Marital Property – The Major Factors to Consider During the Division of the Marital Estate

While there are specific issues for each category of property, some general rules can be applied across the board. When a court seeks to divide marital assets, there are a number of factors which it will look at to make sure the division is “equitable”. Saying that each party is entitled to half is far too simplistic, and in many cases, simply wrong.

The factor of contribution by a spouse has been expanded to currently include non-economic contribution (sometimes referred to as “services rendered by a spouse”, in more archaic terms). Historically ignored, non-economic contribution now is a factor in division of assets. However, non-economic contribution is much more a factor if the contributing spouse did not work at all. If both spouses work outside the home (which of course can include work at home businesses nonetheless), there is a greater burden required to assert non-economic contribution. One must show that he or she made a greater non-economic contribution than the other spouse (In Re: Tatham). A spouse asserting non-economic contribution may find the assertion unsuccessful if the marriage was of short duration (In Re: Siddens and In Re: Zwart). Even if one succeeds in this, economic contribution is still a greater factor in any case.

Contribution as a factor takes on more importance due to the fact that marital misconduct in itself is not a factor. However, marital misconduct does sometimes affect the applicable factors. For example, adultery in itself is not to figure into giving the offending spouse less property; however, if the adultery led to the offending spouse to leave the household and shack up with his girlfriend, then the factor of contribution is affected by the living situation.

The factor of dissipation is applicable when property is improperly used for the sole benefit of one spouse during or after an irreconcilable breakdown of the marriage. In other words, draining a bank account, or selling off all the housewares after the marriage has fallen apart can be dissipation, and may work against the spouse who causes the dissipation. It is important to note that the initial burden of proof is on the party making the accusation.

Dissipation isn’t always clear cut. For example, gambling losses are patently dissipation. However, things like bona fide investment losses are not dissipation if they are legitimate, and not purposeful. Use of marital funds for attorney’s fees can be considered dissipation, but are also viewed as advances from the marital estate. If spouses are separated, the resultant living expenses are NOT dissipation if they are NECESSARY expenses. The failure to properly maintain property can be dissipation, even though it really doesn’t necessarily equal improper use for the sole benefit of one spouse. However, a pattern of gift-giving is not necessarily dissipation, depending on whether one can argue the act of giving was for the “sole benefit of a spouse”. Importantly, dissipation is only an existing factor for acts (or omissions) after the irreconcilable breakdown occurs.

The value of non-marital property assigned to each party is yet another factor. If one party has a significant amount of non-marital property, this may influence the court to award most of the marital property to the other spouse. In the absence of non-marital property, an equitable allocation might be, not considering other factors, a 50/50 split. With a proportionally much greater amount of non-marital property held by one spouse, it could be considered equitable to give the other spouse 100% of the marital estate. Note that when the marital estate is the bulk of the couple’s holdings, the non-marital property won’t be considered on a dollar-for-dollar basis in allocation. Finally, contingent non-marital assets, such as inheritances, may or may not be considered when allocating property, depending on the court.

The duration of the marriage is, by way of reference, closely related to the non-economic contribution factor for “homemakers”, as stated before. A 50% division is more likely in a short marriage where both parties contributed finances equally, as opposed to a short marriage where one party contributed most or all of the finances (in which case the spouse responsible for the income would get a greater share). The situation changes when a marriage is lengthy, and one party was responsible for the income, while the other raised children. The division would be more on an equal basis, presumably because of the greater investment of time and effort by the non-working spouse in this situation, as opposed to a short marriage. (See In Re: Davis).

The relative economic circumstances of the parties may also work in favor of a homemaker/non-working spouse, as the stronger economic position of the other spouse might lead a court to give a larger portion of the marital property to the non-working spouse. There is no requirement that the spouse who receives said property liquidate it. Obviously, this is a very general factor, which may take into account the needs of a spouse in improving or maintaining their position (e.g. awarding a jointly titled car to a spouse who needs it to travel in her position as a saleswoman or real estate broker).

The obligations and rights from a prior marriage is nominally a factor, but receives little weight. There is barely any case law establishing the weight of this factor, but the trend is to assign minimal importance to this factor.

Antenuptial agreements (aka “pre-nups”) can alter property rights by designating specific property as non-marital assets of one of the spouses. As long as the agreement is valid, it can specify either receipt of tangible assets, or a set amount of money (which can even be contingent in its amount depending on the length of the marriage). In addition, post-nuptial agreements can also specify division of assets.

There are also a set of factors bearing on economic security. This includes such things as whether one spouse is in ill health, or can’t work. The criteria include needs, skills, and “station in life”.

In addition, the fact that a person is a custodial parent also may turn in their favor, as the marital home may be considered the best place to raise the child/children. This preference is related to the economic circumstances factor, in that the reasoning is that keeping the child in the marital home will reduce emotional disruption. Furthermore, even if the home is not awarded outright to the custodial spouse, there may be a contingency allowing that spouse to stay in the house.

The factor of spousal maintenance is applicable in that in cases where there is no spousal maintenance awarded, a court may award more property as a “replacement” for the lack of maintenance. However, the tendency of excluding awards of maintenance has decreased since the maintenance statute’s 1993 amendment, thus reducing the importance of this factor.

Much as in determining maintenance, the economic potential of each spouse may result in one spouse receiving more assets to redress an imbalance in future capabilities to accumulate substantial assets (In Re: Atkinson). Obviously, the future economic potential can be affected by such things as a spouse’s education, or debt. The justification here is that the spouse with better economic potential will be able to re-accumulate assets after dissolution, while the receiving spouse may end up not being able to accumulate beyond what he/she receives at the time of dissolution.

Finally, the tax consequences to the parties are an explicit factor involved in the division of assets. However, the only tax consequences to be considered are those “immediately and consequentially” flowing from the court’s actions in division (In Re: Emken). One such applicable situation is when capital gains taxes will be imposed due to a court order to sell property. Even so, many transfers pursuant to a judgment of dissolution are not taxable transactions (exceptions include subsequent sales of property to third parties or retirement plan withdrawals).

As one can see, there are no hard and fast rules as to the division of property. However, these guidelines can give some indication as to what a court would find to be a just division of marital assets.