Family Law Feb 2004 Flashcards
(7 cards)
Summary
The real estate business, the joint bank account, the jointly titled family home, and the pension are all subject to division as “marital property” because they were acquired with funds earned by a spouse during the marriage. In most states, Wendy’s stock would not be subject to division because it was acquired by inheritance and is Wendy’s separate property. However, a minority of states allow courts to divide even this separate property.
Most states would not consider Harold’s affair with Carol relevant to the division of property but would consider Harold’s large gifts to Carol as relevant.
All equitable distribution statutes require consideration of both need and contribution. Wendy’s homemaking services would be relevant because they provide a basis for arguments about both her need and contribution. Wendy and Harold will make very different arguments about how Wendy’s role as a homemaker and mother should affect property distribution. Ultimately, it is impossible to predict the weight the court would place on Wendy’s contribution or her need in making the overall property award.
All of Harold and Wendy’s assets that were acquired with funds earned by Harold during the marriage are marital property subject to division on divorce. Wendy’s stock, which was acquired by inheritance, would be subject to division only in those states that authorize the division of all property.
A majority of states require the court to first classify the property held at the time of the divorce as marital or separate and authorize the court then to divide the marital property. In the eight community property states, community property is treated much the same as marital property. Definitions of marital and community property are nearly identical. As a result, all states will allow the court to distribute marital or community property, which includes all property derived from earnings during the marriage.
Application
All of the property, except Wendy’s stock, will be considered marital property in a common-law state or community property in a community property state. The real estate business, the pension, the jointly titled family home, and the joint bank account were acquired with spousal earnings. How the assets are titled is irrelevant.
Wendy’s stock will not be subject to division in the majority of states. It is Wendy’s separate property because Wendy inherited it. An inheritance is the separate property of the spouse who inherits it, even if the spouse acquires it during the marriage. Id.
A minority of states (about fourteen) authorize the courts to divide all the property held by the spouses at the time of divorce without regard to when, how, or by whom the property was acquired or how the title was held—the so-called “hotchpot” approach. In those states, the stock will be subject to division.
In the majority of jurisdictions, adultery is not relevant to division of property at divorce, but dissipation of assets is relevant. Harold’s large gifts to Carol would qualify as dissipation.
The majority of states do not allow for consideration of adultery in the division of property. A minority of states could consider Harold’s adultery when making a division of property (citing those few states in which the courts will consider adultery as a factor in property division). Therefore, in most jurisdictions the fact that Harold had an affair would not be relevant to the property distribution.
In virtually all states, however, “economic” fault, including dissipation of marital assets, is relevant to property distribution. See Ellman, Kurtz & Scott, supra, at 414 (mentioning “general agreement that dissipation of assets is a relevant factor in the equitable distribution of property”). (directing a court to divide property “without regard to marital misconduct,” yet to consider, inter alia, “the contribution or dissipation of each party in the acquisition, preservation, depreciation, or appreciation in the value of the respective estates”).
Application
Dissipation is generally thought to be “the use of marital property for the sole benefit of one of the spouses for a purpose unrelated to the marriage at a time that the marriage is undergoing an irreconcilable breakdown.” In re Marriage of O’Neill, 563 N.E.2d 494, 497 (Ill. 1990). Harold’s expenditures on Carol were large, were for a nonmarital purpose, inured solely to the benefit of Harold, and were made during the breakdown of the marriage. Therefore, these expenditures would be relevant in dividing the property. The remedy would be either to include the value of the gifts to Carol in the marital estate or to consider the dissipation when making the ultimate distribution of the remaining property.
In most jurisdictions, Wendy’s role as a homemaker and parent would be relevant to equitable property distribution, both as a contribution to the marriage and as an indicator of need.
In all equitable distribution states, spousal contribution and need are the primary factors in property division. Homemaking and parenting are recognized forms of spousal contribution. These same services, when they substitute for paid employment over a lengthy period, will also evidence a spouse’s need. See ALI PRINCIPLES. Therefore, Wendy’s services would provide the basis for two different types of property distribution arguments.
Application
Most states do not assign any particular value to homemaking services and would permit Harold to argue that Wendy’s contribution was minimal, given her modest homemaking skills and heavy reliance on paid help. But some equitable distribution states have a presumption that a homemaker’s contribution is equal to a breadwinner’s and that an equal division is most just.
Wendy will likely argue that her homemaking contributions played a significant role in the acquisition of the marital property. She would emphasize the fact that her role as a full-time homemaker and parent freed Harold to devote time to building his business. She would also emphasize her services in entertaining Harold’s clients.
Wendy will also argue that her role as a long-term homemaker has greatly increased her need for marital property by reducing her capacity for self-support and asset accumulation. This claim would be difficult for Harold to rebut.
Given that equitable property distribution is highly discretionary, it is impossible to estimate how much weight the court would place on Wendy’s need as compared to her contribution. It is also impossible to determine how the court would evaluate Wendy’s and Harold’s contribution-based arguments.
In the small minority of states that require equal division of marital property, arguments about Wendy’s contribution and need would, of course, be unavailable to both parties.
