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Equitable Division of Property and Debt

A second claim made by a spouse is for an equitable division of the marital property of the parties, along with a division of the marital debt. This first consists of making a determination of what is the marital property, and then allocating the marital property between the parties on an equitable, but not necessarily equal basis. Only that property acquired during the marriage can be divided by the court, and that property brought into the marriage, or acquired during the marriage by gift or inheritance to one spouse shall remain separate property of that spouse (non-marital property). However, the spouse receiving that separate property may convert the asset to marital property by transferring an interest to the other spouse or by taking other actions which tend to demonstrate she/he acknowledges it to be marital rather than non-marital. Likewise, a premarital asset can be similarly converted to marital, or a certain portion of the asset may be allocated as marital when there is appreciation in the asset due to the efforts of one or both spouses such as enhancing the asset or paying down the debt associated with it by using marital funds. Appreciation in a non-marital asset due to market forces will not be converted into a partial marital asset. Many times a premarital asset with debt against it, such as a mortgage on a home, is paid down during the marriage such that certain considerations are given in crediting the reduction of the mortgage to create a marital portion, while the asset may still retain its non-marital status. This methodology can be employed with closely-held business interests as well, such as a professional corporation, and the court then must review if the business has appreciated during the marriage and what that value is at the time of divorce. Experts may be employed to assist the court in using their methodologies to determine that value. One major issue may be the matter of good will of the professional corporation, and determining whether the good will is personal such that it is not susceptible to division, or professional, which may be divided.

After issues of non-marital versus marital are determined, the marital property is then equitably divided, but not necessarily by dividing each asset, as a doctor’s full interest in his practice would be properly retained by him or her, but its value accounted for elsewhere in making an award of another asset to account for the offset. There are many factors which may be considered in determining what is equitable, including but not limited to:

  1. Each party’s contributions to the acquisition and maintenance of the property
  2. Purpose and intent of the parties regarding ownership of the property
  3. Age and health of each party
  4. Occupation and income of each party
  5. Duration of marriage
  6. Contribution of service of each to the family unit
  7. The separate assets of each party
  8. Debts of each property
  9. Present income, future earning capacity, and financial resources of each party
  10. Cause which led to the separation and the conduct of the parties toward each other prior to the separation
  11. Needs of each of the parties
  12. Contribution of each party to the acquisition and maintenance of the property (includes monetary)

Unlike a potential award of alimony, which may be barred due to the adultery of a spouse which caused the separation, the equitable division of property is not barred, although the conduct of the parties is admissible which would bear on the issues.

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