How Does Property Division Work in a Utah Divorce?
One of the most common questions we are asked at HOYER LAW is how property will be divided in a divorce. While it’s easy to explain the broad legal concepts involved, we earn our keep and set ourselves apart at HOYER LAW by skillfully and knowledgeably applying these general legal principles to a person’s particular fact situation.
Utah is a Common Law State
Utah is one of the 41 majority states that observes the “common law” on the question of property division, meaning that it splits marital property “equitably” or fairly, but not necessarily equally, although the courts usually start with the presumption that marital property should be divided equally. On the other hand, 9 states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington) still observe “community property” law, meaning that marital property is always divided equally, 50-50.
What is the Difference between Marital and Personal Property?
Before describing how property is classified and split in Utah, it’s helpful to define what “property” is. Property is real property (e.g., land and anything attached to the land, such as a house, buildings and even water and underground mineral rights, etc.), personal property (i.e., everything that is not real property and movable, such as vehicles, boats, household furnishings, tools, artwork, guns, personal belongings, jewelry, etc.), cash on hand or in bank accounts, and even intangible things, such ownership interests in businesses, money contributed to retirement accounts and pension plans, the value and increase on investments, etc.
Marital Property VS. Separate Property
When evaluating a case, the first question that an attorney at HOYER LAW must answer is whether property is “marital property” or “separate property,” which is also the first step a court will take at a divorce trial. Speaking generally, marital property is property or assets acquired during the marriage, while separate or “non-marital” property is property or assets acquired before marriage (pre-marital property), or gifts or inheritances. Parties are usually awarded their own separate property.
It’s important to remember that it in equitable property states like Utah, whether a person’s name is on title or deed to the property (e.g., house, car, etc.) is largely irrelevant and is certainly not a deciding factor in determining if a property is separate or marital.
Another thing to keep in mind is that separate property can become marital property during the marriage. As a simple example, when a spouse deposits, e.g., inheritance money into a joint bank account, it will likely become “commingled” over time, meaning it will lose its identity as separate or non-marital property. In another example, a pre-marital home purchased by a spouse prior to marriage can become marital property if mortgage payments continue to be made during the marriage using marital earnings, or the other spouse makes substantial contributions to the pre-marital home in improvements, maintenance, protection, etc., and these efforts or “sweat equity” have enhanced the value of that property during the marriage.
Second, the court will find the dollar value of the marital property by, e.g., admitting expert testimony related to valuations of businesses, real estate appraisals, Nada or Kelley Blue Book estimates on vehicles, private resale or “garage sale” values on household furnishings, etc.
Third, the court will consider various factors to determine how to fairly or equitably distribute marital property based on the parties’ circumstances and contributions, including length of marriage, the age and health of the parties, their work history, education and earning capacity, other amounts and sources of income (e.g., projected child support and alimony awards in the divorce), division of marital debt, etc. For instance, in long-term marriages, marital property is usually divided equally. Whereas, in short-term marriages, the court may put the parties back into the positions they were in before the marriage. In either case, the court is trying to untangle the parties’ finances so that they can walk away from the marriage at a comparable standard of living.
Get Legal Help with Property Division in your Divorce
At HOYER LAW, we are experienced and thorough in finding (sometimes hidden) property using the various discovery tools available, ensuring that the property is preserved and not “dissipated” (i.e., wasted, sold, transferred, encumbered, etc.) during the pending divorce, making certain that the property is valuated fairly in our client’s favor, and in maximizing our client’s property award so as to minimize some of the devastating economic impact of divorce. Property division evaluations can be complex.
If a party wants to keep certain property, we can propose creative work arounds to offset the equity in another property while still “equalizing” the property awards to both parties. Offsetting can get tricky when dividing, e.g., the parties’ equal interests in retirement benefits that accrued during the marriage and, say, equity in the home. When withdrawing cash from a retirement account, e.g., 401(k), using something called a Qualified Domestic Relations Order (or “QDRO”), which is meant to minimize some of the early-withdrawal penalties and income taxes, there are still penalties and taxes. And if a party wants to remain in a marital home and they qualify to refinance the home out of the other party’s name to remove their liability on the mortgage, there are refi. lender appraisal and financing costs, but the party who is walking away from the home is also avoiding the costs of sale, such as the 7% realtor fees. In any case, you need a knowledgeable and skillful attorney to ensure that there’s a true “dollar-for-dollar” exchange when engaging in “horse trading” with the other party (i.e., offsetting equity in one property for other more desired property). Contact an attorney at HOYER LAW today for peace of mind.