Indiana Divorce: Dividing Property

When we think of hot-button issues in a divorce, the usual suspects are alimony or child custody. But dividing a couple's property can also be a big source of conflict, especially when it comes to things like the family home or pet. If you're facing or in the midst of a divorce, it's important for you to understand how Indiana's divorce law addresses the division of property and allocation of debts.

• Is Indiana a Community Property State?
• What Property Is Divided in an Indiana Divorce?
• How Is Property Valued in an Indiana Divorce?
• Can You Agree on How to Divide Your Property?
• When Is an Unequal Division of Property Considered Fair in Indiana?
• How Do Indiana Judges Distribute Property Between the Spouses?
• Who Gets the Family Home in an Indiana Divorce?
• What About Dividing 401(k) and Other Retirement Accounts?
• Who Gets the Family Pet in a Divorce?
• Getting Help With Your Divorce and Property Division

Is Indiana a Community Property State?

No, Indiana isn't a community property state. Rather, it's generally thought of as an "equitable distribution" state—but with a twist.

In most states that follow the principle of equitable property division, judges divide a couple's property and allocate their debts based on what's fair under the circumstances—which doesn't necessarily mean a 50-50 split.

However, Indiana law requires judges to start out with a presumption that an equal division of a couple's property is "just and reasonable." To get past that presumption, an objecting spouse must present evidence that an equal division wouldn't be fair (more on that below). (Ind. Code § 31-15-7-5 (2023).)

What Property Is Divided in an Indiana Divorce?

The first step in approaching property division is to determine which assets and debts will be included. In most equitable distribution states, only "marital property" is divided in divorce, and each spouse will keep their own "separate property" (which typically includes property they acquired before the marriage or gifts and inheritances they received during the marriage). But this isn't how it works in Indiana.

Under Indiana law, a divorce judge will divide all of the following property that the spouses own:

• property each spouse owned before the marriage
• property they acquired through their joint efforts, and
• property that either spouse acquired during the marriage up until the date of the couple's final separation (defined as the date they filed for divorce or filed for a legal separation).

(Ind. Code § § 31-9-2-46, 31-15-7-4(a) (2023).)

This means that in Indiana, the only property owned by the spouses that's not subject to distribution in divorce is what either of them individually acquired (without the other spouse's contribution) after they filed for divorce or legal separation. Still, the fact that property was acquired before marriage, or was received during the marriage as a gift or inheritance, might play a role in how a judge decides to divide their property division (more on that below).

It's worth pointing out that Indiana couples typically won't have to worry about "commingling" separate and marital property. In many states, separate assets can be "transmuted" (changed) into marital property if they're mixed together—such as when a spouse deposits an inheritance into a joint bank account. But that won't usually be an issue in an Indiana divorce because gifts, inheritances, and property that was owned before the marriage are subject to distribution.

How Is Property Valued in an Indiana Divorce?

When you have any financial issues at stake (including property division), you and your spouse must exchange complete information about your income, expenses, assets, and debts after you file for divorce. That's why it pays to prepare your financial information before the divorce process starts.

In many cases, determining an asset's value is fairly straightforward, such as obtaining the balances on bank accounts. But you'll probably need help from financial experts—such as appraisers, forensic accountants, or actuaries—to figure out the value of certain types of property like a house, family business, or pension plan.

If you and your spouse can't agree on the value of any particular asset, even after getting expert help, the judge may have to decide for you, based on the evidence you both provide.

You also must be mindful of the correct date for establishing the value an asset. Unlike most other states, Indiana has no set valuation date. Rather, it gives judges great latitude, allowing them to select any point between the date a spouse filed the divorce petition and the date of the final divorce hearing. (Deckard v. Deckard, 841 N.E.2d 194 (Ind. Ct. App. 2006).)

Of course, if you and your spouse settle your case before a trial (more on that below), you'll agree at that point on the value of your property and debts.

Can You Agree on How to Divide Your Property?

You and your spouse always have the option of agreeing on how you'll split up your property when you get divorced, rather than having a judge decide for you. In fact, the courts strongly encourage divorcing couples to settle all their marital issues before a trial is necessary, and they provide ample opportunity to do that during the divorce process. You'll need to submit the agreement to the court for approval, but judges will almost always approve these agreements as long as they appear to be fair.

Also, if you and your spouse reach a complete marital settlement agreement before you file your divorce papers—covering all the legal issues involved in ending your marriage—you'll be able to file for an uncontested divorce in Indiana. Uncontested divorces are much cheaper, quicker, and easier than traditional contested divorces. Many couples are able to navigate the uncontested divorce process without hiring a lawyer, either entirely DIY or by using an inexpensive online divorce service to streamline the process.

You can also agree before you get married (by signing a prenuptial agreement) on how you'll divide your property if you later decide to divorce.

When Is an Unequal Division of Property Considered Fair in Indiana?

Because of Indiana's presumption that an equal division of property is inherently fair, it generally makes the judge's job easier. But either spouse may present evidence in an effort to overcome (or "rebut") that presumption. When reviewing the evidence, the judge will consider at least the following factors:

• each spouse's contribution to buying or otherwise acquiring the property
• whether (and to what extent) either spouse acquired the property before the marriage or received it as an inheritance or gift
• each spouse's economic circumstances (when the property division will be effective), including whether the spouse with custody of the couple's children should keep the family home or have the right to live there
• the spouses' conduct during the marriage, if it's related to the dissipation (wasting) or division of their property, and
• the spouses' earnings or ability to earn—again, as that's related to the property division.

(Ind. Code § 31-15-7-5 (2023).)

It's up to the spouse who's arguing for an unequal property division to prove that a 50-50 split wouldn't be fair and reasonable under the circumstances. The judge has a lot of leeway (discretion, in legalese) when making a decision. Typically, an appeals court will overturn that decision only if the judge misinterpreted the law or disregarded the factors outlined above. (Priore v. Priore, 65 N.E.3d 1065 (Ind. Ct. App. 2016).)

As the law makes clear, judges won't consider evidence of a spouse's behavior (such as adultery) in and of itself. But a judge might take misconduct into account if it involved squandering a couple's assets or was otherwise related to the property division. For instance, one Indiana judge divided a couple's marital property unequally after considering the fact that the husband had removed over $100,000 of the couple's assets for his personal benefit and business interests. But the judge also noted that the wife had much lower earnings and earning potential because of cancer-related impairments. (Bizik v. Bizik, 753 N.E.2d 762 (Ind. Ct. App. 2001).)

How Do Indiana Judges Distribute Property Between the Spouses?

Indiana law gives judges a number of options for ways to divide a couple's property, including:

• awarding each spouse property of equal value
• requiring the spouse who receives certain property to pay the other spouse a fair share of the value of that property
• ordering the spouses to sell property and divide the proceeds, or
• setting aside a percentage of benefits that will be paid after the divorce (like a pension or 401(k) account that's not yet eligible for payout), such as by giving a spouse the right to receive a percentage of the other spouse's payments.

(Ind. Code § 31-15-7-4(b) (2023).)

Who Gets the Family Home in an Indiana Divorce?

As we've seen, Indiana law specifically allows the judge to take into account the possibility that a custodial spouse may need to own or continue living in the home the couple owns. But the law doesn't say that either spouse must get to keep the family home after divorce.

If you and your spouse can't agree on what to do with your house, the judge will make a decision based on the specific circumstances in your case. If the property goes to one spouse, the judge will typically award different assets—such as retirement accounts—to the other spouse to arrive at a fair (usually equal) distribution of all the couple's property.

Of course, most homeowners don't have enough other assets to balance out the value of a house awarded to one spouse. So the judge may simply order them to sell the house and divide the proceeds. If you don't want a forced sale, you'd be wise to work out an agreement with your spouse after exploring the other options for dealing with the family home.

What About Dividing 401(k) and Other Retirement Accounts?

Retirement plans are also included in the property division in divorce. But it can be difficult to value some of these assets, especially when a spouse has interest in a defined-benefit pension. You'll probably need expert help to figure out what the plan is worth as of the valuation date (as discussed above).

And when you're dividing any employment related retirement plans, such as a 401(k) or a pension, you'll need an expert to prepare a special order known as a qualified domestic relations order (QDRO).

Also, if you're hoping to reach an agreement on the property division in your divorce, you also may need expert advice on the tax consequences of your agreement.

Who Gets the Family Pet in a Divorce?

Even though many people consider pets to be members of the family, the law treats all animals as property. A few states have special rules for dealing with the family pet in divorce, such as allowing judges to consider the animal's well being or to award joint custody of the animal.

Not so in Indiana, where judges must award ownership of a pet to one spouse in the divorce, just like any other personal property. In fact, an appeals court in the state overruled a judge who awarded the family dog to the wife but then ordered that the children be allowed to take the animal to the father's home during his parenting time. Since Indiana law doesn't have a provision for pet visitation, the judge didn't have the authority to give the kids the right to decide whether to take the mother's personal property with them when they visited their father. (Ivankovic v. Ivankovic, 205 N.E.3d 1061 (Ind. Ct. App. 2023).)

Getting Help With Your Divorce and Property Division

If you're having trouble agreeing with your spouse about how to divide your property, you can try mediation. The cost of divorce mediation varies, but you and your spouse can split the mediator's fee. And a successful mediation will be considerably less expensive than going to trial (with attorneys' fees for both of you).

But if you still aren't able to reach a settlement agreement, even with a mediator's help, you should at least speak with a lawyer. An experienced family law attorney can evaluate your case and lay out your options going forward. Having a lawyer on your side is especially critical if you're experiencing domestic violence in your marriage or if you suspect that your spouse is hiding assets.

You should know that the question of whether you need a divorce lawyer isn't always an all-or-nothing choice. Sometimes, you can hire an attorney on an as-needed or consulting basis to handle certain tasks in your divorce, such as drafting or reviewing your settlement agreement, to make sure you haven't missed anything important or inadvertently given up important rights.