ASSET AND DEBT DIVISION
When it comes to the process of divorce, dividing assets, real estate, valuable possessions, and debts and liabilities remains one of the most difficult tasks. Unfortunately, more and more couples are forced to take this challenge on as divorce rates in Kansas remain steady.
Property division is one of the most complicated and often misunderstood parts of a divorce. Unlike other aspects of divorce, such as child support or child custody, property division varies significantly from state to state. It is essential to understand what property is at stake and how the court determines property division in every divorce. The following is an overview of the process.
Will all of a couple’s property be divided equally?
To put it simply: No. Whereas other states, notably California and Texas, divide property equally, Kansas is an “equitable distribution” state, meaning that the judge presiding over the divorce will make a fair and just division of all property. This does not mean it will be a 50/50 division, although this may happen in some divorces. After filing for divorce, each party will have an interest in all property owned by either spouse. It is important to note that there is a difference between marital property and non-marital property. Marital property is property acquired during the marriage, and non-marital property is property owned pre-marriage and property that is inherited or received as a gift to solely one spouse. A court has the power to divide up property as the judge deems appropriate. Still, the distinction between non-marital and marital property may influence how property is divided. However, it is essential to remember that both types of property are up for division. This means that property will not be divided equally in every divorce.
It is important to note that any property acquired after filing for divorce belongs solely to the spouse who comes into possession of it, and that property will not be up for division in the divorce proceedings.
How do Assets & Debts get divided during a divorce?
Under Kansas state law, the courts will divide assets and debts in an “equitable division.” An equitable division does not mean that assets and debts are split equally, but in most cases, it does.
One of the initial steps in making an equitable division of property is to determine both spouses' assets and debts. In Kansas, it is not essential how the property or debt is titled. This means that even if the home both spouses live in is titled solely in one spouse’s name, the other spouse still has an interest in the amount of equity in that home that was accrued during the length of the marriage. That amount of equity is subject to an equitable division. Pursuant to the Johnson County Family Law Guidelines, all property owned by married spouses, whether acquired during or before the marriage or owned solely by one spouse or both, becomes marital property the moment one spouse files for divorce or annulment.
The Discovery Process
When determining the assets and debts of the spouses involved, an essential tool is the discovery process. Discovery is the legal term for the process of obtaining information pertinent to the divorce. Generally, an interrogatory or request for production of documents is sent to the opposing spouse or the spouse’s attorney if he or she is represented. Interrogatories ask a specific set of questions that are related to the issues in the divorce proceeding. Some attorneys use a standardized discovery that is not tailored to each case. This is probably not the best practice, and discovery should be tailored to be as concise and efficient as possible. Interrogatories should be designed to elicit discoverable information regarding bank accounts, credit accounts, loans, real property, personal property, retirement, and investment accounts. This is to gain an understanding of all assets and debts owned by the other spouse.
A request for production of documents will also be sent. This type of discovery requests physical objects, such as a bank statement, or requires the opposing spouse to make real property available for inspection. These requests are tailored to each specific case. Requesting documentation regarding the opposing spouse's assets and debts allows an attorney to gain a complete understanding of the marital estate. After discovery, the attorney will have a clearer understanding of what an equitable division of the marital estate would entail.
The Role of Marital v. Non-Marital Property
While courts can divide all property owned by either spouse, they still recognize the distinction between marital and non-marital property when dividing the spouses’ property. The discovery process helps distinguish marital and non-marital property. During the discovery process, the premarital value of an asset and its value on the date the divorce petition was filed are learned. If there is premarital value in an asset, that amount is credited to the spouse who had the premarital value invested in the asset, and the equity in the asset that accrued during the marriage will be divided between the spouses.
After an interrogatory or a request for production of documents is sent, the opposing spouse will have a set amount of time to respond or object. After the interrogatories and request documents are returned, the attorney will create an “Asset Debt Spreadsheet.” This is a tool used by attorneys to determine how a couple’s assets and debts will likely be distributed in a divorce proceeding. The spreadsheet contains a column for each asset and debt from both spouses. Any premarital values will be deducted from the marital amount. For any real property that exists, an appropriate amount for closing costs will be determined, and any amount mortgaged against the property will also be deducted. This same process is used for any personal property, such as vehicles. Retirement and investment accounts are calculated by taking the value on the date of the divorce petition filing, deducting any premarital value, and then deducting any appropriate tax deduction if the account will be subject to taxation upon distribution. All other assets and debts are included on the spreadsheet.
Final Distribution of Property
Finally, the spouses and their attorneys must decide which assets and debts will be assigned to each spouse. Some assets will be sold, and the proceeds will be split. At other times, one spouse will retain the property or assume a specific debt. After determining this, the value of each asset and debt is placed in a column under either the husband or the wife, and each column is totaled. After totaling each column, if there is a discrepancy in the value each spouse is receiving, the difference will be divided and awarded to the spouse receiving less as an equalization payment. For example, if the wife has $100,000 in property and the husband has $50,000, the two numbers are subtracted from each other ($50,000) and divided by 2 ($25,000). Then, the party with the lesser equity (the husband) is awarded $25,000 as an equalization payment. This allows both parties to leave the marriage with the same amount ($75,000), in addition to any assets/debts they were assigned.
How Will the Judge Ensure Property Division Is Fair?
A judge has broad discretion to divide property fairly in a divorce proceeding. However, Section 23-2802(c) provides ten factors the judge can use to make a fair, equitable division. These factors are briefly outlined below.
The Age of the Parties
To determine how to divide property, the judge will look at how old each party currently is and how old each party was upon entering the marriage. This may help recognize the importance of non-economic support by spouses. The courts have recognized that bringing home money is not the only way to support a marriage or facilitate the acquisition of property. The court will consider whether one party has forgone education and employment for an extended period when dividing property.
How Long the Marriage Lasted
This factor also serves to reward, or at least not to punish, a spouse for homemaking rather than pursuing an education or a career. In an incredibly long marriage, a spouse may have foregone a future career to maintain the marital home and raise any children. In this situation, a spouse may be given a larger share of property to help offset the inability to earn income after the divorce.
Marital and Non-Marital Property Classifications
As mentioned previously, all property is up for grabs in a divorce, but the court will consider the distinction between marital and non-marital property when making its decision. A typical example is if each spouse has their own vehicle. A spouse will generally want to keep their own vehicle. Unless the car has significant value that would make the division unfair, each spouse will typically retain their own vehicle. Even if the car has substantial value, it may be left to that spouse at the expense of other property.
Present and Future Earning Capacity for Each Spouse
Each spouse's earning potential is a strong consideration in determining how to divide property. This is to ensure that a spouse who sacrificed an education or a career is not placed in an unfair situation. However, if a non-working spouse has similar earning potential, the court may find a 50/50 division adequate. To support the non-working spouse until that spouse obtains gainful employment, temporary spousal support or other means may be a better option than deviating from a 50/50 division.
Time, Source, and Manner by Which Property was Acquired
This factor ties into the distinction between marital and non-marital property. However, even within those distinctions, the manner in which the property was obtained may help determine how to divide it fairly. Again, each spouse will generally want to retain his or her own vehicle, even if the vehicles were purchased during the marriage. Further, property given solely to one spouse as a gift may have personal and sentimental value to that spouse.
Family Ties to Property and Obligations Concerning Specific Property
This factor most often deals with non-marital property. Usually, property owned before the marriage or inherited by a sole spouse will have substantial personal value. The court considers these ties when dividing property. Common examples of these items include family heirlooms, such as jewelry that one spouse intends to give to a child in the future.
Any Spousal Support Awarded to Each Party
Property division and spousal support generally go hand in hand. The court wants to ensure that each spouse will be left in as good a position as possible. This may allow one spouse to keep the marital home in exchange for making monetary payments to the other spouse for support.
Squandering of Any Assets by a Party
If any spouse has squandered assets to prevent the other spouse from receiving the property, the court will consider this when determining how to divide the remaining property. Generally, the punishment for squandering assets is to account for the lost assets in the squandering spouse’s share.
Tax Consequences That Will Result for Each Spouse
When determining how to divide property, the court may consider the tax consequences of any division. Generally, this means considering the property taxes on real estate and vehicles. The court will likely pursue a property division that avoids adverse tax consequences.
Any Other Relevant Factors
This final factor is not really a factor; instead, it serves as a reminder to the trial judge that there is a lot of discretion in dividing property. The nine factors above are not exclusive and should not be considered a checklist. The factors a judge will consider in making a fair and reasonable property division really depend on the facts of each specific divorce.
Property division is a central part of every divorce proceeding. Dividing property takes time, and knowledge of how individual judges handle property division can help ease the process. This insight and knowledge can only be gained through experience.
If you need help from an experienced divorce and family law attorney in Johnson County, Kansas, feel free to contact the attorneys at Roth Davies.
If you are thinking about filing for divorce and want to understand better how asset division works in Kansas, it is imperative that you consult with an experienced Kansas divorce attorney for detailed guidance. Roth Davies LLC has the resources and experience needed to guide clients through the divorce and asset division process. The skilled attorneys at Roth Davies LLC are available to discuss your unique situation and help you navigate key decisions in your divorce proceedings. As your legal counsel, they will fight compassionately to protect what belongs to you and help navigate your divorce as seamlessly as possible.
MARITAL PROPERTY VS. SEPARATE PROPERTY
In the asset division process, assets are categorized into two distinct categories: marital property and separate property.
MARITAL PROPERTY
Marital property includes all assets, property, and debts accumulated by the couple during the period of the marriage. These include the marital home, income, motor vehicles, second homes, bank accounts, royalties, business interests, retirement accounts, stocks, 401(k) accounts, rents, credit card charges, and every other property acquired or debt incurred while they were married.
SEPARATE PROPERTY
In contrast, separate property usually includes all assets owned by either spouse, as well as debts or liabilities incurred by either spouse before the marriage. Separate property can also include bequests, personal gifts, and third-party inheritances received by each spouse during the marriage.
WHO DETERMINES HOW ASSETS ARE DIVIDED?
When it comes to asset division, determining exactly how the assets will be split often depends on whether the divorce is contested or uncontested.
UNCONTESTED ASSET DIVISION
Uncontested asset division is a process in which both spouses mutually agree on essential terms for distributing the couple's assets and debts. Every detail of the agreement will be properly documented in a marital dissolution agreement. All agreed terms will be filed with the Kansas court for official approval. An experienced asset division attorney can help protect your rights and keep the conversation productive as you negotiate how to split everything.
CONTESTED ASSET DIVISION
Contested asset division, as you may have guessed, involves two spouses who are not able to agree on one or more essential terms regarding how the assets and debts should be divided. To resolve such issues, a Kansas court may be needed. A hearing will be scheduled during which the judge will issue a final verdict. A knowledgeable divorce lawyer can help argue your case meticulously and advocate for your rights as you attempt to negotiate terms that make sense for you.
HOW AN EXPERIENCED FAMILY LAW ATTORNEY CAN HELP
Asset division is a crucial aspect of divorce that is often fiercely contested. Categorizing each asset, determining its exact value, and dividing marital property with your ex-spouse can usually be a complicated and overwhelming process. Therefore, when determining asset division in a divorce, you must consult with an experienced family law attorney who can provide detailed guidance and protect your rights.
The family law attorneys at Roth Davies LLC are dedicated to providing comprehensive legal services and reliable guidance to individuals facing complex divorce issues, including asset and property division. Their attorneys can work diligently with both parties to work through asset division issues and help resolve relationship disputes peacefully and productively. At the end of the day, the attorneys at Roth Davies LLC will fight compassionately to protect your legal rights, advocate for your family's best interests, and help you work toward a possible resolution. Call today to learn more about how they can help you with your case!
ASSET DIVISION ATTORNEYS SERVING OVERLAND PARK, KANSAS
If you are thinking about filing for divorce and want to understand your rights better when it comes to asset division, contact Roth Davies LLC today to schedule a one-on-one consultation. They can offer you the experienced legal guidance and advocacy you need to navigate the often complex process of divorce and asset division. Roth Davies LLC is proud to serve clients in Overland Park, Kansas, and the surrounding communities across Johnson County — so call or reach out to their office today for help!