Dividing Assets in a Divorce: What You Need to Know
First, the court determines whether property is marital property or separate property.
The court divides marital property between the spouses.
The court awards separate property to its owner.
Many spouses, who are considering a divorce, or going through a divorce, wonder: How are assets divided in a divorce in Oklahoma?
In this post, I explain the laws that tell how courts are to divide assets in divorce cases in Oklahoma. For each point of law that I list, I also link to the statute or court case that defines the point of law.
How to divide assets in a divorce
In determining whether any particular asset is to be divided, the first question that a court must determine is: Is the property marital property, or separate property of one of the spouses?
If the property is marital property, then, the court is to divide the property equitable between the spouses. If the property is separate property of one spouse, then, the court is to award the separate property to the spouse who owned it.
How courts determine whether property is marital or separate
If a spouse acquired property during the marriage, a court will presume that the property is marital property. If you want to argue that property acquired during marriage is not marital property, you will have to present specific facts to overcome the court’s presumption that the property is marital. Even if one spouse was not working at the time, the non-working spouse is presumed to have contributed to the acquisition of the property. Even if only one spouse’s name is on the title to the property, the property is still marital property, and a court is to divide the property equitably between the spouses. I’ve had clients ask me: “My name is on the property, that means I can keep it, right?” Not necessarily. A court may rule that property is marital, even if one spouse’s name is on the property.
If a spouse acquired property before the marriage, the property is the separate property of the spouse who acquired it.
If a spouse acquired property by gift during the marriage, the property is the separate property of the spouse who received the gift.
If a spouse inherited property during the marriage, the property is the separate property of the spouse who inherited the property.
If a spouse exchanged separate property for other property, the property the spouse received in exchange, is the separate property of the spouse who exchanged it.
If separate property increased in value during the marriage, a court is to ask: Was the increase due to the efforts of one or both of the spouses, or was the increase due to economic factors? If the increase was due to the efforts of one of the spouses, the increase in value is marital property, and a court is to divide the increased property equitably between the parties. Even if only one spouse made the efforts which resulted in the increase, the increase is still marital property. Courts presume that a non-working spouse helped support the other spouse in the efforts which resulted in the increase. However, if the increase was due to economic factors, then, the increase in value is separate property, and a court is to award the increase to its owner. If the spouses disagree on whether the increase in value is due to economic factors, or due to the work of the spouses, then the spouse who did not originally own the separate property, has the burden of proving that the increase is due to the work of the spouses.
If the spouse who owned separate property, placed the separate property in joint title with the other spouse, or “commingled” the separate property with marital property, then, the separate property loses its status as separate property, and becomes marital property. Black’s Law Dictionary defines “commingle” as “the putting together of money from several sources into … one fund.” A court is to divide the marital property equitably between the spouses.
Pensions and retirement benefits are marital property if a spouse acquired the benefits during the marriage. If a spouse acquired the benefits from employment that occurred both during the marriage and before the marriage, then, the portion of the benefits that the spouse acquired during the marriage, are divisible marital property, and the portion of the benefits that the spouse acquired during the marriage is separate property. A court is to determine the portion of the benefits that are marital property and divide this portion between the spouses.
Military disability benefits are separate property, and may not be divided between spouses. If a military member elects to waive retirement benefits in order to receive disability benefits, the portions of retirement pay that the military member waives, are also separate property and may not be divided between the spouses. However, if a military member chooses to waive retirement benefits in order to receive disability, the court may order the military member to reimburse his spouse for money lost due to the waiver of retirement benefits. Also, property purchased with military disability benefits may be marital property.
Academic degrees and professional licenses are not divisible marital property. However, if a spouse helped support their spouse in obtaining a degree or license, a court may order the degree or license holder to give a cash award to the other spouse.
A personal injury settlement, that compensates for lost wages during the marriage, and for uninsured medical expenses incurred during the marriage, is marital property. However, a personal injury settlement, that compensates for future lost wages, future medical expenses, pain and suffering, and mental anguish is separate property. Disability insurance benefits replacing post-divorce wages, are separate property. A workers’ compensation award that compensates for lost wages during the marriage is marital, but any part of a worker’s compensation award that compensates for wages after the divorce is separate property.
A severance payment, paid to replace future wages earned after a divorce, is separate property.
Social Security benefits are separate property.
If property is marital, what does a court consider in deciding how to divide it?
Under Oklahoma law, a court must divide marital property “fairly and equitably.” However, the Oklahoma Supreme Court has explained that “equitable” does not necessarily mean “equal.”; thus, the law does not require a court to divide marital property equally. Some of the factors, that courts consider in how to divide marital property are:
The contribution each spouse made to the marital estate. A non-working, or homemaking, spouse is considered to have made a contribution to the marital estate; a court thus may award a large portion of the marital property to a spouse who did not work.
The need of each party is not a factor in deciding how to divide marital property. However, a court may consider the need of a custodial parent, in caring for the children.
A court is not to consider marital misconduct (such as adultery and spousal abuse) in dividing property. The purpose of dividing property is to give each party an equitable share, not to punish spouses for wrongdoing.
A court may consider economic fault in awarding marital property. “Economic fault” may include wasting assets, or maintaining a secret bank account for a lover.
How courts actually divide property
In some cases, a court will award an equal share of the property to each spouse. In other cases, a court will award a greater share of the property to one spouse, and order the other spouse to pay money to the other spouse as compensation.
Also, in many cases, a court will order each spouse to pay a portion of the marital debt. If a debt was acquired during the marriage, it is considered a marital debt, even if the name of only one spouse is one the debt.
Dividing pensions and retirement benefits
There are two ways a court may divide a pension:
1. The Present Value method. A court determines the present value of the pension, awards the pension to the employee spouse, and orders the employee spouse to reimburse the other spouse to compensate for the value of the pension.
2. The Deferred Distribution method. Under the deferred distribution method, the court will sign a Qualified Domestic Relations Order (“QDRO”). A QDRO will direct that a portion of the retirement benefits be paid to the employee spouse, and that the remaining portion of the retirement benefits be paid to the non-employee spouse. You or your attorney will then send the QDRO to the entity that pays the benefits. The payor will then pay a portion of the benefits to the employee spouse, and a portion of the benefits to the non-employee spouse, as the QDRO directs. For more information on QDROs, click here.
When a QDRO is needed, an attorney for one of the parties will draft the QDRO, and submit the QDRO to the judge for his signature. A QDRO is extremely complicated to draft. You should never attempt to draft a QDRO yourself. Instead, you should hire a QDRO specialist. Many lawyers don’t even draft QDROs themselves – instead, they hire QDRO specialists whenever they need a QDRO drafted. If you are in a divorce case, and you need a QDRO, make sure that your lawyer hires a QDRO specialist to draft a QDRO for you.
As you can see from reading this post, division of property in divorce cases can be highly complex. There is a large body of court cases specifically about dividing property in divorce cases. If you are in a divorce and need help on property issues, the Persaud Law Office is able to help. Give us a call for a free consultation.