Parties must contemplate and plan for the division of their property whenever a divorce is filed. The first step is to identify all assets and debts of both parties, no matter how acquired and no matter how titled. This will include any asset to which a party has a “vested” interest, regardless of whether the asset can be liquidated presently. Sometimes, for instance, a party will have a right to receive a pension, but the pension may not actually pay for years to come. The court, and the parties, must still consider the value of the pension— the future stream of income— in the calculation if the right to receive it in the future cannot be taken away. After the property is identified, values must be assigned to both assets and debts. The value typically is taken from the date of the filing of the divorce or very close in time thereafter.
Indiana is a “marital pot” state. This means that all property, as of the date of filing, is put into this “marital pot” and subject to division. A court is without authority to “exclude” any asset or debt from the division.
Indiana law presumes an equal division of the net estate. This presumption, however, can be rebutted by evidence indicating that an equal division would not be “just and reasonable” under the circumstances. Factors that a court, and the parties, would typically analyze are: whether property was inherited; whether property was premarital; whether property was received as a gift; the contribution of each spouse to the acquisition of the property; the conduct of the parties during the marriage as it might relate to disposition or dissipation of assets; the earnings of the parties and their earning potential; and the length of the marriage. The court must look at each factor if it determines an unequal distribution is appropriate. For example, assume Husband inherits property and wants to keep it without providing equal value to Wife. The court would consider not just the inheritance, but other factors that might favor giving more of the property to Wife. If, for instance, Wife earned only a fraction of the combined income of the parties and her prospects for future earnings were significantly less than those of Husband, the court would consider whether that factor offsets the inheritance and justifies an equal division of all the property despite the inheritance.
Dividing marital property is not always straightforward or easy. Dividing debts can be even more difficult. The main objective is to provide for as complete of a separation of finances as is possible to minimize the need for future interactions and disputes in this area. For instance, it is not typically advisable to divide a piece of property and remain co-owners indefinitely. Similarly, it is not typically advisable to divide specific debts. It is better to assign each particular asset and debt separately if that can be readily achieved.
A property division accomplished through a Settlement Agreement cannot be modified, altered or changed unless provided for in the document itself. It is therefore imperative that the Agreement be done right the first time, and accomplish the parties’ objectives. Major issues arise where the property settlement agreement is incomplete, contradictory, or otherwise not appropriately handled.
If you have questions about how to accomplish an appropriate property distribution in the context of divorce, contact Slotegraaf Niehoff to help guide you through the process.