The Marital Pot: Division of Marital Assets and Debts
You owned a house before getting married, your husband’s name is the only name on both of your vehicles and your grandma passed away a few years ago leaving you an inheritance – what does all of this mean when you divorce? These are all common scenarios that divorce attorneys navigate every day. In short, Indiana lumps all of your property together into one “marital pot”. The common term marital pot includes all assets that each spouse brought into the marriage as well as everything acquired together during the marriage. There is a presumption that all property will be divided equally. However, that presumption is rebuttable. Either party can present evidence to the court that an equal division would not be equitable or reasonable.
The name on the asset or debt does not really matter when determining what is in the marital pot. The court considers decisions during a marriage as joint. Therefore, a credit card debt or car loan with only one name is treated as if the debt belongs to both husband and wife. While it is possible for an asset or debt to be acquired without any intention to share the benefit or liability, it is just as likely the decision was made due to credit scores or mere convenience. In most cases, marital funds are used to purchase assets or pay liabilities. Even if one party can prove that only their individual income was used to pay for something, that is still income that could have been used for other marital bills but was utilized in that manner.
The court may consider title when determining which assets are debts are allocated to which person. For example, if the parties will be dividing $10,000 in credit card debt, it makes sense to distribute debt already in the payors name first then determine if transfers need to be made to equalize the debt.
One misconception is the court will divide each asset or debt individually. More often, a net marital estate is determined and divided. This means a list is made of all assets and values along with all debts and values. The idea is for each spouse to leave the marriage with a specific share of the total net amount (assets minus liabilities). Many have heard from a friend of a friend that “his wife took everything and left him with nothing”. Each scenario is different but a likely explanation would be for a spouse that assumes the home to assume any debt that offsets the value of the equity. The rest of the story may be that the wife was able to stay in the home but also took all of the credit card debt and both parties left the marriage situated in similar positions.
There are certainly situations where an equal distribution is not equitable. Indiana Code 31-15-7-5 outlines the factors the court considers in determining whether or not an equal distribution is appropriate. This is where factors such as an inheritance or pre-owned house come into the equation. With limited exceptions, the property remains in the marital pot but the division can be offset to percentages different from 50/50.
If you or someone you know has questions about the division of marital assets and debt, Banks & Brower, LLC can assist. Give us a call at (317) 870-0019, or email us at firstname.lastname@example.org.