When spouses are going through a divorce, the parties can either agree on classification and distribution of property through a property settlement agreement or, if the parties cannot agree, the court can get involved. Specifically, on motion of either party, a determination of legal title of property between the parties will be made by the court. The court can determine whether property is marital property or separate property. We offer a Free Initial 30 Minute Consultation For New Clients. Give us a call or use the contact form below.
What does a court do in Equitable Distribution cases?
- Determine the ownership and value of all property, and whether that property is marital or separate property;
- Determine the rights and interests of each party in the marital property, and whether an awardof marital property in favor of either party is warranted; and
- After determining that an award of property is warranted, consider the amount of the award based upon all the statutory factors set out in § 20-107.3 of the Virginia Code.
Classification of Property as Marital or Separate Property:
- Separate Property – (i) all property, real and personal, acquired by either party before the marriage; (ii) all property acquired during the marriage by bequest, devise, descent, survivorship, or gift from a source other than the other party; (iii) all property acquired during the marriage in exchange for or from the proceeds of sale or separate property, provided that such property acquired during the marriage is maintained as separate property; and (iv) property acquired after the last separation of the parties. The court cannot distribute separate property which is why equitable distribution is such a litigated issue.
- Marital Property – (i) all property titled in the names of both parties, whether as joint tenants, tenants by the entirety, or otherwise; and (ii) all other property acquired by each party during the marriage that is not considered separate property. In fact, property is presumed to be marital property if it is jointly owned. Marital property includes that portion of pensions, profit-sharing,or retirement plans of whatever nature, acquired by either spouse during the marriage and before the last separation of the parties.
- Transmutation from Separate to Marital Property – income received from, and the increase in value of, separate property, during the marriage is separate property. However, if there was an active effort of the other party resulting in the increase in value of the separate property, the court may consider the increase as marital property. Further, if the court finds the separate property itself is fulfilling a marital purpose as commingled with marital property, the entire separate property may be considered marital property and, hence, subject to equitable distribution.
- Gifts – property acquired during the marriage by gift or inheritance from a source other than the other spouse is considered separate property. However, if the gift or inheritance is to both spouses or, the gift becomes commingled with marital property and loses its separate identity, it will be considered transmuted from separate property to marital property.
- Uncertainty – Source of Funds Doctrine – when separate property is commingled into marital property, the property is generally considered transmuted as now marital property. However, if the property can be traced by a preponderance of the evidence to its origin as separate property, it will be considered part-separate and part-marital.
How does a court convey the property?
The court can order a division or transfer of jointly owned marital property. The court can:
- order the transfer of the marital property, or any interest therein, to one of the parties; or
- permit one party to purchase the interest of the other in property; or
- order the sale of the property by private or public means.
What about money awards?
In addition to ordering a division or transfer of jointly owned marital property, the court also has the power to grant a monetary award. In determining the amount of the award and the method payment, the court will consider the following factors:
- The contributions, monetary and nonmonetary, of each party to the well-being of the family;
- The contributions, monetary and nonmonetary, of each party in the acquisition and care and maintenance of 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 any ground for divorce under the provisions of subdivisions (1), (3) or (6) of § 20-91 or § 20-95;
- How and when specific items of such 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 nonliquid 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 nonmarital 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
- Such other factors as the court deems necessary or appropriate to consider in order to arrive at a fair and equitable monetary award.
Marital debt will also be considered by the court and will be apportioned like marital assets.
Marital waste of assets will be considered by the court if the court finds a party dissipated marital assets in anticipation of divorce.
Retirement Benefits, Pensions,and Profit-Sharing are all subject to equitable distribution as marital property.
There is no presumption in Virginia of 50-50 or equal division of marital property (though a court may nonetheless make such a division if appropriate).
What about marital fault? What if one spouse is the reason for the divorce?
Fault is a factor for the court in determining the equitable distribution of marital property. However, it does not mean that the “guilty” spouse will be awarded less. Specifically, in order to consider fault in the equitable distribution of the parties' property, such grounds must have had an adverse economic effect on the identity or value of the marital property. For example, the court has held that a spouse walking in on another spouse in an adulterous situation was not evidence of an economic impoact on the parties' marital property. Conversely, a long-term affair that depleted marital resources may be considered fault that had an impact on marital property.