How Does Property Get Divided in a Divorce?

One of the most worrisome issues that arises during a divorce are the questions over who will get what.  There are a number of factors that go into making distributions of marital assets. First, one has to determine what property is marital, and what is separate.

“Marital property” is defined by law (R.C. § 3105.171(A)(3)(a)), as

All real and personal property that currently is owned by either or both of the spouses. This includes, but the retirement benefits of the spouses, and anything that was acquired by either or both of the spouses during the marriage;.  It also includes all interest that either or both currently has in any real property (like a house or investment properties) or personal property, (like the retirement benefits, banking accounts and stocks of the spouses, and that was acquired by either or both of the spouses during the marriage.  Also included are the income and appreciation on separate property, due to the labor, monetary, or in-kind contribution of either or both of the spouses that occurred during the marriage is also considered marital property. Lastly participant accounts, and / or deferred compensation programs is also considered marital property.

“Passive income” means income acquired other than as a result of the labor, monetary, or in-kind contribution of either spouse.

“Separate property” is what someone typically gets to keep.  It means all real and personal property and any interest in property that is found by the court to be an inheritance by one spouse during the marriage or property or interest in property that was acquired before the marriage.  Likewise “passive income” and appreciation acquired from separate property is considered separate.  “Passive income” means income you received other than as a result of the labor, monetary, or in-kind contribution of either spouse.  Any real or personal property or interest in property acquired by one of the spouses after a decree of legal separation is separate.  Also, any property that is excluded by a valid prenuptial agreement, compensation for personal injury, (except for loss of marital earnings and compensation for expenses paid from marital assets) is separate.  Courts will declare separate any gift of or interest in real or personal property that is made after the date of the marriage and proven by clear and convincing evidence to have been given to only one spouse.  Clear and convincing evidence is a more stringent standard of proof than is typically applied in most civil cases.

However, the commingling of separate property with other property . . .does not destroy its identity as separate property, except when it’s not traceable.

The Ohio Revised Code says that “the division of marital property shall be equal”. However, the court may divide it other than 50/50 between the spouses “in the manner the court determines equitable”. The court shall consider all relevant factors to make this decision. Each spouse is considered to have contributed equally to the marital property.

To make this division of property courts require each spouse to disclose fully and completely all marital property, separate property, and other assets, debts, income, and expenses of the spouse. Also, if a spouse engages in financial misconduct, like dissipation, destruction, concealment, nondisclosure, or fraudulent disposition of assets, the court may order the offender to compensate the offended spouse.

A court at a minimum must consider these factors:

(1) The duration of the marriage;

(2) The assets and liabilities of the spouses;

(3) The desirability of awarding the family home, or the right to reside in the family home . . ., to the spouse with custody of the children;

(4) The liquidity of the property to be distributed;

(5) The economic desirability of retaining intact an asset . . .;

(6) The tax consequences of the property division . . .;

(7) The costs of sale, if it is necessary that an asset be sold . . . ;

(8) Any division of property made in a separation agreement that was voluntarily made by the spouses;

(9) Any retirement benefits, excluding the social security. . .

(10) Any other relevant factor . . .

Thus, the outcome of any case is very fact specific. Often the value of property and location of assets can only be determined after additional experts (such as forensic accountants) are engaged to sift through all of the financial statements and documents that might be generated through discovery.