A major part of a divorce is the distribution of property and debts. Both are equally important in terms of a court determining who will take what in a divorce. There is a two step process of dividing property. The court (or your attorneys if no trial is had) must first determine what is part of the marital estate and then it must determine what would be a fair distribution of property.
What is considered Marital Property?
Generally speaking, anything that is acquired after you were married, up until the point of a separation, is considered marital property. This would include tangible property, as well as debts. There are instances where property could be marital but be prior to the marriage (a home purchased in both of your names).
A common misconception for people is that they believe when they purchase something, like a car, with their own money for the down payment, are the only person on the loan, and even register the car in their own name, that this makes it their property, and not marital property. This is not the case. As long as that car was purchased after you were married and prior to separation, that car is part of the marital estate. This same logic applies to other property as well as debts. An example of this applying to a debt is if one of you went back to school and needed student loans to do so. Those may be in your name only, but they are part of the marital estate as well.
A very important item is retirement accounts. Retirement accounts are marital property. Portions of it may not be marital, if you had your retirement account for five years prior to your marriage.
What types of things are excluded?
There are a few things that are excluded from the marital estate. Again, things that you brought with you into the marriage are not marital property. Things you acquire as a result of a someone else’s will, is going to be excluded (unless it was left to both of you). This is not an exhaustive list, but these are ones most commonly dealt with in a divorce.
What does my attorney need?
As part of this action, at some point a property statement will need to be filed. This is simply a pleading that lists the marital property, marital debts, and significant items that should not be considered a martial asset or debt. The parties have a chance to list out items that they believe the court should know about, what the values are, who is in possession of it, and whether or not that party is seeking to retain possession of it.
Some attorneys may sit and fill this document out with you. I personally give a blank form to my clients and have them go home to fill out the document. This allows people to have time to either go through their home (if they are still in the home) or to think about what is in the home (if they moved out). I advise my clients to assign a value to the assets and debts. Some are easier than others (student loans for example are very exact). Some items are more difficult (that TV you bought two years ago for $800). The rule of thumb is to assign “garage sale” values to the items on the list. That TV is now worth more like $150-$200 on your property statement now. Other common items to value are cars, which can be determined by using a website such as Kelly Blue Book. Houses can be easy to determine value if they were purchased recently. They can be more difficult if you purchased it 25 years ago and an appraisal may be necessary.
What happens after both parties have completed a property statement?
If the parties agree on what is marital and what the values are, then a settlement may be accomplished quickly. The next step is then to determine who gets what and what, if any, equalization payment is needed. An equalization payment is payment that equalizes what each party is receiving. You add up the assets that you each are taking and subtract the debts each of you are taking and determine how far apart those numbers are. The amount it would take to make things equal is considered the equalization payment.
An example of the above is after adding up assets and subtracting debts, you have $50,000.00 net value and the other party has $100,000.00 in net value. It would take a payment of $25,000.00 to you, to make things equal.
If the parties don’t agree on what is marital or disagree on values of big items (houses or retirement), then property may need to be addressed at trial.
Does it have to be 50/50?
The laws in Nebraska do not require that the parties receive exactly 50% of the marital estate. The law requires an equitable distribution of property. Typically this will be close to 50/50, but could be 60/40 or a little more. You also can agree to take accept less than 50% in a settlement.
Property division can be a major sticking point between parties. It is important to remember that you in all likelihood you are not going to get everything you want, but neither will the other party. There is definitely a give and take that takes place. Fighting over the value of a platter you received for your wedding is probably not a worthwhile fight. Ultimately the $10.00 difference in value is not going to make or break your financial future. Choose your battles wisely, but always try to remain reasonable.