One of the challenges divorcing couples must face is dividing their marital property and assigning marital debts. Hawaii law requires a division of property in divorce to be equitable, meaning that it must be fair but not necessarily equal.
Marital Property and Separate Property
Although Hawaii courts may refer to property a couple acquires after marriage as "marital property," the law in Hawaii allows a judge to divide all of a couple’s property in any manner that seems fair, regardless of which spouse actually owns it or when it was acquired. If one spouse owns property before marriage, or acquires it by gift or inheritance, a court will usually treat that property as a non-marital asset and award it to the original owner in a divorce--but not always, and the judge has discretion to include that property in the division.
In many cases it is difficult to determine what property is marital and what property is not. Marital and separate property can become mixed together—sometimes called “commingling.” 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 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 or not to treat any of the commingled property as separate property belonging only to one spouse.
A couple making their own agreement can divide assets in whatever way they see fit. Some couples have a premarital agreement defining property as separate or marital; if there is a prenup, it can make dividing property much easier.
The spouses—or the court if the spouses can’t agree – generally assign a monetary value to each item of property. Appraisals can help a couple determine the value of real property as well as items like antiques or artwork. Retirement assets can be very difficult to evaluate and may require the assistance of an actuary, C.P.A., or other financial analyst.
Dividing the Property
Spouses can divide assets by assigning certain items to each spouse, or by selling property and dividing the proceeds. They can also agree to hold property together—this isn’t a very attractive option for many people, because it requires an ongoing financial entangelement, but some couples agree to keep the family home until children are out of school. Others may keep investment property in hopes 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 spouse or the other.
If the couple can’t agree on how to divide property and debts, a judge will decide, taking into account all of the circumstances of the case. Examples of factors a court might consider include:
- each spouse’s age and health
- each spouse’s abilities, including employability
- each spouse’s overall economic condition
- any effect of children’s needs, and
- any culpable behavior, such as failing to disclose income or assets, or violating a restraining order.
While Hawaii does not grant divorce based on fault, a judge may consider fault in dividing property. This is particularly true of misconduct affecting the property available for distribution, such as gambling or drug use. There is no fixed formula for determining what is equitable; every case depends on the individual facts and circumstances.