Property and Debt Division in Divorce
All of your marital assets and debt are divided “equitably”, which means they are divided in a fair manner regardless of who is to blame for the divorce; roughly 50/50. Understand, however, that there is no formula for deciding what is considered “fair”. This means the property may not be divided equally. Inappropriate conduct, such as infidelity, is not considered, under Oklahoma law, when it comes to property division.
An asset is anything that has some sort of value. It could be anything from a house, a car, a bracelet, stock in a company to an IRA plan. These are all examples of assets or “property”.
Marital and Non-Marital Property
Only Marital Property is divided among the spouses. To understand what would be considered Marital Property, it is easier to look at what is non-marital. Non-marital property is anything that was acquired with funds outside of the marriage, and not used by the household.
Here are some common examples:
- A set of golf clubs purchased before marriage is non-marital because they were purchased with income made before the marriage and not used by the spouse or children.
- A house that was free and clear prior to the marriage will be converted to a marital property when the married couple lives there. Although, in some cases of a short period of time of living in the house, the property may not be made automatically marital. Subsequently, the increased value in the home during the marriage is a marital asset. (e.g. house was worth $100,000 when they got married and now is worth $150,000. The $50,000 difference is a marital asset.)
- Income from a rental property purchased free and clear prior to the marriage is non-marital property as long as it is put in a separate bank account. Items purchased with this income are non-marital property as long as the items are not put to household use.
- Anything you give to your spouse as a gift, such as an anniversary ring or an iPod, is non-marital property, even if it was purchased with money from a marital bank account.
It is easy to think of marital property as everything else. Remember, income from your job is always marital property. Debts are treated the same way; if the debt was incurred to benefit the household, then it is marital debt, no matter whose name is on the hook.
Valuing the Assets
In order to accurately divide the assets, all marital property should be valued. Small items, like clothes and flatware, are generally not valued, but larger items, like cars, computers, and entertainment systems are. There are two ways to value property: each side hires an appraiser or the parties testify as to what they think it is worth.
The date you file for divorce is important when it comes to dividing property. First, anything you purchase with your own income after that date is non-marital property. Second, it is typically the date for which things are valued on. For example, in determining the value of a house, it would be valued on the date of filing, not when the trial is, which could be a year later.
Debts are divided into two broad categories.
- Secured debt is debt that is tied to a particular person and is secured by collateral. Examples are mortgages and vehicle notes. If a creditor can repossess the item if the payments are not made, it is a secured debt. When the court divides out the assets and debts, if one party gets a car during the division of property, he/she also takes the related car loan.
- Unsecured debt is debt that is not tied to any particular item. This is usually credit card debt. While a person can point to particular items purchased with the credit card, the credit card company cannot repossess them. Unsecured debt will be divided between you and your spouse independent of what items were purchased.