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Marital and separate property in divorce

| Aug 25, 2020 | Divorce |

The end of a relationship can be a highly emotional experience, but divorce itself is a legal process. It requires thorough documentation and negotiation in accordance with the law. If the couple has young children, the process involves calculating child support and resolving complex issues of custody. But in many divorces the most demanding, time-consuming and difficult disputes involve property.

Indiana law requires an equitable division of marital property in divorce. This means the parties must list all their assets and debts, separate marital from separate property, and then divide the marital property in a way that is reasonable and just.

Marital and separate property

For the most part, “marital property” means any assets or debts obtained during the marriage, and “separate property” means any assets or debts obtained before the marriage or after a legal separation. There are exceptions, however, and some types of assets and debts can have a foot in both categories, so to speak. For instance, property received through an inheritance is generally considered separate property if only one of the spouses was named in the will.

More complicated are assets that started as separate property but became partly marital property during the marriage. For instance, a woman might have a share in her family business when she marries her husband. During the marriage, the husband works for the family business and helps it to grow. After 10 years, the couple decides to divorce. The woman may argue that her share in the business should be treated as separate property. The man may argue that he is entitled to a share in the business because he helped it to grow.

Under the rules of equitable division, a court might look at the details of this case and determine that the rules of equitable division demand that the man be compensated for his work for the family business, and that he should therefore receive a greater share of the marital property.

In most cases, this type of decision would not go to a judge. Instead, the parties would negotiate at length to reach a settlement that would meet Indiana’s standards.