A Look at Division of Assets
When someone comes in to our office for a consultation about a divorce, one of the most frequent questions/concerns is how will our assets be split up. Clients tend to focus on who the asset is titled to and/or who paid for or purchased the asset. The law looks at assets differently. Indiana Code gives the Court broad discretion on splitting up assets.
Indiana Code reads:
(a) In an action for dissolution of marriage under IC 31-15-2-2, the court shall divide the property of the parties, whether:
(1) owned by either spouse before the marriage;
(2) acquired by either spouse in his or her own right:
(A) after the marriage; and
(B) before final separation of the parties; or
(3) acquired by their joint efforts.
(b) The court shall divide the property in a just and reasonable manner by:
(1) division of the property in kind;
(2) setting the property or parts of the property over to one (1) of the spouses and requiring either spouse to pay an amount, either in gross or in installments, that is just and proper;
(3) ordering the sale of the property under such conditions as the court prescribes and dividing the proceeds of the sale; or
(4) ordering the distribution of benefits described in IC 31-9-2-98(b)(2) or IC 31-9-2-98(b)(3) that are payable after the dissolution of marriage, by setting aside to either of the parties a percentage of those payments either by assignment or in kind at the time of receipt.
There have been several cases dealing with the interpretation of this law. One thing is clear, who an asset is titled in is of very little importance. The Indiana Supreme Court spoke clearly on this issue when it stated, “Regardless of the source, property owned by the parties in a marriage is not excluded from the “marital pot”, is not beyond the scope of the court’s authority for division, and is subject to the equal division presumption. The court may, in dividing marital property, transfer property held individually or jointly, and may transfer to one party property previously settled in the other.” In other words, just because an asset is titled one way, a court may order it be awarded to either spouse.
Property acquired after the date of separation is generally not included in the marital pot. However, there are exceptions. For example, if a party has an interest in a bonus prior to separation that is vested and not contingent on some later event, then that might be a later acquired asset that is still subject to division. Even if not subject to division, the Court may consider the later acquired asset when deciding how to distribute the assets that are included in the marital pot.
So, what about property acquired before the marriage? The Court may consider that in deciding how to divide assets, but it is not controlling. Assets brought to a marriage are still considered marital property and the Court is given broad discretion on dividing those assets.
Property inherited by one of the parties is also a factor the Court considers. Generally, inherited property will be included in the marital pot of assets to be distributed. However, where one party acquired an asset from inheritance and that asset was not co-mingled, the Court will many times find that the inherited property should be given to the party that it was left to outright.
Annuities generally are divisible as marital property. The Court will, in most instances, discount the value of the annuity to the present day value for purposes of dividing it.
Does the economic situation of the parties matter? Yes! The Court may consider the earning capacity and economic situation each party is in when determining how to distribute assets. For example, a party who has an advanced degree and a history of high earnings who is married to a spouse with a lesser education and low-income history may end up with less marital assets as the Court could find the lesser situated spouse will need more of the assets going forward.
Pensions and other retirement items like 401(k) and IRA’s will generally be held to be divisible marital property as long as there is a vested interest in the account. These accounts can then be given a present day value for purposes of division.
The Court also has broad authority in determining what should be done with the marital home. The Court can order it given to either party or can order it sold and determine how any equity or shortfall be split. The marital property may be awarded to the spouse given primary physical custody of the children. As in most areas of family law the Court can use broad discretion.
The division of marital property can be a complex and complicated process. The attorneys at Banks & Brower will work hard to make sure you are given your fair share and that you achieve the amount of assets you deserve.