Legal: Mediators May be Able to Help You as You Divide your Marital Assets in Divorce
Getting a divorce requires both parties to make a number of decisions that have the potential to create a profound impact on their futures: one big decision focused on how to divide property.
According to the American Bar Association, most property that is acquired during the marriage is marital property. Therefore marital property, also sometimes referred to as community property, can entail the home, an established business and the wages of each spouse. Along with the term marital property, the ABA defines separate property. This term refers to the property owned by each spouse prior to his or her marriage. Separate property is not marital property.
“Some people are unaware of what property is subject to distribution,” said New Jersey-based family law attorney Mark Guralnick. “It’s not just the house, the cars, the furniture, and the pots and pans. Pensions, 401Ks and other retirement assets are also up for grabs in a divorce.”
When a person is planning on getting divorced, he should quietly make an inventory of all property. Write it down, take photographs, photocopy bank records and credit card statements. “Keep a detailed record of everything there is,” Guralnick said. “Once a divorce begins, property tends to disappear.”
COMMUNITY VERSUS EQUITABLE
Each state has law governing the division of marital property, Guralnick said, “They are usually based on what’s called community property or equitable distribution laws. Gurlanick, who also authored The Portable New Jersey Equitable Distribution Handbook,” said certain states such as Louisiana, Texas, New Mexico, Arizona, Nevada, California, Washington and Idaho are community property states.
“A community property state sees all property as being owned in common by husband and wife, with each of them having an undivided one-half interest in the property,” Guralnick said. “This right is far-reaching and applies to all kinds of property. For example, a California wife would have a one-half ownership interest in the earnings of her husband.”
Equitable distribution states are heavily located on the East Coast and sprinkled through the rest of the country. According to Guralnick, these states sees all property owned or acquired by the parties during their marriage as being subject to a fair and equitable division at the time of the divorce. Furthermore, Guralnick said it doesn’t matter which spouse has the title to the property. Distribution is also not necessarily equal, but instead equitable.
Finally, Guralnick adds there is a third option — called a title state — in which the state law awards marital property to whomever holds the title of that property. “Title states see property distribution as being based on who has legal title. If husband and wife occupy a house that husband bought before the marriage, and assuming that house remained in husband’s name throughout the marriage, a title state would award the house to the husband,” Gulanick said.
Because states vary in terms of law, Gurlanick said it is important for individuals preparing for a divorce to determine which law applies in his or her state.
TYPES OF PROPERTY
Beyond the house and money in the bank, there are other types of property the the court can examine when dividing the marital assets. Pets, for instance, are considered property — like the dishes or the TV set. “There’s technically no such thing as custody of a pet,” said Guralnick.
Royalties, trademarks, patents, license rights and other intangibles are also subject to distribution, according to Guralnick.
“And if the couple has a business partnership, goodwill — the name or reputation of a business and the ability to produce or market it — is also subject to distribution in a divorce. Property gets complicated when there is a business involved,” said Dr. Lynne Halem, of the Centre for Mediation & Dispute Resolution Online in Massachusetts.
So can the process of dividing that property.
“It may be necessary to determine the value of an asset before dividing it, and thus, it become necessary to hire real estate appraisers, personal property and jewelry appraisers, business valuators, accountants and other specialists,” Guralnick said. “People should not argue relentlessly over who gets each knife and fork in the kitchen or every book or DVD in the den. Senseless bickering can raise legal fees beyond the value of the items in dispute. In some cases, however, a trial will be necessary. Consider, for example, the case I had a few years ago in which a court was asked to divide a law practice between husband-and-wife lawyers who were getting divorced. It was quite a complicated situation, requiring expert accountants and conflicting financial analyses.”
DETERMINING WHAT IS EQUITABLE
How does a court know what’s equitable? Virtually all equitable distribution states rely on a list of statutory factors literally a checklist of considerations that the court must consider to determine what’s equitable. For example, in New Jersey, there are 16 published factors in the statute, among which are
- Duration of the marriage
- Age and health of the parties
- Income or property brought to the marriage by each party
- Earning capacity of each party
- The contribution of each party to the education, training and earning power of the other party.
“Most states do not include marital fault (such as cheating on your spouse) as a factor, meaning that even a cheating scoundrel-of-a-husband can keep his fair share of the property,” Gulanick said. “But some states do consider this factor.”
“Equitable distribution allows a court to give a stay-at-home mother credit for her non-economic contributions to the family such as raising children, caring for the home, and so forth,” Guralnick said. However, Guralnick said the court also takes into consideration the amount of alimony of other kind benefits each spouse will receive. “With that in mind, the court may choose to reduce the amount of property distributed to a given spouse based on the other benefits to maintain a balance in equity. Each case is different,” Guralnick said.
Halem helps people sort out how they can divide their marital property. “Very often when they come in they have no idea how they are going to divide their marital property,” Halem said.
MEDIATING THE DIVISION
When a couple can’t agree or they want professional input, Halem can help. “If we make the assumption that it’s going to be more or less an equal division, then what the parties have to look at is what do we each want,” Halem said. “… Where mediation really shines, I think, is to look at what is it each person wants. In other words, what is important to everyone and can we make that happen?”
“Because mediation is a process that allows give and take between two parties and creativity, we often get much more unusual agreements,” Halem said. “Sometimes people make a deal. For example, let’s say someone has a chronic illness. Well then maybe it would make sense that they have more property to generate income or something. Or maybe someone is trying to trade support for property. There are lots of reasons why you could make an unequal agreement to be equitable, to be fair.”
“Perhaps one of the worse things that can happen to a divorcing couple is for the court to decide the division of assets. I had a mediation case many years ago in which the parties litigated their divorce. They went to court, the judge made the decision on who got what, and it was exactly what the parties did not want. So they came to mediation to redistribute the property.”
“No matter what,” Halem said, “it is critical to seek advice from a lawyer or mediator as part of the process. To make decisions without full knowledge is a dangerous thing. These are long-term agreements. You are making big decisions…”
Her best advice to divorcing couple trying to divide their assets while they’re dividing themselves: When you get married, someone doesn’t say, “Take divorce 101,'” she said. “More than anything you should know exactly what you are getting and what you are giving up.”
Casey Clark Ney is a freelance journalist based in Boise, ID. She holds a B.A. in Communication and has more than six years experience in newspaper and magazine writing. Her Web site can be viewed at www.CaseyClarkNey.com E-mail correspondences can be sent to caseyclarkney@earthlink.net
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