Property Division after Divorce in USA

By | August 27, 2021
Property Division after Divorce in USA

Last Updated on by Admin LB

The article ‘Property Division after Divorce in USA’ by Pranava Pishati sheds light on the division of different properties after divorce, such as separate property, marital property, and property split by the state in the U.S.A.

I. Introduction

Property gained over the course of a marriage is referred to as marital property. In the United States, over two million individuals divorce each year[1]. Many divorced people usually do not have minor children. Have you ever wondered what happens to their property after they divorce? Since the introduction of no-fault divorce in the United States in the 1960s and 1970s, both divorce lawsuits and negotiations have centred on the division of property and debt.

II. Types of property

1. Marital Property

This legal concept of marital property exists largely to safeguard spousal rights. Marital property includes real estate and other property purchased by a couple during their marriage, such as a home or investment property, cars, boats, furniture, or artwork, when not acquired by either as separate property. Even an Individual Retirement Account, which is legally owned separately by each spouse, is marital property if earned income is made a significant contribution during the course of a marriage.

The main property division issue is how to divide the property after the divorce. The primary guiding principle is justice to the divorced spouses. Different ways of attaining justice in divorce have been introduced by legislators.

In the United States, there are two primary approaches: equitable approach and community approach.

  1. Community approach: A minority of jurisdictions employ community property, which is a method in which couples hold property collectively during the marriage. This frequently results in an equal property distribution between the couples upon a divorce. However, most jurisdictions follow common law, which means that spouses keep their property independently during the marriage by default. The concept governing property division in these states is equitable distribution, which “seeks an equitable, but not necessarily equal, divide between the spouses;” in other words, fairness is sought in property division[2].
  2. Equitable distribution: Although each partner has a stake in the partnership, the stakes are not always equal. When the marriage dissolves, the partners receive shares proportional to their contributions. Contributions in the marital setting, on the other hand, do not have to be monetary and might include childcare. When using the equitable distribution approach, judges may take into account the length of the marriage, the age and condition of the spouses, as well as each spouse’s vocational skills, income, obligations, and needs. Property division is a matter for the courts, and their rulings are frequently fact-specific. However, the argument over the most equitable property allocation upon divorce persists. Disagreement between spouses on this issue has also resulted in a lot of litigation.

1.1 Uniform Marital Property Act,1983

At their annual conference in July 1983, the National Conference of Commissioners on Uniform State Laws recommended that all 50 states implement a Uniform Marital Property Act. The legislation categorizes and establishes property as marital or individual from the start of a marriage. Marital property, defined as property gained by either spouse during the marriage, comprises all income produced during the union, regardless of whether it is obtained from individual property. Each spouse has a one-half current vested interest in all marital property[3].

Individual property is defined as property obtained by a single spouse before marriage or prior to the implementation date of the Uniform Marital Property Act. The individual property includes property obtained as a gift or inheritance from a third party, as well as damages collected for personal injury or separate property.

The Uniform Marital Property Act developed as societal norms altered to reflect women’s progress toward equality. According to the act, if a spouse holds a joint title to marital property, both must engage in management and control functions. If a pair holds the title alternately, any spouse may exert management and control. Individually owned marital property enables only the spouse who has the title to manage and control the property. The statute, on the other hand, gives individuals who want to alter, ignore, or accept elements of the marital property and gives considerable contractual discretion.

Many states enacted “no-fault” divorce laws and regulations that provided for fair property distribution upon divorce in the 1970s. In some states, only designated marital property was divided, but in others, all spousal property was divided in order to achieve a more equitable outcome than would be reached via strict adherence to the title[4].

Most states probate laws or elective share provisions recognize marital property in some way when a marriage ends in death. The varied explanations of equitable distribution within common law states, as well as the community property approach, create a tangled mess of marital property law in which a husband and wife’s property interests may change if they move from one state to another, or even at different stages of their marriage if they stay in the same state.

As a result, the act is a necessary synthesis of these two coexisting but distinct marital property systems. The legislation incorporates common law concepts like third-party and creditors’ rights, as well as the premise that marriage is a partnership, which is fundamental in the law of community property jurisdictions.

2. Separate Property and Alimony

Property owned by an individual prior to marriage, as well as inheritances or third-party gifts received by an individual during a marriage, is considered distinct property. Signing a prenuptial or postnuptial agreement allows marriage spouses to exclude specific items from the marital property[5].

However, because each partner owned his or her own assets, in the event of a divorce, both spouses would walk away with whatever they happened to possess. This might easily signify nothing to a homemaker. If someone who is a homemaker required help, she might file an alimony claim against her husband.

Except in Pennsylvania, the court has the authority to award alimony[6], which obligates one spouse to contribute to the maintenance of the other through periodic monetary payments. An obligor spouse may choose to free himself or herself of the permanent obligation by paying the whole sum at its capitalized value on rare occasions[7].

The oblige may also prefer the possibility of having money in his or her hands to the promise of receiving a pension every month or week. A number of courts found that they lacked the jurisdiction to order the conversion of a pension into a lump sum payment if the statute did not expressly enable it. Even in the lack of a particular statute, other courts assumed comparable power.

However, where a lump sum alimony award is possible, payment may be ordered in a variety of forms: a lump sum payable all at once; a fixed sum of money payable in a fixed series of subsequent instalments; transfer of property assets to the oblige or a trustee for the profit of the oblige; or any combination of these modes of payment. In such a procedure, the distinction between alimony as a means of support and the unscrambling of the parties’ property might readily be lost.

As a result, in the vast majority of noncommunity property states, divorce can be paired with a redistribution of the spouses’ property under the pretext of alimony, as a combination of alimony and property settlement, or by the employment of a broad power of property redistribution.

The courts may assume the power to take such measures or, as in Oregon, expressly grant it to the courts by statute. As in typical community property regimes, such redistribution is not restricted to the fund of marital acquests. All property owned by the parties can be redistributed, and in the extreme scenario, all property owned by the other party can be allotted to one party.

The combination of alimony and division of assets has been supported by the need to constitute divorce in order to bring about a final and definite termination of the parties’ relationship. As the view that separation of marriage should pave the way for the establishment of a new family gains traction, so does the tendency to eliminate as many future obligations between ex-spouses as possible, and the courts welcome the opportunity to reduce the burden of post-divorce lawsuits over alimony regulation or modifications.


Reference

[1] Margaret Ryznar, An Empirical Study of Property Divisions at Divorce, 37 Pace L. Rev. 589 (2017)

Available Here

[2] Marsha Garrison, What’s Fair in Divorce Property Distribution: Cross-national Perspectives from Survey Evidence, 72 La. L. Rev. (2011) Available Here

[3] Available Here

[4] POLL, EDWARD. “Marital Property: Speaking the Same Language.” <i>Compleat Lawyer</i>, vol. 1, no. 2, 1984, pp. 24–25. <i>JSTOR</i>, Available Here, Accessed 6 Aug. 2021.

[5] ‘Separate Property’ (LII / Legal Information Institute, 2021) Available Here, accessed 6 August 2021

[6] Available Here

[7] Max Rheinstein, “Division of Marital Property,” 12 Willamette Law Journal 413 (1975).


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