What is an equitable division of property? Is equitable always equal? Why don’t they just say equal?
It is a common misunderstanding that all of the community property will be divided equally. However, this is not the case. In a divorce, any community property you and your spouse have acquired shall be divided equitably between both of you. Equitable does not mean equal. The court often looks to what is a fair division, also known as equitable. The court is going to look at a number of factors in making the determination of what a fair division is.
Let’s look at an example.
Husband has a retirement account he acquired prior to the parties getting married. Husband used the funds from that account to purchase a home after the parties were married. Husband purchased the house in cash in full. After the purchase was made, Husband added Wife’s name to the deed. The parties were married for less than 1 month at the time. The housing market boomed, and the value of the house rose to $200,000 more than the purchase price. Husband immediately sold the property within a year of owning it and made $200,000.
While the parties owned the property, Wife never contributed to any payments on the home nor any improvements. The house was owned outright and did not require any renovations. The $200,000 is now sitting in an escrow account.
The parties are now divorcing. Wife makes the claim she is awarded half of the $200,000, as her name was on the deed to the house. Husband makes the claim that the house is his sole and separate property, as he purchased it with his separate retirement account from prior to the marriage. What arguments does Husband have?
There is a presumption that if a spouse’s name is added to the deed of a home, it was a gift to that spouse, and therefore community property.
Husband would need to overcome that presumption by proving that it was not his intent to gift the home to Wife. Unfortunately, this will be very difficult to do. Most likely the court will find that the property is community. Thus, Husband will need to make the argument that the proceeds should be equitably divided, not equally.
Husband will need to analyze a few factors in order to make the argument that the proceeds should be divided equitably. First, Husband will need to show that the parties were not married for a long duration, as well as owned the house for a short period while they were married. Husband needs to show this, because this shows that Wife had little opportunity to contribute to the house. Husband also needs to show what other property and debts the parties have. Is Husband taking on a large portion of debt that Wife will not be taking on? Is Wife walking away without any assets? These items will need to be assessed, as they can be a factor in what portion, if any, Wife will get of the proceeds.
Last, Husband needs to show the court that Wife did not contribute to the house. He needs to show that community funds were not used for the home or any improvements on the home. If Husband is able to present evidence that supports those factors, it is likely that the Court may award him more from the proceeds or even all of the proceeds.