BLANK

On What Basis Should the Couple Share Half of Property in Divorce if One Contributes Significantly More Than the Other? How Is It Fair?

It’s fair. It’s not fair. Frankly, reasonable minds can differ on this question.

The governing principle in the USA is still (though it’s subtly and slowly changing) in most jurisdictions in the USA that I know of (if not all jurisdictions in the USA) is that property acquired during the marriage by the couple should be divided equally is because a marriage is an “e pluribus unum”-style principle: out of two, one. A married couple is considered to be one when it comes to the ownership of property the couple acquired during the marriage, even if that means that each spouse did not contribute an equal amount of money or effort to the purchase/acquisition of the property.

If the property was purchased with money earned or otherwise acquired by one or primarily by one of the spouses or in exchange for “sweat equity” that one spouse contributed more than the other, the idea is that “what’s mine is yours and what’s yours is mine—it’s all ours.”

Equitable distribution and community property are two different approaches to dividing marital property between spouses in divorce.

Community property states treat all property acquired during the marriage to be owned equally owned by the spouses, and so they, unless exceptional circumstances dictate otherwise, divide the marital property equally between the spouses. Equitable distribution states generally presume that an equal division of marital property is equitable, but an equitable division of property is not necessarily an equal division. In Utah (where I practice divorce and family law), for example the rule of equitable distribution is articulated this way:

Labon v. Labon, 517 P.3d 407, 2022 UT App 103, ¶¶25 – 27 (Utah Court of Appeals 2022; I removed the references to caselaw for the sake of making it easier to read and understand the principles articulated):

In making this division [i.e., and equitable division of property and debts and obligations] the court should engage in a four-step process: (1) distinguish between separate and marital property, (2) consider whether there are exceptional circumstances that overcome the general presumption that marital property should be divided equally between the parties, (3) assign values to each item of marital property, and (4) distribute the property in a manner consistent with its findings and with a view toward allowing each party to go forward with his or her separate life.

And in making the equitable distribution, the court should generally consider the amount and kind of property to be divided. As concerns the type of property, in situations where the marital estate consists primarily of a single large asset, such as a business or stock, a common acceptable approach for the court to take is to award the asset to one party and make a cash award to the other party. Doing so avoids the obviously undesirable situation that forces former spouses to be in a close economic relationship which has every potential for further contention, friction, and litigation, especially when third parties having nothing to do with the divorce will also necessarily be involved.

Moreover, a court should consider the tax consequences associated with the division of marital property if one of the parties will be required to liquidate assets to pay marital debts. But the court is under no obligation to speculate about hypothetical future tax consequences. Thus, when settling property matters, the trial court may decline to consider the speculative future effect of tax consequences associated with sale, transfer, or disbursement of marital property. In other words, there is no abuse of discretion if a court refuses to speculate about hypothetical future tax consequences of a property division made pursuant to a divorce.

Utah Family Law, LC | divorceutah.com | 801-466-9277

https://www.quora.com/On-what-basis-should-the-couple-share-half-of-property-in-divorce-if-one-contributes-significantly-more-than-the-other-How-is-it-fair/answer/Eric-Johnson-311?prompt_topic_bio=1

Tags: , , , , , , ,
Click to listen highlighted text!