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Property & Debt for Married Couples

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Property & Debt for Married Couples | Property & Debt for Unmarried Couples

Property & Debt for Married Couples

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What is marital property?

Anything earned or bought during the marriage. This commonly includes houses, land, vehicles, money, retirement accounts, pensions, household goods, furniture, snowmachines, four-wheelers and each spouse's personal property. In divorce and dissolution cases, people often mean property AND debt when they refer to property.

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What is not included as marital property?

Generally the following are not considered marital property so the court will not divide them, unless one spouse did something that changed the premarital item to marital:

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What is marital debt?

Any money owed to a business or person that happened during the marriage. Some common types of debt in a divorce or dissolution case include credit card debt, medical bills, mortgages, car loans, or personal loans.

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What's the process for handling property and debt in a divorce or dissolution?

There is a 3-step process:

  1. identify the marital property and debt
  2. value the marital property and debt
  3. divide the marital property and debt.

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What does "identify the marital property and debt" mean?

You must identify marital property/debt from separate property/debt. Marital property/debt will be divided between you and your spouse as part of the divorce; separate property/debt will not be divided.

The general rule is that marital property and debt is any property or debt acquired during the marriage for the benefit of the marriage. However, just because a party acquired property before marriage does not necessarily mean that it won't be considered marital property. A spouse's premarital separate property can become marital when a married couple demonstrates an intent, through their words or actions during marriage, to treat one spouse's separate property as marital property. Gifts and inheritances are generally separate property, although gifts for the benefit of the marriage, such as a dishwasher, may be considered marital property.

"During the marriage" generally means from the time of marriage until the time of separation.

People often disagree about what property/debt is marital or how long the marriage lasted before separation. It can be helpful to talk to a lawyer about what property is marital and can be divided and what is the appropriate separation date.

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What does "value the property and debt" mean?

There are two things to keep in mind when valuing property and debt:

  1. property must be valued at its "fair market value," which generally means Craigslist value or the garage sale value, and
  2. the value of both property and debt should be set as close to trial as possible.

Remember, your property and debt worksheet will probably go through a couple of drafts as you try to figure out how to divide the property. You should be able to value everything pretty accurately during this pre-trial period, but just before trial you may end up changing some values if, for example you have retirement accounts that fluctuate as the stock market changes.

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What is a fair and equitable division of property?

Property and debt must be divided in a fair and equitable way.

For a marriage of some length, "fair and equitable" often means 50-50. However, after considering the factors listed below, the court may decide that it is "fair and equitable" to give one party more or less than 50%.

For short term marriages, there may be no need to divide anything if the spouses haven't accumulated much of value or taken on debts. In some cases, it is appropriate for each spouse to keep what is theirs. But in others, they may have bought expensive items together or taken on debt and need the court to divide their property and debts.

How to divide the property and debt can create disagreements between the spouses. Talking to a lawyer about what is a fair and equitable division can help you understand what to expect in your case.

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What factors does the judge use to decide what is a fair and equitable division of the property?

The judge considers the following factors, which are listed in AS 25.24.160(4):

(A) the length of the marriage and the parties' station in life during the marriage;

(B) the age and health of the parties;

(C) the parties' earning capacity, including their educational backgrounds, training, employment skills, work experiences, length of absence from the job market, and responsibilities to take care of children during the marriage;

(D) the parties' financial condition, including the availability and cost of health insurance;

(E) the parties' conduct, including whether either has unreasonably spent or sold marital assets;

(F) the desirability of awarding the family home, or the right to live in it for a reasonable period of time, to the party who has primary physical custody of children;

(G) the circumstances and necessities of each party;

(H) the time and manner of buying or receiving the property in question; and

(I) whether the property can produce any income and its value at the time of division.

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How do I figure out the division when some items can't be divided?

Some items can easily be divided like household goods (spouses can split the books or dishes). But some items can't be divided like a house or a car. In those situations, you need to figure out the value and divide the value.

Step 1: List all of the marital property items and debts and include their values. Use Craigslist values or amounts lists on accounts.

Step 2: Figure out the total value of all of the marital property and debts, by adding up:

Step. 3: Once you know what is ½ the value of the property and debt, see if you can divide up the individual items to equal that amount. That list could be what you ask the court to give you and the remainder could go to your spouse.

One spouse may owe the other an “equalization payment” or lump sum of money to make the net amounts equitable.

You can fill out:

Remember, your property and debt worksheet may go through a couple of drafts as you try to figure out how to divide the property. You should be able to value everything pretty accurately during this pre-trial period, but just before trial you may end up changing some values if, for example you have retirement accounts that fluctuate as the stock market changes.

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Can one spouse's retirement account be divided?

Often the most valuable assets in a marriage are retirement accounts if one or both spouses have them. This includes retirement accounts, military and government pensions, 401(k)s , IRAs, TSP accounts, even if only one spouse contributed or the account is through an employer and the person is not yet retired. The court can divide the marital portion of the retirement account if the person started contributing to or earning the retirement before the marriage. The court can also divide a future interest in the marital part of a retirement account if the spouse isn't old enough yet to retire.

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How do you figure out the marital portion of a retirement account?

Figure out:

For example:

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How does the court divide retirements and pensions?

Once the parties agree or the judge decides that a retirement account or pension should be divided, the court will usually issue a Qualified Domestic Relations Order (QDRO, pronounced “Kwah-dro”). This separate order contains special language for the retirement plan administrator that allows them to pay a portion of the money directly to the former spouse. This is usually stated as a percentage or a specific dollar amount.

QDROs are often complicated and require specific language. If parties want to divide retirement accounts, it is a good idea to agree on a percentage or amount and then ask a lawyer who specializes in QDROs or the retirement plan administrator to prepare the order. Parties should also discuss who will pay for valuation of the account and/or preparation of the QDRO.

Most judges will not finalize the divorce until the QDRO is signed.

You can learn more about QDROs and dividing retirement benefits.

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How do you value a home?

The most accurate value for a house is to get an appraisal. Some people cannot afford appraisals so the spouses can agree to a specific value, or some choose to use the property tax value, although that is often lower than the market value.

It is helpful to figure out how much home equity there is when people still owe a mortgage. To figure out the home equity, start with the market value and subtract the total mortgage and loans owed (home value – total mortgage = equity).

For example if the home value is $250,000 and the total mortgage is $237,000, the equity is $13,000.

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What are the options to deal with a marital home?

There are different options to deal with a marital home in a divorce.

Both options may involve figuring out who will move out by specific dates and how to move the property (furniture and personal items) they are taking with them from the divorce.

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What should you think about if you need to refinance a home?

Determine if you qualify to refinance the loan into your name. You need to have enough income to cover the monthly payments and a good enough credit score for the lender to loan you the money.

It is helpful to start the refinance process as soon as possible because it can take some time and require coordination between both spouses.

It can take some time to refinance a loan because it involves:

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Does a quitclaim deed help me get my name off a mortgage?

No, a quitclaim deed only removes your interest in the real property, but not your responsibility for paying the mortgage if it is in your name. If you quitclaim your interest in property, it means you cannot sell it or claim any interest in it. The quitclaim does not affect the mortgage or any loans on the property at all. So if your name is still on the mortgage and you quitclaim your interest in the property, you still are responsible for paying the mortgage. The only way to get your name off the mortgage is to refinance it into someone else's name like your spouse.

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Are short marriages treated any differently for property and debt division?

Short marriages often result in each spouse keeping their own possessions and debts as if they had never gotten married. This is common with marriages of 2 years or less if the couple did not buy a house together or save any significant money. However sometimes even in short marriages the spouses have bought expensive items like a home or taken on a lot of debt that needs to be divided.

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How do I find out what property or debt exists?

Civil Rule 26.1 PDF, and other discovery tools can help you to get the information you need to make your proposal of how to divide the property and debt.

Within 45 DAYS of the defendant filing the answer, both spouses are supposed to tell each other tell each other about all the property and debt you might have. Fill out and give your spouse:

Each spouse should give each other releases to bank accounts, employee benefit information, retirement accounts, etc. Fill out:

You do not file this information with the court, rather you exchange it with one another. Keep a copy for your records. This information is to help you prepare a fair and equitable property and debt division for the divorce.

View video: Disclosure and Discovery Play Disclosure and Discovery Video

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Are there other ways to find information about the marital property and debt?

There are many other formal rules of discovery to help get information from the other party such as interrogatories. In divorce cases, disclosures of information required by Civil Rule 26.1 usually is all that is needed, but sometimes parties do use the mechanisms set out in Part V. of the Civil Rules PDF, which covers Rules 26-37.

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What if my spouse won't give me the information?

If your spouse does not give you information about the marital property and debt, you may file a Motion To Compel Rule 26.1 Disclosure and/or Release asking the court to order your spouse to provide you with specific information by a specific date. For example, your motion can ask the court to order your spouse to provide you with their 3 most recent paystubs, tax returns, bank statements, retirement plan statements, or whatever specifically you ask to see to understand the marital finances. Please see the motion practice page for more information on filing motions.

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Can a lender/creditor require payment of a debt even if a court order says the opposing party has to pay in the divorce?

Yes. When both spouses are listed on a loan, mortgage or credit card, each individual listed makes an agreement with the lender/creditor (bank, credit card company, mortgage company) to be responsible to pay that debt. If nobody pays the debt, the lender or creditor can “go after” one or both parties to receive payment, even if a court order says specifically that one party is responsible to pay a joint debt. Regardless of what the court order says, there is a contractual relationship between the lender/creditor and the parties with the debt.

The spouses may need to refinance the loan to remove a name to make it clear that person is not responsible for the debt any more. If the opposing party isn't cooperating with the refinance, you can file a motion asking the court to order the opposing party to refinance the loan.

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After the case is over, can I change the property and debt division?

It is very difficult to change the outcome of final property and debt decisions in a divorce or dissolution case. Once the court order divides and distributes property and debt to a specific person, that person may take action that is very hard or impossible to reverse. For example, if the court awards a spouse the house from the marriage, he may sell the house. At that point, it would be impossible to get the house back if the other spouse thinks something different should have happened with the house. Also, the court could order one spouse to receive a sum of money from the marriage. The receiving spouse may spend that money and not be able to get it back.

If you want to ask the court to change a property or debt division order, you can file:

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Where do I find out more information about different stages of a case or specific topics?

This website has forms and information for all of the stages of the case. You can also find information about specific topics such as divorce, custody and parenting, child support, paternity and Qualified Domestic Relations Orders - dividing retirement benefits.

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Can the judge divide marital property if one spouse has filed for bankruptcy after the divorce case has been filed?

The divorce judge cannot divide the marital property and debt, unless the bankruptcy court gives its OK first. Federal bankruptcy law requires that court cases involving property belonging to the bankruptcy estate be stopped until the bankruptcy case is worked out. This is called an “automatic stay” and it applies to the marital property and debt division in a divorce case. The judge in the divorce case cannot divide the marital property and debt until the stay is lifted when:

Before the stay is lifted, the divorce judge can grant the divorce and decide child custody and child support.

Filing for bankruptcy and divorce are serious actions. You should talk with an attorney to figure out how these cases impact each other.

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Property & Debt for Unmarried Couples

Can the court divide people's property that lived together, but never married?

Yes. The court can divide the property of people who lived together in cohabitation or were domestic partners, but who are not married. However, unmarried couples need to file a separate civil case to deal with dividing their property and debt. There are no court forms for filing a complaint to divide property of unmarried couples who split up. There are different legal theories that may apply depending on the specific situation in the relationship. You should talk to an attorney about how to draft up the papers to start the case, to understand your legal rights and obligations, and to consider what legal arguments to make in your case.

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Should an unmarried couple have a written property agreement?

Yes. In an ideal world unmarried couples should have a written property agreement that states who owns what, how they plan to pay for specific items and property, and what should happen to the property if their relationship ends. This can help avoid a serious and possibly expensive battle over how to divide the property if and when they split up. Without a written agreement, it can be hard to figure out how they intended to own or pay for the property they have.

There are three main categories of property to be considered in an agreement:

  1. property that comes with documented evidence of who owns it, such as real estate, vehicles, stocks and bonds, and bank accounts
  2. income, and
  3. personal possessions.

If one party of an unmarried couple dies, the surviving party does not automatically inherit any of the deceased partner's property. The result might be different if the deceased partner had a will or other legal document (joint tenancy agreement, living trust, etc.) which stated that the survivor is to inherit some or all of the deceased person's property.

If you are in an unmarried relationship and want to prepare a written property agreement, you can talk to an attorney or find information on the Internet.

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How does the court divide the property and debt of an unmarried couple?

The court will determine the parties' express or implied intent when dividing property from the time the parties were together. In other words, the court will want to see evidence about how the parties' actions and/or words (either written or spoken) show who owned different property and assets and who is to be responsible for any debts.

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What does the court look at when it tries to figure out the intent of the parties?

Some people who live together but don't get married choose to have a written agreement that states who owns what and whether you want to keep all of your property separate or share some or all of it. The court will consider such an agreement in figuring out the parties' intent when dividing property when they split up. If you are in an unmarried relationship and want to prepare a written property agreement, you can talk to an attorney to help you write an agreement or find information on the Internet.

However, most people who live together do not have written agreements. The court will look closely at the facts in each case to figure out what the parties, expressly or impliedly, intended. In such cases, the court will consider several factors to figure out the parties' intent. For example, have the parties:

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Will the court use the same factors to divide unmarried couples' property that are used in a divorce?

No. To divide the property and debt of unmarried people, the court looks at the parties' express or implied intent. It does NOT try to make sure a property division for unmarried couples is fair and equitable or look at the factors considered when dividing marital property in a divorce.

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Is one party in an unmarried relationship responsible for the debts of the other party?

That depends on how the debt or account where the debt occurs was structured. In most situations, financial responsibility is created by a contractual relationship. For example, if one party applied for and received a credit card and also asked for a courtesy credit card for the other party, only the original card applicant is liable for the credit card debt.

But, you could be responsible for the other party's debt if you both agreed to be jointly responsible for the debt, or if the couple had registered as domestic partners in a state that legally recognizes domestic partners. For example, if you bought a car or house together and the loan documents state your name AND the other person's name, you are both jointly liable to pay the car loan or mortgage. If both parties jointly applied in writing for, and received credit cards for one account, then both parties would be jointly liable for the credit card debt, regardless of who actually made the credit card purchases.

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Can a lender or creditor tell me to pay a debt if I have a court order that says the opposing party has to pay?

Yes. When more than one party agrees to be responsible for a single loan or debt, the parties are jointly and severally liable. This means the lender or creditor (bank, credit card company, mortgage company) can "go after" one or both parties to receive payment, even if a court order says specifically that one party is responsible for paying a joint debt. This is because when you get a loan or a mortgage or a credit card, you make an agreement with that company that the people on that loan or account will pay any debt. So the lender or creditor cares only about getting someone to pay. Regardless of what the court order says, there is a contractual relationship between the lender or creditor and the parties who had the debt.

To avoid that situation, if you have a court order saying you are not responsible for a debt, sometimes you can refinance the loan to get your name off to make it clear that you are not responsible for the debt any more. If the opposing party isn't cooperating with the refinance, you can file a motion asking the court to order the opposing party to refinance the loan.

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Does common law marriage exist in Alaska?

No. Many people believe that if you are in a relationship with a person for a long time, you're automatically married – that you have what is called a common law marriage with the same rights and responsibilities of a couple who has been legally married. This is not true in Alaska because common law marriage is not recognized here.

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Rev. 8 April 2019
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