In the US, there are essentially two methods for distributing the marital property of a couple that is dissolving a marriage—community property and equitable distribution. There are only a handful of community property states, most notably California, where the marital property is divided on a 50-50 basis. Ohio is in the majority of states that use equitable distribution, where property may or may not be divided equally. The applicable Ohio statute is ORC §3105.171, where the courts will look at a number of factors in dividing marital property on an equitable basis.
Equitable distribution may mean “equally” in many cases where there are assets that both parties shared or contributed in some fashion to its growth. An example is deposits to a retirement or pension fund that are made during the marriage term, which a court will generally divide equally. In other cases, however, the court will award one party a greater share of the marital assets to compensate for significant disparities in their financial condition.
To fully understand equitable division under Ohio law, consult a Brunswick family law attorney. The following information is what you can use to familiarize yourself with this concept and how a court may divide your assets.
Is Ohio an equitable distribution state?
What are Marital Assets?
Marital assets consist of real and personal property acquired during the marriage up to the time when a final decree is issued, though it may end sooner in some circumstances, such as when the parties are separated. All other property is separate. Under ORC 3105.171, the court considers the following as marital:
1. Any real property acquired during the marriage and owned by either spouse, including retirement accounts and deferred compensation
2. Any interest that either party has in real property acquired during the marriage
3. Income derived from and appreciation on a separate property where both parties contributed labor or funds or other efforts during the marriage
What is Separate Property?
Separate property is any property not considered marital, primarily assets owned before the marriage. Ohio law considers the following as separate and generally not subject to distribution to the other spouse:
• Personal property owned before the marriage
• Real property owned before the marriage
• Gifts made to a spouse during the marriage
• Inherited property
• Proceeds received in a personal injury settlement for pain and suffering
• Any property designated separate in a prenuptial agreement
In a situation where one party owned a house before the marriage and that property is sold with the proceeds or equity used as a down payment on a marital home, the court will award the down payment to that spouse as separate property.
How is Property Divided Equitably?
In some cases, the court will decide that one party should make a distributive award or cash instead of dividing the property if circumstances make such a division impracticable or too complicated. In making this determination, the court will look at the following factors:
• The assets and liabilities of each party
• The duration of the marriage
• If one party stayed home to care for the children
• The tax implications of a property award to both parties
• If dividing an asset would be more economically desirable than retaining it as a whole
• If awarding the marital home to one party who has custody of the children or allowing that party to reside there for a time is desirable
• Retirement benefits of each
• Liquidity of the property to be distributed
A spouse that gave up a career to care for the children may be more adversely affected by a divorce since it will be difficult to obtain suitable employment, if at all. In a situation like this, that spouse will likely receive a greater share of the marital assets to balance out the inequities.
The assets do have to be evaluated. While funds in bank accounts and the value of retirement and pension funds can be readily ascertained in most cases, the parties should have other assets like a home, vehicles, jewelry, and collections appraised by professionals. If there are disputes over value, then the court will have to issue a ruling after hearing testimony and considering the evidence presented. You should discuss with your Brunswick family law attorney regarding evaluating assets and if an agreement over the value of the assets without litigation is possible.
Regarding retirement benefits and accounts such as 401ks, pensions, IRAs, and other retirement plans, the court may divide these in a number of ways but will primarily look at the duration of the marriage. If you were married for 10 years and contributed to the retirement fund over that period, the court can divide the entire account equally. If the marriage was 25 years or more, but you only contributed to it for 10 years of the marriage, then that 10-year period would constitute the value of the fund to be divided. The remainder would be separate property. Premarital contributions and their appreciation are not considered marital and are not divided.
If there are several retirement plans, the court may divide them so that each spouse receives one-half the value of each. The court may also decide that one spouse be awarded one or more plans and only a portion of another if that would make the distribution equal. If assets of equal value to the retirement benefits exist, then a spouse may retain the entire value of the retirement plan but another asset, such as the marital home, will be awarded to the other spouse.
For state retirement benefits, the court has to approve the Division of Property Order form. For federal employees with qualified retirement plans, a Qualified Domestic Relations Order is to be approved by the court and plan administrator.
Spousal Support and Division of Property
Spousal support can be awarded pursuant to ORC § 3105.18 based on the duration of the marriage, spousal contribution to the other’s education and employment advancement, disparity in incomes, and resources and ability to earn, among other factors.
The court, however, will first make the equitable division of marital property before making any determination of spousal support. The division of property is also to be made without regard to an award of spousal support.
Equitable distribution of property in Ohio can be a complicated process. With the experience and knowledge of a Brunswick family law attorney, you can be more assured of what to expect in a dissolution and how your assets will be divided.
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