Ohio Divorce: Who Gets the Silverware When the Marriage Goes South?
This article is another in a series of articles about different aspects of divorce in Ohio. It is meant to provide meaningful information and explain the law. Here, I will explain how property is divided in divorce in Ohio.
First, it is important to clarify that under Ohio divorce law, “property” includes just about everything you could think of, including, but not limited to, houses and other real estate, IRAs, 401ks, other retirement accounts, stock investment portfolios, automobiles, cash, money in bank accounts, businesses, shares/interests in businesses, debts, etc. All of these things have to be awarded to one spouse or the other (or divided, where appropriate), with each spouse generally receiving roughly half of the total value of the marital "pot." Now, lets back up and explain what that means.
First, each item of property owned by either spouse must be classified as “marital,” “separate” or “mixed.” This classification is the first step in property distribution.
Marital property includes property acquired by either spouse during the marriage, as well as income and appreciation generated during the marriage from property owned before the marriage by one party (though only if the income or appreciation is the result of a monetary, labor, or other contribution from either spouse, as opposed to simply being “passive” income or appreciation).
An example of marital property is a car you purchase during the marriage (though see below for a twist on this example). It does not matter if the car is titled in your name only; it is considered marital property regardless, because it was acquired during the marriage. That is the key. This is an important thing to understand – it does not matter whose name an item of property is in, but rather when it was acquired. Sometimes clients come to me in a panic and say something along the lines of "He transferred our stock accounts into his name only!" or "I just found out she put the new car she bought in her her name only, even though she told me she was putting it in both our names!" If your spouse does either of these things (especially the former), consult a good divorce attorney right away, but for other reasons not related to property distribution. Your spouse transferring something that was already marital into their own only does not affect how that asset is ultimately divided.
Separate property includes (1) traceable inheritances, (2) traceable premarital property (property owned by one spouse prior to the date of marriage), (3) traceable “passive” income and appreciation from premarital or separate property, (4) property acquired after the date a decree of legal separation is filed, or which is excluded from marital properties by a prenuptial agreement, (5) compensation for personal injury or claims for lack of consortium, if traceable, (6) gifts received by a spouse during the marriage, only if they can be proven by clear and convincing evidence to have been intended to benefit only the recipient, as opposed to being a gift to both spouses. In the future, I hope to write additional blog posts explaining the concept of "tracing" and what constitutes a gift to one spouse only.
This can get complicated, and a number of disputes can arise. For example, it is stated above that a car purchased during the marriage is a prime example of marital property. However, it could actually be separate property under certain circumstances. It would be separate, for example, if the money used to buy the car could be traced back to an account one of the spouses had before the marriage (because the money in that account would itself be premarital, and thus separate, property).
Lets say Aunt Milly passes away and leaves John $20,000.00. He opens up a new bank account, deposits the entire amount, and then forgets about it. He marries Sally one year later. A year into the marriage, he decides to buy a used car after remembering that the $20,000.00 had just been sitting there in that account, untouched. He withdraws $5,000.00 and spends it on a car, writing a check from that account to the car dealer for the entire purchase price. That car would be John's separate property because it was purchased solely and indisputably with premarital funds that were his separate property. If Sally tries to take him for all he is worth in a divorce, insisting she is even entitled to half the value of this used car, John's lawyer can obtain (1) a copy of the bank statement for the account for the month in which John and Sally got married (which will reflect a $20k balance, proving he had the money before the marriage), (2) the subsequent bank statements up until he withdrew the $5k (to show that no marital money went into that account), and (3) a copy of the check showing that only premarital money from the account was used to buy the car.
Not to get too crazy, but lets take this a step further. Assume Sally is really mad at John and hires a ruthless divorce attorney who wants to bill her as much as possible and fails to explain to her that it is not worth it to fight over $2,500.00. Sally and her clever (but possessing poor judgment) attorney might argue that John bought the $5k used car as a gift to her only, making it her separate property with John not entitled to any of the value. This would be difficult to prove, and Sally and her attorney will most likely lose this argument and look unreasonable to the Judge in the process since it will cost more than $2,500.00 to fight over this low-value used car in court. John's lawyer might even seek attorney fees for having to defend against such an argument.
Back to the big picture. All the marital property goes into one "pot." Ohio law essentially requires marital property to be divided equally (“50-50”), unless an equal division would be “inequitable" (i.e, not fair). In most cases, marital property is simply divided 50-50, though a separate blog post could be written to explain this in more detail. This means that each spouse should receive a list of marital assets that, when added together, are about equal. For instance, if the only marital assets a couple has are a house worth $100,000.00 with no mortgage and a bank account with $100,000.00 in cash in it, one of them will most likely get the house and the other will get the bank account (though they could agree to split the $100,000.00 and then sell the house and split the net proceeds). If there is only a house and no other assets, the house might be sold and the net proceeds divided, or one spouse could keep it and pay the other spouse half of the equity in the house over time. You get the picture. Each individual asset not not be "split." The spouses simply have to receive the same (or roughly the same) total value. Note that tax consequences of a sale of assets must be considered before you determine what an "equal" division of marital assets really is, especially in high-asset divorces. Courts have a lot of flexibility in how exactly they divide marital property.
Separate property is disbursed to its owner, meaning it is not divided. To add to one of the examples above, if there is a house worth $100,000.00 with no mortgage and a bank account with $100,000.00 in it, which are both marital, but husband also a premarital bank account with a $50,000.00 balance that was untouched during the marriage (we will assume it was not invested, to keep the hypothetical simple), then husband would keep the entire $50,000.00, in addition to either the house or other bank account. Therefore, obviously, if it is possible to argue that certain property is your separate property, it is crucial to do so and to gather all evidence available to support that argument.
Property may also be “mixed,” meaning it is partially marital and partially separate, in which case the marital and separate portions are determined and distributed accordingly, with the marital portion divided and the separate portion going to the one spouse only. For an example, take the $50,000.00 premarital bank account discussed above. If husband and wife deposit another $50,000.00 in marital money into that account, so that it has $50,000.00 of premarital money and $50,000.00 of marital money (and that can be proven, i.e. "traced"), husband would receive $75,000.00 from that account - his original $50,000.00, the separate portion, plus $25,000.00, which is half of the marital portion. Wife would get $25,000.00 - half of the marital portion.
I hope this article has been helpful. However, keep in mind that there are exceptions within exceptions within exceptions, so it is always best to consult a good divorce lawyer about your specific case, and it is best to do so early on in the process.
Alex Durst is a Cincinnati civil litigation attorney and appellate attorney with The Durst Law Firm. Licensed in Ohio, Alex has also practiced in Missouri, Florida, Indiana, California, Nevada, Massachusetts, and Kentucky. Alex can be reached at (513) 621-2500 or firstname.lastname@example.org.