Will all of our property be divided 50/50 in the divorce?
In dividing a couple’s property in a divorce (technically a dissolution of marriage), the judge must first set aside and award to each party what is called his or her separate property. “Separate property” is property that was owned by a party at the time of the marriage or acquired after the marriage by gift (just to one person), by inheritance (just by one person) or in exchange for property so acquired. Then, the judge must “equitably divide” the marital property between the parties. This may (and often does) end up being 50/50, but that it not necessarily true in every case.
When dividing the marital property, the trial judge is required by law to consider a number of factors.
First, the court must consider the economic circumstances of each party at the time that the division will occur (typically at the time of the divorce), including consideration of the person who receives custody being awarded the house or being given the right to live there for some period of time.
Second, the court must consider the contribution made to the acquisition of the marital property. Interestingly, the law contains a specific directive to the judge to consider the contribution of a party as a homemaker (this can be a man or a woman, although it was most certainly originally aimed at protecting stay-at-home moms).
Third, the court must consider the amount of separate property awarded to each person. This is generally only a real game changer when the separate property is of great value relative to the marital property or is significant income producing property.
Fourth, the court must consider the conduct of each party during the marriage. In St. Louis, judges are most likely to consider financial misbehavior in favoring one party in the property division. The fact of adultery may not influence the judge, but the spending of marital money on a paramour probably will.
The judge will honor the terms of a valid post-nuptial agreement by which the parties have agreed that certain property acquired after the marriage that might otherwise be marital is the separate property of one party.
Remember that property includes not just real estate and bank accounts; it also includes items like frequent flier miles and monies in health savings accounts and tax credits such as capital loss carry forwards. A request should be made that Uniform Gift to Minors Act (“UGMA”) and 529 college savings accounts be awarded to one or both parents to hold for the benefit of the child.
The division of marital property can have significant tax implications down the road and the discovery of marital property that was not divided can result in expensive and time consuming litigation.
It is important to have a complete list of the marital property and what you believe to be the values before you sit down to divide or ask the judge to divide it. If you have any concerns about possible future tax implications of property that you are asking to be awarded to you, seek the advice of a tax attorney before the divorce. Ignorance of tax issues that come up after the divorce is no reason to revisit the property division in the divorce.