How is Property Division Handled During a Divorce?
Although laws on property division vary a bit from state-to-state, the general rules are the same. Divorcing spouses will have to identify, value, and divide all marital property.
Identify the Property
Spouses must identify all property that’s subject to division in the divorce through a mandatory disclosure process. Both spouses are required to fill out court forms listing all property they own. Spouses must not only specifically list all property, but also include the date the property was purchased. This will give both spouses a clear picture of what needs to be divided. In California, the form is called a Schedule of Assets and Debts. Spouses must sign these forms under penalty of perjury before exchanging them—so it’s essential for each spouse to be completely honest when providing this information. If a court finds out that you provided false information on this form, it could sanction (punish) you.
Martial Versus Separate Property
The next step is to determine the character of the property – meaning whether it’s marital (belongs to the couple) or separate (belongs only to one spouse). This will depend on the laws of your state, when the property was acquired, and who acquired it, but generally, the rules are as follows:
- marital property—property that’s acquired during the marriage, but not acquired by either spouse as a gift or an inheritance. Marital property is divided in a divorce.
- separate property—property acquired individually before or after the marriage and any assets acquired by either spouse as a gift or inheritance. Spouses generally keep their separate property after a divorce.
What’s the Property Worth?
Next, spouses must agree on values. They can accept each other’s opinions as to the value of the property, use fair market values (not purchase price), and/or use current values from account statements. It has become very simple to determine car values by using Kelly Blue Book.com. You can even estimate real property values on sites like Zillow.com or Trulia.com. Other assets, like a family-owned business, may be more difficult to appraise and require an expert business appraiser’s valuation.
Who Gets What?
Finally, couples must decide how to divide their assets. In community property states, each spouse is entitled to 50% of the marital assets. This is not necessarily a physical division—you can’t split a home in half—but rather an equal division of the value of the marital estate. For example, if a couple has a total marital estate of $200,000, including a family home with $100,000 in equity and retirement accounts worth $100,000, Spouse A could take the home and Spouse B could take the accounts for an equal (50/50) division. In equitable distribution states, courts strive for an equitable (fair) division, which may not necessarily be equal.
Reach a Settlement Agreement or go to Trial
Once the spouses have agreed on the character, value, and division of property, they can memorialize their agreements in a written property settlement agreement (also called a marital settlement agreement). They will submit this to a judge who will incorporate it into a final divorce judgment. If the spouses can’t agree, they’ll have to go to trial and ask a judge to make a property division order which is then incorporated into a divorce judgment.
Motion to Set Aside a Divorce Property Judgment
Many spouses experience buyer’s remorse after a divorce. For example, maintaining a family home may become too expensive, or the car one spouse wanted so badly may die a few weeks after the divorce decree arrives in the mail. While these frustrations may be difficult and even unexpected, they won't convince a judge to issue a new or different outcome. A spouse will need to show extreme circumstances to convince a court to change a property judgment.
Although states have an interest in making sure judgments are final, they also have a strong interest in the proper division of property, sufficient support awards, and discouraging misconduct in divorce proceedings. When faced with a request to set aside a divorce property judgment, a court will have to balance these interests and look carefully at the reasons for the request.
In California, for example, a divorced spouse who believes the property division was improper may file a “Motion to Set Aside the Judgment,” which is a written request that a family court judge set aside the original property judgment and consider evidence showing why certain property should have been awarded to the requesting spouse. The following grounds (reasons) will generally provide good cause for a motion to set aside:
- one spouse committed fraud to keep the innocent spouse from being fully informed about property
- one spouse committed perjury—lied about assets or their values
- one spouse was under duress because the other used threats of harm or violence to force an agreement, or
- one spouse failed to comply with financial disclosure obligations during the divorce.
The following facts of a famous California family law case (In Re Marriage of Rossi) may help illustrate how a motion to set aside works:
- A wife won the lottery with a group of coworkers, but didn't tell her husband about the winnings and filed for divorce 11 days later. She failed to disclose the $1.3 million prize during the divorce. The judge issued a property division order that did not address the lotto money. Husband later found out and filed a motion to set aside the original judgment. As a punishment to the wife, the judge awarded the husband 100% of the lottery winnings—not just the half husband was entitled to—because of the wife’s obviously fraudulent misconduct.
Although most cases won’t be this extreme, there are many scenarios where one spouse’s failure to disclose a valuable asset will provide a sufficient basis for a court to set aside and reconsider the property judgment.
How to Resolve a Post-Divorce Property Dispute
There are several ways to resolve post-divorce issues. First, you may want to try working things out directly with your ex-spouse. If that goes nowhere, your lawyer may be able to settle the problem by sending a few letters to your ex. You may also suggest mediation.
If all of this fails, the “innocent” spouse will need to go back to court and file a motion to set aside the property judgment—this motion may be called something slightly different depending on where you live. As mentioned above, you will need to show that something extreme happened during the divorce—such as fraud, duress, concealment, or perjury.
Courts are hesitant to reopen a case, so it's best to make sure you’re getting complete financial information during your divorce. If you’re faced with post-divorce property issues, you should speak with a local family law attorney for advice on reopening your case.