When clients ask about “divorce,” I often think there is much more to a “divorce case” than getting divorced. Yes, there will be a time when a Judge signs a divorce decree and you are no longer married, but before we can do that, let’s consider other things that need to be resolved.
For example, what about the division of your property and debts?
If spouses disagree on how to divide their property and debts, then a court will divide property and allocate debts as part of a divorce case. In doing so, the court will consider which property and debts are “separate”, “marital”, and which are“part separate and part marital.”
Date of Determination
What about value?
Of course, if spouses don’t want a judge to decide the value of their property and debts, they can agree on value and use any date to value any asset or debt they wish. If they can’t reach an agreement, at what point in time is property valued by the court? The court will determine the value of any property at issue as of the date of the evidentiary hearing on the evaluation issue.
What about debts?
If spouses can’t agree, the court will determine the amount of any debt as of the date of the last separation of the parties, if at that time at least one of the parties intended the separation to be permanent (“last separation”); and the extent to which the debt has increased or decreased since then as of the date of the evidentiary hearing.
Separate property is defined as:
- all property, including real estate or personal property, acquired by either party before the marriage;
- all property acquired during the marriage by inheritance or gift from someone other than the other party;
- all property acquired during the marriage in exchange for or by sale of any separate property, so long as any such property is maintained as separate property; and
- that part of any property classified as separate when the court determines certain property to be part separate and part marital (see below).
If during the marriage, separate property is commingled with the separate property of the other party, or into marital property, the contributed property will retain its original classification to the extent the contributed property is retraceable, and was not a gift.
Marital property is defined as:
- all property titled in the name of both parties;
- that part of any property classified as marital when the court determines certain property to be part separate and part marital (see below); and
- all other property acquired by each party during the marriage that is not classified as separate property as defined above.
All property, including pensions and retirement plans (discussed separately below), acquired by either party during the marriage and before the last separation of the parties is presumed to be marital property in the absence of evidence to the contrary.
Marital property is presumed to be jointly, meaning equally, owned, unless there is a deed, title, or other clear evidence that it is not jointly owned.
Part Marital/Part Separate
If during the marriage there is any income received from or an increase in value of any separate property, only the portion of the income or increase in value that is due to the specific, personal efforts of either party will be deemed marital property.
“Personal effort” includes labor, inventiveness, physical or intellectual skill, creativity, or managerial, promotional or marketing activity applied directly toward the separate property of either party.
The non-owning spouse bears the burden of proving that the value of the separate property of the other spouse did increase, and that the non-owning spouse did contribute personal effort toward the increase in value of that property.
The owning spouse then bears the burden of proving that the personal effort of the other spouse did not, in fact, cause the increase in value or any portion of that increase.
The marital share of any pension, deferred compensation plan or retirement benefits means that portion of the total value that was earned during the marriage and before the last separation of the parties.
As an aside, any specific determination as to the marital or separate status of military retirement benefits will be made in accordance with the federal Uniformed Services Former Spouses’ Protection Act (10 U.S.C. 1408 and following).
Personal Injury or Workers’ Compensation Recovery
The marital share of any personal injury or workers’ compensation recovery (lost wages or medical expenses not covered by health insurance) means that portion of the total recovery that accrued during the marriage and before the date of last separation of the parties.
Separate and Marital Debt
Similarly to the treatment of real or personal property, separate debt refers to:
- all debt incurred by either party before the marriage;
- all debt incurred by either party after the date of separation of the parties; and
- that portion of any debt that was incurred for a non-marital purpose.
If, however, a party can prove that a debt was incurred for the benefit of the marriage or family, the court may designate it as a marital debt.
Marital debt refers to:
- all debt incurred in the names of both parties, before the separation of the parties, whether incurred before OR after the date of the marriage; and
- all debt incurred in either party’s name after the date of marriage and before the date of separation
Factors the Court Will Consider in Apportioning Marital Property/Debt
In determining the amount of any division or transfer of marital property, the amount of any specific monetary award, the apportionment of any marital debts, and the method of payment, the court will consider the following factors:
- The contributions of each party, monetary and non-monetary, to the well-being of the family;
- The contributions of each party, monetary and non-monetary, in the acquisition and care and maintenance of any such marital property of the parties;
- The duration of the marriage;
- The ages and physical and mental condition of the parties;
- The circumstances and factors which contributed to the dissolution of the marriage, specifically including adultery, felony conviction, causing fear of bodily harm, cruelty, desertion, and abandonment;
- How and when specific items of marital property were acquired;
- The debts and liabilities of each spouse, the basis for such debts and liabilities, and the property which may serve as security for such debts and liabilities;
- The liquid or non-liquid character of all marital property;
- The tax consequences to each party;
- The use or expenditure of marital property by either of the parties for a non-marital separate purpose or the dissipation of such funds, when such was done in anticipation of divorce or separation or after the last separation of the parties; and
- Any other factors the court deems necessary or appropriate to consider, in order to arrive at a fair and equitable monetary award.
Means by Which the Court Can Divide/Transfer Property Between the Parties
After the court determines, taking into account the above-listed factors, how any jointly owned property and/or debt shall be divided or transferred between the parties, it has several means for doing so.
The court may order the transfer of any real or personal property (or any interest therein) to one of the parties, allow either party to purchase the interest of the other (so long as the purchaser agrees to also assume any debts secured by the property), or order its private sale by the parties.
In addition, based on examining the equities of the situation, the court also has the power to award a monetary award to either party, payable at once or in installments over time. The party against whom a monetary award is made may satisfy the award, in whole or in part, by transferring property to the other party, subject to the approval of the court.
If the court does decide to award a specific monetary amount to one of the parties, it shall determine the amount without regard to any separate spousal or child support awards.
The court has the power to enter any additional orders needed to enforce its orders as to the division of property and debts, including:
- order a date certain for the transfer or division of any marital property, or payment of any monetary award;
- punish any willful failure to comply with its orders as contempt of court; and
- appoint a special commissioner to transfer any property where a party refuses to comply with the court’s order to do so.
A Note About Life Insurance and Other Death Benefits After Divorce
Under Virginia law, any revocable beneficiary designation that provides for a death benefit to one of the spouses upon the death of the other (including in the case of life insurance contracts, annuities, and retirement benefits) may or may not be revoked automatically by law upon the entry of a decree of divorce.
The spouse who owns the contract providing for the death benefit is responsible for revoking the beneficiary designation if he or she wishes to do so, and must follow any and all instructions to change the designation given by the provider of the death benefit.