Divorce: Property Divison FAQ Set I

Lawyers.comsm
  • Am I entitled to part of my husband's business?

  • If my husband and I cannot agree on the division of certain household items, will we have to litigate the division?

  • Are my employment benefits and frequent flyer miles considered marital property?

  • What happens to a couple's property when they divorce, remarry, and then divorce again?

  • How do I handle a potential IRS inquiry about tax returns filed by my ex-husband?

  • Will I be entitled to part of the stock given to my husband as a gift during our marriage?

  • If we divorce, will I receive credit for the down payment I made on our house?

  • How will my savings account be divided during our divorce proceedings?

  • Is my wife entitled to any of my accident settlement if we divorce?

  • Should there be an equal division of property in a divorce?

  • Can I argue that my wife earned some of the income from our small business?

  • Will I be responsible for my husband's medical school loans?

    Q: Am I entitled to part of my husband's business?

    A: Generally, an asset such as a business that a spouse owns prior to marriage is considered ''separate property'' and would be owned by the spouse who started the business. But if the business has appreciated during the marriage, the appreciation value may be considered marital property.

    Some states will require more than just appreciation during the marriage. Some will require that either or both of the spouses have contributed to the business, through labor, money or other contribution.

    The presence of a business can really complicate property division. If you're involved in such a divorce, it might be best to consult an attorney.

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    Q: If my husband and I cannot agree on the division of certain household items, will we have to litigate the division?

    A: Most divorce court judges and lawyers try to prevent people from litigating the division of household items, because it often will cost more money in legal fees to fight over those items than it would to buy new ones. But if you and your ex-husband can't agree, it's likely you'll need to seek legal help, because your property settlement won't be complete until these items are divided.

    If the two of you can't agree, it's entirely possible the judge will simply divide them in a manner neither of you like.

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    Q: Are my employment benefits and frequent flyer miles considered marital property?

    A: In most cases, the benefits you've accumulated through your employment during the time you've been married are subject to division in a divorce. Your spouse may be entitled to one-half of the value of your pension and 401(k) from the date of marriage until the date of separation or divorce. The same may be true for your unused vacation time and frequent flyer miles.

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    Q: What happens to a couple's property when they divorce, remarry, and then divorce again?

    A: When parties remarry, the property may once again become marital property and be subject to division on a second divorce. A court may also look to the first marriage when determining the length of the marriage in the second divorce. In general, the longer the marriage, the more a court is likely to find that property is marital rather than separate property.

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    Q: How do I handle a potential IRS inquiry about tax returns filed by my ex-husband while we were still married?

    A: Since July 1998, federal tax law has included ''innocent spouse'' relief: if a taxpayer files a joint tax return but then divorces, legally separates, or lives apart from his or her spouse for one year, he or she might be able to limit or even avoid his or liability if he or she can prove that the other spouse caused the tax problems. An ''innocent spouse'' must not have had any ''actual knowledge'' of the former spouse's tax violations.

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    Q: Will I be entitled to part of the stock given to my husband as a gift during our marriage?

    A: If the stock was transferred to your husband as part of his compensation for working for a company, you may be entitled to a portion of the stock when dividing your property.

    If the stock was given to him as a gift, it may be his separate property. In most states gifts are considered separate, non-marital property and are generally not subject to division in a divorce.

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    Q: If we divorce, will I receive credit for the down payment I made on our house?

    A: In most states, an asset that a spouse owned prior to marriage is considered the separate property of that spouse, so long as it hasn't been combined with marital property to the point where you can't tell what is separate and what is marital. Separate property is excluded from division in a divorce, and the spouse with the separate property keeps that property.

    In those states, the equity created in your home by your down payment would probably be your separate property and you would be entitled to at least the amount of the down payment and possibly the interest on your down payment based on the overall appreciation of the house.

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    Q: How will my savings account be divided during our divorce proceedings?

    A: In most states, a person's separate property owned before marriage remains that person's property after a divorce, as long as it isn't combined with marital property and becomes untraceable. This is known as ''commingling.'' Any money put into the account during the marriage will most likely be considered marital property. As long as you can properly identify the funds and trace their movement back and forth through the account, they should remain separate property that will be returned to you at the time of a divorce, rather than be divided as marital property.

    This can be very difficult where the accounts are subject to withdrawals, or where money is withdrawn to pay expenses. The question then becomes ''Which money was withdrawn?'' If that cannot be determined, it's possible the account will become marital property.

    In general, it is usually best to keep separate property separate, rather than counting on it being returned upon divorce.

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    Q: Is my wife entitled to any of my accident settlement if we divorce?

    A: In general, payment for pain and suffering resulting from an injury is the separate property of the injured person. However, the portion of the payment that makes up for lost earnings and expenses resulting from the accident may be considered a marital asset that may be divided between you and your spouse in a divorce. You should keep your personal injury settlement money separate from other money that might be considered marital property.

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    Q: Should there be an equal division of property in a divorce?

    A: Many states have ''equitable division of property'' laws, which means the division of property isn't necessarily equal. A court has tremendous discretion in deciding what constitutes ''equitable.''

    Several factors are relevant when deciding how to divide property, including:

    • The length of the marriage
    • The assets and debts of both spouses
    • Who should logically live in the family home (often the spouse with whom the children will live the majority of the time)

    After considering these factors, a judge may not think it is ''equitable'' to divide the property evenly.

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    Q: Can I argue that my wife earned some of the income from our small business?

    A: Courts will review this type of situation on a case-by-case basis. Commonly, where a married couple has a small business that both help operate, but the couple's joint tax return shows that the wife earned no income as a ''homemaker,'' all of the income from the business will be attributed to the husband for support purposes.

    Basically, you can't argue both positions. It is either the case that the income is yours, or both of yours. When you take the position with the IRS that it is yours alone, there is nothing wrong with a court holding you to that.

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    Q: Will I be responsible for my husband's medical school loans?

    A: Generally, a court will divide marital debt ''equitably,'' in the same way marital assets are divided. Generally, if the school loans were made during the marriage and you both benefited from them -- that is, some of the loan money was used to buy food or pay rent -- you could have to repay some of the loans.

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    Related Resources on lawyers.comsm
    - Enforcing a Property Division Order
    - Divorce
    - Visit our Divorce Property Division Message Board for more help
    - Visit our General Divorce message board for more help
    - Visit our Alimony message board for more help
    - Spousal Support
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