CHAPTER TEN

Dividing Property

Ted and Alice, both aged 55, decide to divorce after 22 years of marriage. Their main assets are their house (80 percent paid for), Ted’s pension, Alice’s IRA, and Alice’s investment account, which she inherited from her father. They also have two cars and assorted personal property. They both work outside the home. By what rules will the property be divided?

In the event of a divorce, the husband and wife generally are free to divide their property as they see fit. They may enter into what is called a marital settlement agreement. A marital settlement agreement is a contract between the husband and wife that divides property and debts and resolves other issues of the divorce. Although many divorces begin with a high level of acrimony, a substantial majority of divorces (95 percent or more) are settled by the husband and wife—with help from attorneys—without the need for a judge to divide property or decide other issues.

When the husband and wife have reached a marital settlement agreement, they can take the agreement to court, where a judge usually will approve the agreement after a short hearing. Some states with simplified divorce procedures might not even require a hearing if the husband and wife agree on everything.

Settlement agreements operate in what is sometimes called “the shadow of the law”—meaning that parties and their attorneys are aware of what a judge might do if a judge had to decide the case. It may not be possible to predict with complete precision what a judge would do, but an experienced attorney can give a range of possible results. With that knowledge, parties often prefer to reach their own agreements rather than go through the monetary and emotional expense of a trial.

• Deciding Whether to Go to Trial
• Separate or Nonmarital Property
• Marital or Community Property
• Factors Considered in Dividing Property
• The Family Home
• Liability for Mortgage Payments
• Family-Owned Business
• Information from Unhappy Employees
• Looking for Hidden Assets
• Pensions
• Social Security Benefits
• Dividing Personal Property
• Personal Injury Awards
• Lottery Winnings
• Allocation of Debts
• Modifying or Undoing a Property Division
• Effect of bankruptcy