How Is Property Divided In Divorce?

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Where you live can have a huge impact on your divorce as laws and regulations differ from state to state. For instance, Oregon has its own set of standards when it comes to property division that are different than its West Coast partners Washington and California. While those two are community property states, Oregon practices equitable distribution.

What is equitable distribution?

In the case of community property states, debts and assets are viewed, as the title implies, as belonging to both parties, and can be split down the middle in the case of divorce. When a state like Oregon uses equitable distribution, however, the two sides, usually along with attorneys, judges, or mediators, sit down to determine a fair, just way to distribute the marital property.

In this situation, in the case of shorter marriages, the court generally wants to ensure that each party exits the marriage on similar financial footing as they entered. When it comes to a longer pairing, the consideration is to provide each party with the necessary tools and opportunities to rebuild their lives and move forward. Each case is going to be unique, but this can, as you probably expected, have a significant bearing on property division in a divorce.

What Influences Property Division?

Equitable does not necessarily mean that all assets are divided into equal parts, and a number of factors come into play.

These can include things like

  • whether or not the property was obtained before the marriage,
  • whether it is held jointly or individually,
  • and how much each side contributed to the acquisition of the resources in question.

In the case of premarital property, it usually stays with the original owner. For example, if you bought a car on your own and kept it registered in your name, it will most often remain yours. This does get cloudy in cases where assets are commingled and used by both parties with equal frequency and access. In these situations, what began as individual property can, over time, become construed as part of the larger marital estate and be allotted as such in a divorce.

Courts may also take into account how much property there is to divide, what to do if there are communal assets to be sold, and more. Factors like taxes, medical bills, spousal support, and the ongoing needs of any minor children are also often considered.

One thing that should not figure into property division, however, is fault.

When it comes to allocating assets, the court looks at need, future earning potential, child custody, and other components, not who or what caused the divorce. That may very well come into play in other areas, but not usually when you’re talking about splitting up material goods.

Debt is also treated the same way as property in equitable distribution states like Oregon. If a financial obligation was jointly accrued, it will likely be viewed as part of the marriage and divided accordingly. Responsibility may be assigned based on each party’s ability to pay. When it comes to preexisting liabilities, though, much like assets, they usually remain with the one who incurred the balance. So don’t worry, you won’t likely be on the hook for your spouse’s student loans from years before you even met.

Joint Property Versus Individual Property

When it comes to determining what belongs to each party and what belongs to the marriage, things can get a bit tricky. As the court attempts to divide the assets in an equitable fashion, they must get a clear picture of who owns what individually and what belongs to the couple as a unit.

Regardless of what name may or may not be on a title, Oregon generally assumes that any assets acquired during a marriage are communal property and owned jointly by both spouses.

In many cases, these items or assets will subsequently be distributed in a fitting manner. During the process of property division, however, the parties can dispute that the other did not contribute equally to the acquisition of the asset in question, make a case for possession, or barter for ownership.

Once the assets and debts have been classified as either marital or separate property, and a value or liability has been assigned to each, they are then divvied up between the two parties in what the court determines to be the fairest and equitable way.

In the case of major assets, like a house, which is often one of the largest pieces in play, there are a number of ways to go about the division. Once both sides agree on the value, and any debt still owed is taken into account, there are three ways to proceed.

  • You can sell the home and split the earnings.
  • One spouse or the other can refinance in his or her name and buy out the other.
  • Or, if there are children, the custodial parent may continue to live in the home for a period—often until the youngest child turns 18 or graduates from high school—at which time they either buy out the other or sell the house and split the proceeds.

Property division can be a hugely variable endeavor. How assets are split between two spouses in a divorce depends on a number of factors, the parties involved in the process, and will be different case to case.

In an equitable distribution state like Oregon, in a broad sense, what you owned before the marriage will likely remain yours, and what was acquired during the union will be divided. There are exceptions to this, but that’s how it generally goes down.

In long-term marriages, pre-existing ownership tends to be a moot point. But if you’re concerned with retaining possession of certain assets in the case of divorce, it may be in your best interest to talk to an attorney about a prenuptial agreement or to explore other ways to shield your resources.

Related Reading: Should You Sell Your Home During Divorce?
Related Reading: Are You Responsible For Your Spouses Debt?
Related Reading: How To File For Divorce In Oregon
Related Reading: The Most Common Mediation Questions Answered

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