How do assets and debts get distributed when going through a divorce?
In Kansas, courts divide assets and debts pursuant to the phrase “Equitable Division.” It is important to keep in mind that “equitable” does not always mean equal, but in most cases it usually does.
One of the first steps that your attorney will take when beginning the process of making an equitable division of property, is to determine all the assets and debts both parties have. In Kansas, how property or debt is titled is not dispositive and even if, for example, the home you and your spouse live in is titled solely in your spouse’s name, you are still entitled to a determination of the amount of equity in that home that was accrued during the length of your marriage and then that amount is subject to an equitable division. Per the Johnson County Family Law Guidelines, all property owned by married persons, whether acquired by either spouse before or after the marriage, and whether held individually or by the spouses in some form of co-ownership, becomes marital property when one spouse files for divorce, separation, or annulment.
An important tool used when determining all the assets and debts of the parties includes the “Discovery” process. Discovery is the legal term used to describe the process used to obtain information that will be pertinent to your divorce or separation. Typically, Interrogatories and Requests for Production of Documents are sent to the opposing party, or his or her attorney if he or she is represented. Interrogatories ask a series of questions that relate to all the issues in your particular case. Some attorneys will send out standard discovery that is not tailored to your specific case. I think this is a bad practice and believe the discovery should be tailored to be as concise and efficient as possible. The Interrogatories will be designed to lead to discoverable information. We will ask for information regarding bank accounts, credit accounts, loans, real property, personal property, retirement and investment accounts, etc. until we are sure we have a grasp on each asset and debt that the other party has any ownership of.
Requests for Production of Documents will also be sent out. As you can imagine, through this type of Discovery we will be asking for physical objects, whether it be a bank statement, an item (personal property), or the request for the opposing party to make real property available for inspection. Like mentioned above, these requests will be tailored to your case and only requests that are applicable to your situation will be made. Requesting documentation relating to all bank accounts, retirement accounts, investment accounts, mortgages, property appraisals, personal property, etc. allows your attorney to get a full picture of what is referred to as the “marital estate.” Only after reviewing all the produced Discovery, will your attorney be able to start deducing what an equitable division of the marital estate looks like.
Although courts can divide ALL property owned by either spouse, the court does differentiate between marital property and individual property when determining how the parties’ property will be divided. The discovery process will help specify what is considered marital property (property acquired during the course of the marriage) and individual property (property you or your spouse owned before the marriage, property set aside to a particular party in a premarital agreement, or inherited property). During the discovery process, we will request records that show the premarital value of an asset and the value of the asset as of the date the Petition for Divorce was filed. If the asset and/or debt was accrued during the course of the marriage, there will be no premarital value, usually. If there is some premarital value to an asset, that amount will be credited to the spouse who had the premarital value invested in the asset, and only the amount of equity/growth in the asset that accrued during the marriage will be divided among the parties.
Once Discovery is sent, the opposing party has a set time that they must respond to your Interrogatories and Requests for Production of Documents or object on several bases. Once the answers and responses are received by your attorney, he or she will begin preparing an “Asset Debt Spreadsheet.” This is another tool attorneys use to determine how a couple’s assets and debts will be distributed at the conclusion of the marriage. This spreadsheet will include a column for each asset and each debt of both parties. Any premarital value of an asset will be deducted from the marital amount. For real property, an appropriate amount for closing costs will be deduced (rather the real property is being sold or not), and any amount mortgaged against the property will be deducted as well. The same process is used for personal property, most commonly being vehicles. Retirement and investment accounts are calculated by taking the value as of the date of filing the Petition for Divorce, deducting any premarital value, and then further deducting the account by an appropriate tax deduction if the account will be subject to taxation upon its distribution. All of the parties’ debts are also included on this spreadsheet and any other assets the parties have.
Finally, the parties and their attorneys must decide what assets and what debts go to which party. Sometimes assets are sold and proceeds are split. Other times, one party maintains a certain piece of property or takes on a certain debt. Once this is determined, the value of each asset and debt is placed in a column labeled either “husband” or “wife” and each spouse’s column is totaled up. If, after doing all of the totaling, wife has $100,000 worth of marital property and husband has $50,000, then the two numbers are subtracted from one another ($50,000) and divided by two ($25,000) and the party with the lesser amount of equity, here, husband is awarded the $25,000 as an equalization payment. As you can see, that allows wife and husband to walk away from the marriage with the same amount ($75,000) in addition to any asset/debt they were assigned.
This is a general description of how assets and debts are divided in Kansas. Each case is different and there may be some variation on how your individual assets and debts are divided. Give our firm a call today, and we can walk you through the process and answer any lingering questions you may have.
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