credit cards and personal loans must also be itemized and accounted for because debts offset assets. Ongoing financial disclosure ensures proper categorization, valuation and division.

Retirement Accounts and Pensions

Retirement assets earned during marriage are commonly divided through qualified domestic relations orders (QDROs) allowing the spouse without the account to receive their share directly from the plan administrator. This includes pensions, 401(k) plans, IRAs and more.

The QDRO splits the asset through a separate account for the former spouse rather than liquidating and dividing funds. This prevents tax penalties that would otherwise arise from withdrawals. Each spouse’s share is defined by a fixed dollar amount or percentage.

Tips for Divorcing Spouses

There are several tips that can help make the divorce property division process go more smoothly. First, divorcing spouses should be as transparent as possible by clearly disclosing the full details on all assets and debts early in the proceedings, with an ongoing duty to supplement discovery if anything changes. 

Obtaining professional appraisals and valuations of real estate, businesses, and other major assets also provides necessary documentation for an equitable split. Consulting an experienced divorce attorney to gain understanding of the applicable state laws and extent of judicial discretion in dividing property is highly recommended. 

Spouses should also give serious consideration to mediation as a means of working towards mutual agreement on property division, which avoids prolonged litigation. Perhaps above all, maintaining a spirit of compromise instead of treating divorce as an adversarial battle is key – contested court fights will rapidly deplete the marital estate through legal fees, leaving fewer total assets for each spouse in the end.

Conclusion

Dividing marital property during divorce involves complex financial and legal considerations. While community property states mandate equal division, equitable distribution grants courts discretion based on many factors. Understanding the process, properly valuing all assets and liabilities, and seeking expert advice from Edwards Family Law in Atlanta helps to achieve fair outcomes and avoid future disputes.

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