Going through a divorce is already an emotionally difficult process because a romantic relationship is coming to an end. Unfortunately, this is often made worse because of the mysteries and misinformation that trips many people up when it comes to details of how their property and finances will be separated from their ex-partner. The laws in Ohio that cover this aspect of a divorce are more fair than in many states, but it is still extremely important to understand how these laws apply to your situation.
As with all divorce issues in Ohio, division of assets and debts in a divorce are controlled by several sets of rules. The Ohio legislature has given us the basic rules in black and white through the Ohio Revised Code (ORC) Chapter 3105, specifically ORC 3105.171. This statute outlines the procedures and considerations for the equitable distribution of marital property and the allocation of marital debts during a divorce.
In Ohio, the division of assets and debts during a divorce is built on the principle of equitable distribution. This means that the division is based on what is fair and equitable, not necessarily equal. This aspect of the process is often more complicated than it sounds. Because Ohio uses the equitable distribution concept rather than simply cutting everything down the middle, it is very important that every asset and every debt have a definitive number value attached to it so that both parties can walk away knowing they have received a fair and equitable portion of the assets and debts overall. For instance, one party may be allowed to keep 100% of their retirement account, but then receive less than 50% of a bank account - they get more retirement value and the other party gets more upfront cash and the bottom of the balance sheet will still cancel out overall.
The process involves several key steps and considerations:
Identification of Marital and Separate Property
Valuation of Assets
Division of Marital Property and Debts
Identification of Marital and Separate Property
1. Marital Property: This includes all assets and debts acquired by either spouse during the marriage. Common examples are the marital home, vehicles, retirement accounts, income earned during the marriage, and debts like credit card balances and loans.
It is important to understand that it does not matter how something is titled. In the eyes of the law, what matters is when and how the item was obtained, not necessarily who "owns" it on paper. So, if the house was bought during the marriage it doesn't matter if the title only has one name on it, it's still a marital asset and the other spouse will be entitled to some of the equity value in that house.
2. Separate Property: This includes assets and debts acquired by either spouse before the marriage, inheritances, gifts received by one spouse, and personal injury awards. Separate property is generally not subject to division, but it can become marital property if it is commingled with marital assets.
Many people bring property and financial assets into a marriage, especially when marrying later in life. This leads to asset division becoming a highly complex issue governed by special laws and case decisions. The general concept is that <separate property> can stay separate, and not be divided with the other spouse, as long as it didn't get mixed in, or "commingled" with the marriage.
Valuation of Assets
Each asset that will be divided in the divorce must be assigned a fair market value. This might require appraisals for real estate, businesses, and valuable personal property. Financial accounts and retirement accounts must also be valued, often as of the date of separation or divorce filing, though sometimes later in the process.
Many assets change in value over time, especially real estate. This means the date that is used for appraising the value of assets and debts can be crucial in a divorce. Under the law, the duration of a marriage is from the date of the marriage license through the date stamped on the final order granting the divorce. This makes valuation of certain assets difficult, so many times parties will use a different "end date" for the marriage, called a de facto termination date. By setting the de facto termination date, an asset can be definitively valued for purposes of the divorce. Sometimes the date the parties separated will be used, other times a different date based on the facts and circumstances of that particular case - it all comes down to what is fair and equitable.
It is essential to have an experienced family lawyer on your side when it comes to asset valuation. The simple decision of "what date will be used for termination of the marriage" can mean the difference in thousands upon thousands of dollars gained or lost.
Division of Marital Property and Debts
The court considers several factors to determine an equitable division, including:
Length of the Marriage
Longer marriages often result in a more equal division of assets.
Assets and Liabilities of Each Spouse
The court evaluates each spouse's financial situation, including their separate property.
Desirability of Retaining the Marital Home
Especially if there are minor children, the custodial parent may be awarded the marital home.
Tax Consequences
The court considers the tax implications of the division for each spouse.
Retirement Benefits
Pension plans, 401(k)s, and other retirement accounts are divided based on their value accumulated during the marriage.
Spousal Support
If one spouse is awarded spousal support (alimony), this can impact the division of assets.
Any Other Factor the Court Finds Relevant
The court has broad discretion to consider any factors it deems pertinent to ensure a fair distribution.
Special Considerations
1. Debt
Marital debts are divided similarly to assets. The court assesses who is responsible for debts incurred during the marriage, regardless of whose name is on the debt.
2. Business Interests
If one spouse owns a business, the court may consider its value and whether it should be divided or retained by the owning spouse with an offsetting distribution to the other spouse.
3. Complex Assets
Items like stock options, intellectual property, and complex investment portfolios may require expert valuation and consideration.
Legal Process
- Negotiation and Settlement: Many couples prefer to negotiate and settle the division of assets and debts through mediation or collaborative divorce, which can be less adversarial and more cost-effective.
- Court Decision: If the parties cannot agree, the court will hold a hearing and make a determination based on the factors listed above.
The division of assets and debts in an Ohio divorce aims to achieve fairness and equity based on the specific circumstances of each case. It is essential to work with a qualified attorney to navigate this complex process and ensure your interests are protected.
For more detailed information or personalized legal advice, it is recommended to consult with an experienced family law attorney in Ohio.
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