Laws governing division of marital property in divorce vary from state to state. Kentucky law requires a division that is equitable, meaning that it must be fair even if it's not equal. Some couples are able to agree on how to divide everything, while others seek the help of attorneys or a mediator to help them to negotiate a settlement that works for both spouses. Couples who don’t manage to resolve property issues outside of court will end up going to court to ask for a decision from an arbitrator or a judge. A Kentucky judge will consider all relevant factors in deciding what kind of property division is fair, including:
The first step in the process of dividing property is determining whether property is marital or separate. Marital property includes most assets and debts a couple acquires during marriage. 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. Income from separate property, or an increase in the value of separate property, will also be separate unless the income or increase in value was the result of significant activity by either spouse during the marriage (for example, if your spouse spent a lot of time trading stocks in an account that was only in your name, resulting in significant gains, those gains would likely be marital property).
Sometimes spouses convert separate property into marital property, or vice versa. One way of doing this is through a prenuptial or premarital agreement that specifies whether certain property is separate or marital. A spouse can also change separate property into marital property by changing title from individual to joint ownership, in which case a court would generally presume that the spouse intended to make a gift of the property to the marriage.
Marital and separate property can also 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 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 any or all of the commingled property was a gift to the marriage or whether the original owner should be reimbursed in whole or in part. These situations can be very complicated and you may need a lawyer's help in untangling things if you have a commingling issue.
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 professional, such as a C.P.A. or an actuary.
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, for example if the children are about to graduate from high school in a few years and it makes sense to keep the family home until then, or if you have investment property that you don't want to sell because you think it will increase in value. For most people, this isn't an appealing choice because of the ongoing financial entanglement, but some couples choose to keep holding property together.
The couple must also assign all debt accrued during the marriage, including mortgages, car loans and credit card debts, to one of the spouses.