New Hampshire Divorce: Dividing Property

Find out how marital assets and debts are divided in a New Hampshire divorce case.

Is New Hampshire a Community Property State?

No. States divide property in a divorce either through the theory of “equitable distribution” or “community property.” There can be significant differences between the two.

New Hampshire is an “equitable distribution” state, which divides property based on a judge’s determination of what’s fair under the circumstances of each case. Community property states, on the other hand, allocate property between spouses as close to 50-50 as possible.

What Constitutes Property?

Under New Hampshire divorce laws, the term “property” includes all tangible and intangible assets. (New Hampshire Statutes, Title XLIII, Section 458:16-a.) Tangible property encompasses assets like real estate and personal property, such as furniture, cars, electronics, bank accounts, and so on.

Intangible property includes, but isn’t limited to, employment benefits, vested and non-vested pension or other retirement benefits, or savings plans. To the extent permitted by federal law, intangible property also includes veterans' disability and military retirement benefits. So the law considers pretty much anything you can put a dollar value on to be property. That’s consistent with most equitable distribution states.

Assessing Property Value

Before determining how to distribute a couple’s property, the court will need to know what the property is worth. Some assets are easy to value, such as bank accounts. But if there’s real estate involved, or a business either or both of the spouses owns, or expensive personal property (like artwork and jewelry) you’ll probably need a qualified appraiser to provide an accurate assessment. For retirement accounts that aren’t yet in payout status, valuation can be tricky, and often requires the services of an actuary.

Dividing Property Under New Hampshire Divorce Laws

New Hampshire’s law regarding property distribution contrasts with many other equitable distribution states in certain respects. Most of these states differentiate between “marital property” and “separate property.”

Marital property consists of assets accrued during the marriage. Separate property includes the assets a spouse had prior to marriage, as well as those received as a gift or through inheritance at any time. As an up-front rule, marital property is subject to distribution; separate property isn’t. If a spouse claims that an item identified as separate property is actually marital property and thus should be divided, that spouse has to prove it to the court’s satisfaction.

New Hampshire recognizes the concept of marital and separate property, but its law makes both types of property subject to division in a divorce. In other words, any property the couple has at the time of divorce is on the table, regardless of where it came from or when a spouse acquired it. The burden is then on each spouse to convince the court that excluding a separate asset from distribution would be fair. So in this regard, New Hampshire reverses the standard approach.

Another way in which New Hampshire veers from the norm is that it presumes a 50-50 split of assets is fair. That’s a presumption that doesn’t exist in most equitable distribution states, and on its face makes New Hampshire sound more like a community property state. The difference is that in a community property state, that equal split stays in place through the finalization of the divorce. In New Hampshire, it’s only a starting point, and a judge can alter it, depending on each couple’s circumstances.

Factors for Equitable Distribution

If either (or both) of the spouses believes that an equal division of their assets wouldn’t be fair, then it’s incumbent on them to bring that to the court’s attention and convince a judge of the validity of their claim.

In making a decision, the court will consider one or more of the following factors:

  • the length of the marriage
  • the spouses’ ages, health, social or economic status, occupation, vocational skills, employability, separate property, amount and sources of income, and needs and liabilities
  • the spouses’ opportunities for future acquisition of capital assets and income
  • the ability of the custodial parent (the one having custody of the children) to engage in gainful employment without substantially interfering with the interests of any minor children in that parent’s custody
  • the need of the custodial parent to live in or own the family home, and to use or own its household effects
  • actions of either spouse during the marriage which contributed to the growth or reduction in value of property owned by either or both of them
  • significant disparity between the spouses in relation to contributions to the marriage, including contributions to the care and education of the children and care and management of the home
  • direct or indirect contributions by one spouse to educate or develop the career of the other, and any interruption of a spouse’s education or career to benefit the other’s career, the marriage, or children
  • the expectation of pension or retirement rights acquired prior to or during the marriage
  • tax consequences for each spouse
  • value of property that is allocated by prenuptial contract
  • a spouse’s fault in causing the marriage to fail, if it also caused substantial physical or mental pain and suffering or resulted in substantial economic loss to the marital estate or other spouse
  • value of any property acquired prior to the marriage or in exchange for property acquired prior to the marriage
  • the value of property acquired by gift or inheritance, and
  • any other factor the court believes to be relevant.

Regarding property acquired before marriage, as well as gifts and inheritances (which, as indicated earlier, are normally separate and exempt assets in most equitable distribution states), notice that the list of factors specifically references the value of these items as something for a judge to consider in determining distribution. So, for example, if one spouse’s inheritance accounts for a significant part of the marital estate, a judge may decide that the inheriting spouse should be entitled to more than half of the couple’s assets. That outcome could be even more likely if the uneven division of property would still allow both spouses to maintain the marital standard of living after the divorce.

Note that according to the New Hampshire equitable division statute, if the court doesn’t order an equal division of assets, it must specify, in writing, the reasons why it opted not to.

Who Gets the House in New Hampshire Divorce?

Dividing the marital home can be problematic. The easiest way to avoid conflict is for the couple to sell the house and split the proceeds. However, if either spouse objects to that, only a judge can order it.

Where there are minor children involved, the situation can become more complicated. One of the equitable distribution factors listed above references the need of the spouse who has custody of the children to stay in the home. That’s typically based on a desire not to uproot the children.

There are a number of things that can be done which would permit the custodial parent to stay in the house, and still allow the other spouse to share in the home’s value. One method is to have the spouse who wants to occupy the home buy out the other spouse’s interest. The one spouse keeps the house, and the other retains more of the remaining assets to balance the scales. Of course, this assumes there are enough assets available to make the exchange viable. Another approach is to have the custodial parent refinance the home (if that spouse qualifies for a mortgage), and use the proceeds of the refinance to pay the other spouse.

Another available option that is fairly common is for the couple to keep the house in both names while one of them lives there, but then sell it and divide the proceeds at a certain date. That end date is often pegged to the youngest child entering or finishing college. It’s usually the responsibility of the spouse who occupies the home to pay the costs associated with living there.

If the couple can’t agree on what to do, then the court will make that decision. And in doing so, the court will be mindful of its obligation to act in the children’s best interest.

What Happens to a 401k and Other Retirement Accounts in Divorce?

As seen above, vested and non-vested pensions and other retirement benefits (such as 401k’s) are assets that are subject to distribution. Dividing them isn’t particularly difficult if the benefits are already being paid out—you know exactly what the plan owner is getting. But more often than not, divorces occur before the spouse who owns the retirement account is eligible to start receiving a payout. In that scenario, there are primarily two ways to effectuate distribution. Both of them will probably require using an actuary to calculate the plan’s current value.

One way to divide the plan is to have the owner spouse keep the account, and allow the other spouse’s share to be paid out of other assets. Another way is to defer the non-owner spouse’s distribution until the owner spouse retires. At that point, the plan starts paying out benefits to both of them.

In order for this second method to work, however, the retirement plan administrator will likely need a Qualified Domestic Relations Order (QDRO). Providing the plan administrator with this document protects the non-owner spouse’s interest in the retirement account. The QDRO is separate from the final divorce judgment, and is usually prepared by the actuary or an attorney.

Distributing Debt

Resolving debt is also a part of equitable distribution, and the same rules apply here as applied to dividing property. The court starts out with the premise that the spouses should equally divide the marital debt. If one of the spouses believes this is unjust, the court will listen to the reasons given, and make a decision. By way of example, a judge might rule that it would be unfair for one spouse to be equally liable for the other spouse's significant gambling debt. Again, the court assesses these issues on a case-by-case basis.

Something else to remember regarding debts is that your divorce judgment isn’t binding on creditors. If your divorce judgment contains a provision that says your spouse is responsible for paying off a joint credit card, but that spouse defaults on the payments, you’re on the hook as far as the credit card company is concerned. You can head back to court for an order compelling your ex-spouse to live up to the divorce terms, but in the meantime that default is impacting your credit rating. So it’s a good idea to get as much marital debt as possible paid off when finalizing the divorce. At the very least, keep track of payment of those accounts your name is still on.

Settlement Agreements

Courts in New Hampshire—and every other state—strongly encourage spouses to attempt to resolve their differences amicably. This applies to property distribution as well as all other aspects of your divorce. You can do this between yourselves, or with the aid of your attorneys or a qualified family law mediator. To the degree you can settle your issues, you’re controlling your own fate.

If you can agree on terms that you both believe are fair, you can incorporate them into a written contract, usually referred to as a “property settlement agreement” or “separation agreement”. Once you’ve done that, the written agreement can become part of your final divorce judgment. By resolving your issues, you’ll almost certainly save time, anxiety, and attorneys’ fees.

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