Dividing Property in a Divorce

Dividing property is the first topic that most folks think of as they contemplate divorce—who will get what and how much?

We divide property each day in our firm in a solutions-oriented way.

You’ll see statutes, a video and article on how to think through this important issue on this page.

Most of our cases at Smith Strong law firm are resolved outside of court by a Property Settlement Agreement, which we negotiate with the other spouse or their attorney, if they have one.

Most people are able to work things out on property without going to court and the odds are in your favor for reaching settlement—if you have skilled counsel that practice with integrity and are committed to reaching an agreement if that’s your goal. That’s because enduring a legal battle in court (and we know because we’re in court every week) is costly and takes much longer to resolve.  We see ourselves as peacemakers in settlement, skillfully meeting your interests, but then as warriors in a courtroom if the other side won’t agree to a reasonable settlement offer.

 

Sure you can divide property yourself, but most need legal help to do it right the first time.

 

For instance—do you know how to draft the QDRO (Qualified Domestic Relations Order) to divide retirement accounts?  Our firm drafts QDROs each week—they’re tricky documents to get right, but have to be absolutely right to work.

 

You’ll hear stories of people “doing it themselves” with “forms found online” for “much cheaper” than some firms charge.  Forms don’t negotiate themselves and don’t reassure you that this is right for your particular situation.  It usually takes a lot longer when you do it yourself versus hiring legal counsel, we’ve found, with far more errors.

 

Most people require a bit more effort, and help, to work things out—but want to work with a professional firm that gets it and is reasonable on the fees.

 

In Virginia the process is known as “Equitable Distribution.” And it can be a headache to gather all the property you and your spouse own, determine its fair value and then divide it in a common sense way—some attorneys get in there and make it much more complicated than it has to be.  At Smith Strong, we’re simply different in our systematic approach to property division.

 


Does it Matter Who Moves Out of the House First?

 

Don’t leave the marital residence until you get the OK from your attorney.

 

Particularly when there are children involved or spousal support issues to consider, leaving the marital residence too soon can lead to unintended bad consequences for your case.

If domestic violence is an issue, by all means, leave--but in most other cases you are far better to consult an attorney before moving out.

Moving out is usually the “first step” to a divorce for most couples. Get started on the right foot, however, and make the first step getting the “OK” from your attorney.

 

Itemize property & debt.
An accurate list of property and debt, along with supporting documentation, is critical to a successful transition.

General records to assemble:

•  Tax returns & pay stubs

•  Account statements (supporting docs from step 2)

•  Loan statements, including title information (cars, houses)

•  Inventory and pictures of household furnishings, etc. 


 

Debts to list and photocopy supporting documentation of:

•  Mortgages, equity loans, other debts

•  Car loans, debt secured by tangible assets

•  Outstanding student loans and tax obligations 


 

Assets to list and photocopy supporting documentation of:

•  Marital residence, real estate holdings, timeshares

•  Intangible, financial assets, like stocks and 401-Ks

•  Tangible assets, such as cars, furniture, collections

•  Business interests

Extra Credit:  Prepare a snapshot of your monthly expenses—from eating out to car insurance—it is important for your attorney to know the lifestyle you wish to maintain.

 

EQUITABLE DISTRIBUTION OF MARITAL ASSETS IN VIRGINIA

 Think of property as residing in one of three buckets:  (1) separate, (2) marital, or (3) hybrid.  Hybrid property is an area that can get contentious.  The following definitions, based upon Virginia Code section 107.3 (A) (1-3), assist our understanding of how to appropriately label (and then divide) the assets of a marriage.

 

Separate property is defined as:

  • Property acquired before the marriage;
  • Property acquired during the marriage by gift or inheritance;
  • Property acquired during the marriage from the exchange or sale of separate property, provided that such property acquired during the marriage is maintained as separate property; and
  • Any part of marital property, which may be declared separate property pursuant to court order. 

 

Income received from separate property during the marriage is typically separate property if not attributable to the personal effort of either party.  The increase in value of separate property during the marriage is separate property, unless marital property or the personal efforts of either party have contributed to such increases (and then only to the extent of the increases in value attributed to such contributions). And the personal efforts of either party must be significant and result in substantial appreciation of the separate property if any increase in value is to be considered marital property.

 

Separate property, once categorized without caveat, remains the property of its separate owner.

 

Marital property is defined as:

  • Property titled in the names of both parties, whether as joint tenants, tenants by the entirety, or otherwise;
  • Property classified as marital pursuant to court order; or
  • Property acquired by each party during the marriage, which is not separate property as defined above.

 

Hybrid property or "part-marital property and part-separate property" is defined as follows:

  • Income received from separate property during the marriage shall be marital property only to the extent it is attributable to the personal efforts of either party;
  • Increase in the value of separate property during the marriage shall be marital property only to the extent that marital property or the personal efforts of either party has contributed to such increases, provided that any such personal efforts must be significant and result in substantial appreciation of the separate property;
  • Any pension, profit sharing, or deferred compensation plan or retirement benefit, the marital share shall be marital property;
  • Any personal injury or workers' compensation recovery of either party, the marital share shall be marital property;
  • When marital property and separate property are commingled by contributing one category of property to another or into newly acquired property, resulting in the loss of identity of the contributed property, the classification of the contributed property shall be transmuted to the category of property receiving the contribution; 
    • [However, to the extent the contributed property is retraceable by a preponderance of the evidence and was not a gift, such contributed property shall retain its original classification];
  • When separate property is re-titled in the joint names of the parties, the re-titled property shall be deemed transmuted to marital property;
    • [However, to the extent the property is retraceable by a preponderance of the evidence and was not a gift, the re-titled property shall retain its original classification];
  • No presumption of gift shall arise under this section where:
    • (i) separate property is commingled with jointly owned property;
    • (ii) newly acquired property is conveyed in joint ownership; or
    • (iii) existing property is conveyed or re-titled into joint ownership.

 

For more information, read Virginia Code Section 20-107.3(A)(1), (2) and (3), which formed the basis of this earlier section, or consult with an attorney at our law firm.

 

In spite of the statutory guidance above, parties may simply not agree or may be unable to come to terms with the application of this division, leading to an equitable distribution hearing in Circuit Court.  These hearings can turn on close reading and interpretation of case law or the unique sequence of facts established in a particular case.

 

Assignment:  Think through what you want your property division to look like—will you sell, move or stay?  And if you're stuck, remember, we can help.