Indiana Divorce: Dividing Property

Find out how marital property (and debt) is divided in an Indiana divorce case.

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Gavel and Scales

All divorcing couples must figure out how to divide their marital property and assign any marital debts. Indiana law requires an equitable division of property in divorce, meaning that the division must be fair but not necessarily equal. Some couples are able to agree on their own about how to divide property, while others use the help of attorneys or a mediator to negotiate a settlement. Couples who don’t manage to resolve property issues will end up going to court to ask for a decision from a judge.

Marital Property and Separate Property

Marital property is property a couple acquires during marriage, while separate property is property one spouse owns before marriage, or acquires by gift or inheritance while married. Although Indiana law makes a distinction between marital and separate property, a judge may 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.

The distinction between marital and separate property is still important, though, because a court will presume that an equal division of property is fair unless one spouse presents evidence of unfairness, and a claim that certain property is separate may support an argument of unfairness.

By downplaying the importance of the distinction between marital and separate property, Indiana law recognizes that in many cases it is difficult to determine which is which. 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 fairness requires treating any property as separate property belonging only to one spouse.

Other factors a court may consider in determining that an unequal division of property would be more appropriate than an equal division include:

  • each spouse’s contributions, whether income producing or otherwise, to the acquisition of property
  • each spouse’s economic circumstances
  • each spouse’s earnings, or earning ability
  • any conduct of a spouse which resulted in the disposal or dissipation of property, and
  • the desirability of awarding the family home, or the right to live in it for a reasonable period of time, to the party who has physical custody of children the majority of the time.

A court will also consider any tax consequences of the property division on the present and future economic circumstances of each spouse. In addition, if there is little or no property to divide and one spouse has made a financial contribution toward the other spouse’s postsecondary education, a court may order a money judgment to the contributing spouse as a reimbursement.

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.

Assigning Value

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. While this isn’t a very attractive option for most people, as it requires a continued engagement, 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 spouse or the other.

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