How Is Property Divided in a Divorce?

While the short answer to how property is divided in a divorce is equally, that may not always be the case.  Indiana is an equitable division state.  Indiana Code states that property shall be divided “in a just and reasonable manner.”  I.C. § 31-15-7-4(b).  However what is “just and reasonable” is not always clear.  Ind. Code § 31-15-7-5 sets forth the presumption for equal division of marital property and the rebuttal, as follows:

The court shall presume that an equal division of the marital property between the parties is just and reasonable. However, this presumption may be rebutted by a party who presents relevant evidence, including evidence concerning the following factors, that an equal division would not be just and reasonable:

(1) The contribution of each spouse to the acquisition of the property, regardless of whether the contribution was income producing.

(2) The extent to which the property was acquired by each spouse:

(A) before the marriage; or
(B) through inheritance or gift.

(3) The economic circumstances of each spouse at the time the disposition of the property is to become effective, including the desirability of awarding the family residence or the right to dwell in the family residence for such periods as the court considers just to the spouse having custody of any children.

(4) The conduct of the parties during the marriage as related to the disposition or dissipation of their property.

(5) The earnings or earning ability of the parties as related to:

(A) a final division of property; and
(B) a final determination of the property rights of the parties.

Contribution.  Examples of non-income producing contributions may include a stay at home parent or supportive spouse.  For example, if one spouse helps the other with a business and accompanies the spouse to networking functions, a court may consider this a contribution.  A stay at home parent’s contributions may include allowing the other parent to work outside of the home, as well as saving money on day care expenses.

Acquisition of property prior to marriage or through inheritance or gift.  If one party brought substantial funds into the marriage, this may allow the court to deviate from an equal division of assets, allowing the party bringing more into the marriage more than 50% of the total marital pot.  If a court finds that an inheritance was meant for the sole benefit of the inheriting party, they also may consider a deviation from an equal distribution in favor of the party receiving the inheritance.

Economic circumstances.  The Court will consider the economic circumstances of both parties when dividing the assets of the marriage.  If the custodial parent is not in a position to purchase or rent a new home, the court may allow that party to reside in the marital residence, even if the court awards the marital residence to the other party, or orders the property to be sold.

Conduct of the parties.  Indiana is a no-fault state.  This does not mean that if a spouse has an extramarital affair leading to the end of the marriage, the Court will consider that when dividing the marital property.  However, if the spouse’s infidelity resulted in paying for an apartment for his/her side piece, this is dissipation of assets.  If one party sells his interest in a multi-million dollar company for $1.00, this is dissipation of assets.  Likewise, if one party has a gambling addiction and has cashed in her retirement to support this, it may also be considered dissipation.  If one party dissipates assets of the marriage, the Court will take that into consideration when deciding on the divisions of marital property.

Earning ability. The Court may consider the earning ability of the parties in determining whether to deviate from an equal distribution.  This does not mean that future earnings of a party will be divided, but it may factor into which party is ordered to pay certain debts, or whether the court awards one party more than 50% of the marital property.  For example, if one party earns $250,000 per year and the other party earns $25,000 per year, the court may award the party with less income more of the marital property.

In determining whether a deviation is proper, a court will review all of the factors to determine what is just and reasonable.  Therefore, if one party has a lower earning ability, that in itself may not be enough for the court to award one party more than 50% of the total marital property.

All of these factors are to be considered together, with no one factor alone necessarily proving or requiring an unequal division. In re Marriage of Marek, 47 N.E.3d 1283, 1290-91 (Ind. Ct. App. 2016) (citing Fobar v. Vonderahe, 771 N.E.2d 57, 59-60 (Ind. 2002) (explaining that the trial court’s distribution is to be considered as a whole, not item by item and therefore, “[e]ven if some items meet the statutory criteria that may support an unequal division of the overall pot, the law does not require an unequal division if overall considerations render the total resolution just and equitable.”). Further, the mere fact of traceability of assets should not be the basis for deviation from the presumptive equal division. Hatten, 825 N.E.2d at 796.

Gish v. Gish, 111 N.E.3d 1034, 1038 (Ind. Ct. App. 2018), transfer denied, 2019 WL 318570 (Ind. Jan. 17, 2019)

Once the value of the marital assets is determined the court has different options for determining how the division is actually carried out.  The division may be done by (1) dividing the property in kind (setting aside property to either spouse); (2) setting the property to one spouse and requiring either spouse to pay an amount either in gross or installments, that is just and proper; (3) ordering the sale of the property and dividing the proceeds of the sale; or (4) ordering distribution of pension or retirement benefits.  Ind. Code § 31-15-7-4(b).  The courts may use more than one method of distribution to ensure a just and reasonable distribution of marital property.

This post is intended to provide general information on the division of property in a dissolution action.  If you need assistance with a dissolution of marriage, contact the experienced attorneys at Banks & Brower LLC for a free consultation at (317) 870-0019 or email us at info@banksbrower.com.