One issue that must be determined by the court in every dissolution of marriage (divorce) proceeding in the state of Missouri is the division of property and debts. "Property" includes anything of value owned by a person, such as a home, vehicle, bank account, retirement account, business interest, and even household goods, furniture, and personal effects.
Missouri is not a community property state. Rather, under current Missouri divorce law, the court is required to determine whether each item of property is either "marital" or "non-marital," as described below. After the court has determined the character of the property, the court must then set aside to each spouse their non-marital property. The marital property is then divided as the court deems equitable, after consideration of the economic circumstances of the parties, contributions to the acquisition of the marital property, the value of each party’s non-marital property, conduct during the marriage, and the custodial arrangements of the children. In most circumstances, property and debt is divided equally, but there are factors that can justify an unequal division. Property and debt divisions are final, and may not be modified.
Below you will find information about property division in a Missouri divorce. We encourage you to speak with a qualified divorce attorney if you have questions about property division in your divorce. Especially if you are negotiating a divorce settlement or completing an uncontested divorce, an experienced attorney can help you determine what is fair in your case to protect you financially in the long run.
"Marital" property is all property acquired by either spouse between the date of the marriage and the date of the divorce, except as outlined below as non-marital property. Note that it is not relevant who owns legal title to a particular item of property, which spouse actually purchased the property, or whether it is jointly titled or owned. If the property item came to either spouse at some point during the marriage, and is not excluded as indicated below, the property is marital. Also, non-marital property can have a marital component in some circumstances. All property that is determined to be marital by the court will be divided in a "fair and equitable" manner, which in most, but not all, cases means equally.
Non-marital property can also be converted into marital property. This can happen by gift to the marital estate or by joint titling. Simply commingling, or mixing, marital and non-marital property does not, by itself, convert non-marital property in to marital property.
Prior to any division of assets or debts, the court must determine the value of the "marital estate." The marital estate is basically the net worth of the marriage, meaning the total value of all marital property less the total of marital debt. The resulting number is the marital estate value and, when the property is divided, it will be based upon a division of the net marital estate. This means that the court does not necessarily divide each and every piece of property. Rather, the court determines the value of the entire marital estate, then determines what dollar value each spouse should receive, and then awards sufficient property to each spouse to equal that value. Sometimes, a cash payment will be paid by one spouse to the other to "equalize" the marital property division.
Although in the majority of cases the marital estate is divided equally, Missouri law describes several factors that the court must consider in dividing property, and the court has authority to divide the marital estate in any proportion that it sees fit, based on the following:
The court is required to divide marital debts in such proportions as the court deems just after considering all relevant factors. Note however that the court's division of debts is only effective between the spouses. It has no bearing on creditors. This means that regardless of what a divorce decree orders, a creditor can collect a debt from whomever is a signatory on the loan, or is on the account, etc. If a spouse is required to pay a debt that was ordered to be paid by the other spouse, that spouse must seek recourse against the other spouse in the family court, usually through a contempt proceeding.
With regard to marital real estate, the court will either award the marital home to one of the spouses or order it sold. The division of the marital home (or other real estate) is based upon the division of marital equity in the property. Equity in real estate is the value of the real estate minus the total mortgage debt (or other debt such as liens, home equity lines of credit, etc.) If the court awards real estate with marital equity to one spouse, that spouse will have to "buy out" the other spouse's share of the marital equity either by direct payment or award of another asset to compensate for the equity award. If the real estate is ordered sold, the spouses will share the net proceeds (or loss) in whatever proportion the court deems just.
Note that it is possible for marital real estate to have both non-marital and marital components. If this is the case, the non-marital portion of the equity must be determined and set aside to the appropriate party before division of the marital portion.
Transfer of legal title in the division of real property is a simple matter of the transferring party signing a quit claim deed, which removes one party's name from the title. However, transferring the mortgage or other debt is a more complicated matter. As discussed above, the court does not have the authority to alter contracts between creditors and the parties to the case. So, in order to remove a spouse's name from a mortgage or other debt, that debt will have to be refinanced, assumed, or some other arrangement must be made with the creditor directly.
Retirement accounts — such as pensions, 401(k), 403(b), IRAs, and other qualified plans — will be divided to the extent that they are marital. It is not relevant that the account is owned by one spouse and all contributions to the fund are by that one spouse. The other spouse still has a marital interest in the account to the extent value was added or acquired during the marriage. Any value in the account that was accrued before the marriage is not subject to division, nor is any value accrued after the marriage.
The division of a retirement account is usually accomplished by the use of a Qualified Domestic Relations Order (QDRO), which is a separate order from the divorce decree. The QDRO directs the administrator of the retirement account to divide it according to the court's order. When retirement accounts are divided this way, the spouse receiving the award will receive a retirement account identical to the account that was divided at the value assigned by the court. That receiving spouse will be bound by the same rules as the original plan, and will not be allowed to cash out the account without the same tax consequences or penalties that apply to the original account.
Division of retirement accounts by QDRO is often a lengthy and expensive process, and is usually used for accounts with significant value. Another method to account for a spouses share of marital retirement accounts would be avoid division of the retirement fund, and award the other spouse another marital asset in exchange.
Similar to real estate, the division of vehicles mainly deals with marital equity in the vehicles. Equity is the value of the vehicle minus the amount of the loan. The court will look at the marital equity in any vehicles, including cars, boats, ATVs, recreational vehicles, motorcycles, agricultural vehicles, or any other type of vehicle. Transfer of title is done by one party signing an affidavit of gift, which removes a person's name from the title. However, similar to real estate mortgages and other debts, if there is a loan on the vehicle, the Court does not have authority to order a creditor to remove a person's name from the loan. In order to transfer a loan, the debt will have to be refinanced, assumed, or some other arrangement must be made with the creditor directly.
The court can divide the household goods and furnishings in any manner that it sees fit. However, in practice, household goods and furnishings are usually divided by agreement between the parties, and this issue is not often litigated, except in situations where there are items of significant value. The reason for this is that while household property may have great value to the owners, it is difficult to accurately value and include in the marital estate. However, in the event that the parties cannot come to an agreement, the court will make a division based on the best information it has available.
Wedding rings are generally considered to be gifts that are conditioned upon marriage. Once the marriage occurs, the wedding ring belongs to the spouse that received it, and it will be deemed to be non-marital property. There is no valid claim for return of a wedding ring in most circumstances in a Missouri divorce. The same usually applies to jewelry given as a gift during the marriage, such as anniversary or birthday gifts.
Other types of property that should be considered in calculation and division of the marital estate include, but are not limited to, the following:
The items listed above may or may not constitute marital property, depending on the facts of the case, and special rules apply to these special items.
For more information regarding the division of property and debt in divorce, contact experienced Kansas City divorce attorney Mark A. Wortman.