Asset and Debt Division

When it comes to the process of divorce, dividing assets, real estate property, valuable possessions, and debts and liabilities remains one of the most difficult tasks to tackle. 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 part of a divorce. Unlike other aspects of divorce, like child support or child custody, property division differs significantly from state to state. It is important to understand what property is up for grabs and how the court determines the 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 the property that was 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, but the difference between non-marital property and marital property may influence the determination of how to divide property. However, it is important 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 that comes into possession of it, and that property will not be up for division in the divorce proceedings.

How do Assets and 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 equally split, but in most cases, it generally does.

One of the initial steps taken when making an equitable division of property is to determine all the assets and debts that both spouses have. In Kansas, it is not important 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 prior to 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 important tool is the discovery process. Discovery is the legal term that describes the process used to obtain information that is 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 individual 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 lead to discoverable information relating to bank accounts, credit accounts, loans, real property, personal property, retirement, and investment accounts. This is to gain an understanding of all assets and debts the other spouse has ownership of.

A request for production of documents will also be sent. This type of discovery asks for physical objects, such as a bank statement, or requests the opposing spouse to make real property available for inspection. These requests are tailored to each specific case. Requesting documentation relating to assets and debts of the opposing spouse allows an attorney to grasp a full understanding of what all the marital estate. After discovery, the attorney will have a better understanding of what an equitable division of the marital estate would look like.

The Role of Marital v. Non-Marital Property: While courts have the ability to divide all property owned by either spouse, the court does still recognize the difference between marital and non-marital property when deciding how to divide 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 is learned. If there is some premarital value to an asset, that amount is credited to the spouse who had the premarital value invested in the asset, and the amount of 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 go to which spouse. Some assets will be sold, and the proceeds split. At other times, one spouse will maintain the property or take control of a certain debt. After determining this, the value of each asset and debt is placed in a column under either husband or wife, and each column is added up. After totaling each column, if there is a discrepancy in 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 worth of property and the husband has $50,000, the two numbers are subtracted from each other ($50,000) and divided by two ($25,000). Then, the party with the lesser amount of equity (the husband) is awarded the $25,000 as an equalization payment. This allows both parties to leave the marriage with the same amount ($75,000), in addition to any asset/debt they were assigned.

How Will the Judge Ensure the Property Division Is Fair?

A judge is given wide discretion in determining how to fairly divide property 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.

1. 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 and facilitate getting property. The court will consider if one party has forgone education and employment for a long period of time when determining how to divide property.

2. 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 incredibly long marriage, a spouse may have foregone any possibility of having a career in the future by maintaining the marital home and raising any children. In this situation, a spouse may be given a larger portion of property to help offset the inability of the spouse to earn income following the divorce.

3. Marital and Non-Marital Property Classifications: As mentioned previously, all property is up for grabs in a divorce, but the court will consider the marital property and non-marital property distinction when making its decision. A common example is if each spouse has their own vehicle. A spouse will generally want to keep their own vehicle, and unless the car has significant value that would make the division unfair, each spouse will typically get to retain his or her own vehicle. Even if the car has significant value, the car may be left to that spouse at the cost of other property.

4. Present and Future Earning Capacity for Each Spouse: The earning potential of each spouse 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 feel that a 50/50 division is adequate. To help support the non-working spouse until that spouse has obtained gainful employment, temporary spousal support or other means may be a better option than deviating from a 50/50 division.

5. Time, Source, and Manner by Which Property was Acquired: This factor ties into the marital property and non-marital property distinctions. However, even within those distinctions, how the property was obtained may help make the determination on how to fairly divide the property. Again, each spouse will generally want to retain his or her own vehicle, even if the vehicles were purchased during the marriage. Further, property that was given to solely one spouse as a gift may have personal and sentimental value to that spouse.

6. Family Ties to Property and Obligations Concerning Specific Property: This factor most often deals with non-marital property. Often, property owned before the marriage or inherited by a sole spouse will have strong personal value. The court takes these ties into consideration when determining how to divide property. Some common examples of these items are family heirlooms, such as pieces of jewelry that one spouse intends to give to a child in the future.

7. Any Spousal Support Awarded to Each Party: Property division and spousal support generally go together. The court wants to ensure that each spouse will be left in as good of 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.

8. 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.

9. 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 does not result in negative tax consequences.

10. Any Other Relevant Factors: This final factor is not really a factor but rather, it serves as a reminder to the trial judge that there exists a lot of discretion when 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 the help of an experienced divorce and family law attorney in Johnson County, Kansas, feel free to contact the experienced attorneys at Roth Davies.

If you are thinking about filing for divorce and want to better understand 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 experienced 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

When it comes to the process of asset division, the assets will be 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, 401k accounts, rents, credit card charges, as well as every other property acquired or debts incurred while they were married.

SEPARATE PROPERTY

In contrast, separate property usually includes all assets owned, 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 the process of asset division, determining exactly how the assets will be split often comes down to whether or not the divorce itself is contested or uncontested. 

UNCONTESTED ASSET DIVISION

Uncontested asset division is a process that involves both spouses mutually agreeing upon important terms regarding how the couple's assets and debts will be distributed. Every detail of the agreement will be properly documented in a marital dissolution agreement. All the terms agreed upon 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 both negotiate over how everything gets split.

CONTESTED ASSET DIVISION

Contested asset division, as you may have guessed, involves two spouses who are not able to agree on one or more important terms regarding how the assets and debts should be divided. To resolve such issues, the intervention of 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 and every asset, determining their exact value, and dividing marital property with your ex-spouse can often be a complicated and overwhelming process. Therefore, when determining asset division in a divorce, it is important that you 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!