Laws governing division of marital property in divorce vary from state to state. The District of Columbia (D.C.) requires a division that is equitable--meaning it must be fair--but but not necessarily equal. If the couple can’t agree on how to divide property and debts, a judge will decide, taking into account all relevant factors, including each spouse’s:
- age and health,
- occupation, vocational skills, and employability,
- assets, and amount and sources of income,
- debts and needs,
- opportunity for future acquisition of assets and income,
- obligations from a prior marriage or for other children,
- contributions to the family unit as a homemaker or otherwise,
- increase or decrease in income resulting from the marriage, including homemaking or child care responsibilities,
- contributions to education of the other spouse that increased earning ability,
- contributions to the acquisition, preservation, or increased value of marital property, and
- contributions to any decrease in value or waste of marital property.
Additional factors a judge may consider include the length of the marriage; the effects of child custody arrangements (such as whether the children would benefit from one parent continuing to live in the family home); whether a spouse is also receiving alimony; whether one or both spouses acquired a particular asset after separation; and any tax consequences of the property division. A judge may also consider whether one spouse’s behavior contributed to the break-up of the marriage, even though D.C. law does not consider spousal misconduct as a ground for divorce.
D.C. law specifically provides that all equitable distribution factors apply to the division of property in domestic partnership terminations as well as in divorce.
Marital Property and Separate Property
The first step in the division process is deciding whether property is marital or separate. Marital property includes most assets and debts a couple acquires during marriage, regardless of whether one spouse holds title to the property individually or both hold title in some form of co-ownership—such as joint tenancy, or tenancy by the entirety.
Property is separate if a spouse owned it before marriage or acquired it during marriage by gift or inheritance. Separate property also includes items purchased with or exchanged for separate property, as well as any increase in value of separate property, provided that the claiming spouse can trace it through financial records or other documents.
Sometimes spouses convert separate property into marital property, or vice versa. Spouses can specify whether certain property is separate or marital in a written agreement either before or during marriage. A spouse can also change separate property into marital property by changing title from individual to joint ownership, in which case a court would presume that the spouse intended to make a gift of the property to the marriage, and would divide the property along the rest of the marital property.
Marital and separate property can be mixed together—sometimes called “commingling.” Some couples combine their separate assets intentionally; others do so simply by being careless. A premarital bank account belonging to one spouse can become marital property if the other spouse makes deposits to it; a house owned by one spouse alone can become marital property, in whole or in part, if both spouses pay the mortgage and other expenses.
If the spouses aren’t able to decide what belongs to whom, the judge will have to decide whether the original owner should be reimbursed in whole or in part for any of the commingled property. These situations can be very complicated and may require the assistance of an attorney.
After determining which property is marital property, the couple, or the court, will assign a monetary value to each item. Couples who need help determining values can hire professional appraisers. Some financial assets, such as retirement accounts, can be very difficult to evaluate and may require the assistance of a financial analyst, such as a C.P.A. or an actuary.
Dividing the Property
Spouses can divide assets by assigning certain items to each spouse, possibly with an equalizing payment if one spouse gets substantially more than the other, or by selling property and dividing the proceeds. They can also agree to continue to own property together. While this isn’t a very attractive option for many people, as it requires an ongoing relationship, some couples agree to keep the family home until children are out of school. Others may keep investment property hoping it will increase in value.
The couple must also assign all debt accrued during the marriage, including mortgages, car loans and credit card debts, to one of the spouses.