Got Half? Marital Property

In any action for divorce, it is necessary to make a property settlement. Traditionally, it is believed that the couple will split their assets evenly. But is this always the case?

The law in several states has been trending towards the adoption of a “community property rule.” In 2018, there are nine such states. The reason for the trend is that it is very difficult for courts to decide what is and is not property that should be divid-ed in a divorce. Community property rules attempt to make this process easier by pre-supposing that all assets and debts acquired during the course of the marriage are split 50/50 with exceptions for student loans, personal injury, or misdeeds. However, most states including South Dakota, are “all property” or common law property states.

In South Dakota, the statute controlling the division of property is SDCL §25-4-44, which reads:

When a divorce is granted, the courts may make an equitable division of the property belonging to either or both, whether the title to such property is in the name of the husband or the wife. In making such division of the property, the court shall have regard for equity and the circumstances of the parties.

This statute is very general in nature and has been defined over time in case law that has changed little since the 1950’s.

If South Dakota were a “community property” state, a judge would be presumed to consider a 50/50 split in property obtained during the course of the marriage. However, South Dakota is an “all property” state that the Court de-scribes as, “[a]ll property is subject to division in divorce action regardless of its origins or title.” Kolbach v. Kolbach, 877 N.W.2d 822, 2016 S.D. 30..

Property in a divorce action is divided into marital and non-marital property. How that property is divided is not always as equal shares to both parties.

The awarding of property or money in a divorce action is not a problem in fractions and should not be treated as such. The problem is what is a fair and just award considering all of the material factors.
Kressly v. Kressly, 87 NW 2d 601 – SD: Supreme Court 1958.

In making an equitable division of property, a trial court is not bound by any mathematical formula but is to make the award on the basis of the material factors in the case, having due regard for equity and the circumstances of the parties.
Fink v. Fink, 296 NW 2d 916.

In making an equitable distribution of property, the Court will consider several factors that have not changed over time.

Under the language of our statute and the caselaw, it is not important whether the court creates “marital” and “nonmarital” estate pots or whether it places all of the property of the parties, whether individually or jointly held, in one pot. What is important is that the court, before it sets aside certain properties as “nonmarital,” consider the seven principal factors we have repeatedly held must be considered in making an equitable property division. Voelker, 520 NW2d at 907. The factors are: (1) the duration of the marriage; (2) the value of the property owned by the parties; (3) the ages of the parties; (4) the health of the parties; (5) the competency of the parties to earn a living; (6) the contribution of each party to the accumulation of the property; and (7) the income producing ca-pacity of the parties’ assets. Id. at 9078 (citations omitted).
Billion v. Billion, 1996 S.D. 101, ¶ 20, 553 N.W.2d 226, 232.

One factor curiously missing from those cited in Billion is “fault.” In several states a person is barred from alleging fault as a reason for seeking a divorce and determining a settlement of property. South Dakota is not a “no-fault” divorce state and fault is not considered with regard to property settlement, except in certain circumstances. “Except in certain limited circumstances, fault is no longer to be considered in making a division of marital property. SDCL §25-4-45.1. The only time fault is considered is when the actions of one party either inhibit or diminish the value of the property of the other.

Assuming no fault can be assessed, property obtained during the course of marriage may be considered non-marital when,

[o]ne spouse has made no or de minimis contributions to the acquisition or maintenance of an item of property and has no need for support that a court set it aside as non-marital property.
Kolbach v. Kolbach, 877 N.W.2d 822, 2016 S.D. 30.

This means that despite the fact that one spouse has made little or no contribution to the payments on the house or done anything to upkeep the property, a Court may still consider his or her need for support in determining how to split the equity. However, if the spouse did make contributions or increased the value of the property the Court in Halbersma v. Halbersma, 2009 S.D. 98, 775 N.W.2d 210 ruled, “When the value of separately held property increases due to the joint efforts or contributions of the spouses, the circuit court should make an equitable division of that increase in divorce.” Examples of contributions include maintenance, upkeep or even caring for children while the spouse works on the property.

What is clear from case law is that the Court can and will consider all as-sets of parties in making an equitable distribution and that equitable doesn’t always mean equal. When seeking a divorce for a lengthy marriage or one with sizable or complex assets it is always advisable to seek the help of knowledgeable attorney well versed in divorce law.

If you need help navigating the complexities of a divorce call the attorneys at Wilka and Welter for a no cost consultation regarding your situation.

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