Asset and Debt Division in Divorce
In every divorce or dissolution case, it is necessary for the parties or the Court to spell out how the parties’ assets and debts will be divided. There is some guidance for this division that can be found in the Domestic Relations statutes, but, for the most part, the division is one that is made by the Domestic Relations Court after the presentation of schedules of assets and debts and presentation of any evidence concerning the same.
The more assets and debts that the parties have accumulated, the more complicated is the division of these assets and debt. For this reason, it is imperative that competent, experienced legal counsel be engaged as early as possible in the divorce process. The Allen Law Firm has been representing clients in asset and debt division matters since for over 20 years.
In Ohio, the general rule is that all assets accumulated during the marriage by either or both spouses’ efforts are marital assets. As one would think, “assets” includes houses, cars, bank accounts, investment accounts, retirement accounts, personal property and other items of value accumulated by the parties during the marriage. But assets may also mean businesses, professional practices, and even professional and other licenses. The existence of a valid pre-marital agreement may alter this definition and remove items that otherwise would be considered marital assets. It does not matter which spouse’s name the assets are in for purposes of this analysis.
Definition of “During the Marriage”
Ohio law considers “during the marriage” to be from the date of the marital ceremony until the date the marriage is terminated by Court Order, or possibly some other earlier date such as the date of separation. These beginning and end points are important to delineate, because they may have a substantial effect on the value of marital assets.
Equitable Division of Marital Assets
The basic rule in Ohio for the division of marital assets is that the Domestic Relations Court must divide the assets “equitably” which, in most cases, is going to result in an equal division of the marital assets. However, the Court does not have to divide the assets equally and, in cases where there has been financial misconduct, the Court may made a different division of the assets to compensate the spouse injured by the financial misconduct.
Assets that were owned by either spouse prior to marriage or that were acquired during the marriage in such a way as to make it clear that the assets are not marital, such as gifts from one spouse to the other, are considered separate property and are not subject to division as marital assets. These separate assets may be the subject of a distributive award in appropriate cases.
The starting presumption of the Court is that all assets are marital, but it is possible to present documentary and testimonial evidence that can trace the ownership of an asset or appreciation or depreciation thereon. To prove non-marital assets, is a complicated process, and requires the expertise of experienced legal counsel and most likely also the testimony of expert witnesses, such as accountants, but the benefit can be substantial in appropriate cases.
Ohio Courts recognize four basic categories of assets that are non-marital: 1) assets owned prior to marriage, or appreciation or depreciation on these same assets; 2) gifts made to one of the spouses; 3) inheritances; and 4) personal injury proceeds compensating an injured spouse for pain and suffering.
The mechanism of debt division is not spelled out in Ohio law, but, as with assets, most Courts will attempt to start from a position of equitable debt division which, again in practice, tends to mean equal debt division. However, this is not a hard and fast rule and Courts will consider factors such as relatives incomes of the parties, ownership of the debt, reasons for incurring the debt, financial waste, and other factors. Such an analysis frequently results in an unequal division of debt.
Another important factor to consider in debt division is whether the person being assigned the debt is also ordered to “hold harmless” the other person on the debt and whether the debt that is taken can be later discharged in a bankruptcy proceeding.
All these facts are extremely complex and become more so with increased levels of debts, ownership of businesses, or ax delinquencies.
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