Two issues tend to raise more concerns and frustrations than others during a divorce. The first issue is child custody. Of course, this only concerns the parents of minor children, but when child custody is a concern, it tends to be the number one point of contention. The second issue is property division.
Everyone wants to come out of their divorce with a fair share of the marital estate. Fortunately, this isn’t usually a big problem. Kentucky’s laws aim to ensure a fair and reasonable outcome for both sides. However, it often helps to start with reasonable expectations, and those start with knowing the facts.
Not all property is marital property
The first thing to know is that couples only divide their marital property. They do not divide certain, “separate” assets. The law identifies five types of separate assets that do not qualify as marital property:
- Gifts and inheritance acquired during the marriage
- Property that either spouse owned individually prior to the marriage
- Property that either spouse acquired after a decree of legal separation
- Items excluded from property division by a prenup, postnup or other valid agreement
- Any increase in the value of separate property, provided the other spouse did not contribute to the increase
Importantly, these separate assets can become “commingled” when the other spouse contributes to them or increases their value. The commingling of assets can transform some or all of the otherwise separate assets into marital assets.
Apart from these separate assets, everything that a couple acquires or gains during the course of their marriage is marital property. And the first step in property division is usually to get a full and accurate list of all these assets.
Kentucky is an equitable division state
Once you have identified the marital estate, you do not split everything equally. Theoretically, you could, but that is almost never how things happen in real life. Instead, Kentucky law demands that couples split the property in “just proportions.” In other words, Kentucky aligns with many other states by expecting couples to divide their marital property “equitably” rather than equally.
An equitable or “just” division generally looks something like a 50-50 split, but it accounts for certain factors that may make an equal split less just or fair than a different division:
- The length of the marriage
- Each spouse’s contribution to the marital estate, including work as a homemaker
- The value of each spouse’s separate assets
- Each spouse’s income and other economic circumstances at the time of the property division
Notably, the law also addresses the “desirability of awarding the family home […] to the spouse having custody of any children. This does not mean the spouse with primary custody will automatically take the house, but it does acknowledge that stability may be good for the children.
Good solutions allow for some creativity
Couples that fight over property division and take it all the way into the courtroom often end up with worse outcomes than couples that negotiate settlements on their own. This is because trials are expensive, and they don’t afford the same creativity that mediation and negotiation do.
Again, you need to remember that property division isn’t about “equal” so much as it is about “equitable.” This leaves you all sorts of room to prioritize the things that matter most to you and use other assets as bargaining chips. It may also allow you to keep certain investments intact, avoiding tax penalties for early withdrawals.
As an example, you might want to keep your business and retirement account whole. You may also have unvested stock that you want to mature. To avoid breaking up these assets, you might forfeit your claim to the house and cash assets in the bank. Or you might find another solution.
How an attorney can help
While it is possible for divorcing couples to divide the marital estate all on their own, there are a number of ways an experienced attorney can help:
- Ensuring that your division follows all legal requirements so that the court will eventually sign off on it
- Tracking down all marital assets, including any that a spouse may try to hide
- Addressing how the different factors may influence the “just proportions” for division
- Paying attention to the tax consequences and other complicated details
- Taking a step back to avoid emotional decisions in favor of rational decisions aimed at the bigger picture
This last point is important. A good and fair property division can help you start your post-divorce life on more solid footing. However, one of the most common ways that people hurt themselves in divorce is by fighting needless battles. You don’t want to spend one-thousand dollars in legal bills fighting over a couch worth only a couple hundred. A good attorney will help you focus on the decisions that matter.