In terms of marital property, Hawaii is an equitable distribution state. Assets, and debts, must be divided in such a way so the marriage dissolution is not an unfair financial burden for either party.
In this context, “equitable” is usually synonymous with “equal.” That’s definitely the presumption under Hawaii law. However, such a division is not always appropriate. So, the judge looks at a number of factors when dividing the marital estate. Additionally, there is a threshold matter, which is separating marital and nonmarital property. Despite appearances, this division is not always easy.
Since most marriage dissolutions settle out of court, a Kona divorce lawyer must be very mindful of all these things when crafting a property division settlement. At the same time, your attorney’s top priority is arranging a settlement which upholds both your legal and financial rights.
Classifying Marital Property in Hawaii
On the surface, it is easy to separate marital and nonmarital property. Everything is marital property, unless it was acquired before marriage or by gift. However, the division is not as easy in practice, especially after a long marriage.
Property easily becomes commingled, and the result often resembles a Gordian knot. Consider the following example.
Assume Husband owns a rent house before his marriage to Wife. She uses a wedding gift from her parents to make improvements to this rent house. At the time of marriage, the house is clearly Husband’s separate property. Depending on the specific facts, that ownership could change.
If the rent house was so dilapidated that it was unrentable before Wife’s cash infusion, the house might be her separate property. On the other hand, if Wife’s investment amounted to light fixtures and a fresh paint job, the house probably still belongs to Husband. If the gift funded some substantive improvements, like a new HVAC system, the house might be community property.
There is also the matter of the rentals. Generally, the increase from nonmarital property is also nonmarital property. So, past and future rental income could belong to Husband, Wife, or both of them.
This same issue comes up regarding marital and nonmarital debts. For example, perhaps our hypothetical Wife used funds from her paycheck (marital asset) to pay off a student loan she took out before the marriage (nonmarital debt).
Factors Affecting Property Division
Once property is classified, the marital property, and only the marital property, must be equitably divided. Some legal factors to consider include:
- Duration of the marriage,
- Relative earning capacity of each spouse based on things like age, health, and education level,
- Economic and noneconomic contributions to the marriage,
- Custody provisions for minor children, and
- Any agreements between the parties.
That last factor may be the most important one. Generally, Hawaii County judges approve any agreed property division plan, as long as it is not blatantly one-sided and each spouse had a roughly equal voice in the process. As a practical matter, it’s difficult to overturn property agreements in Hawaii if each spouse had an independent Kona divorce lawyer.
There are some economic factors as well. Statistically, divorced women are three times more likely to live in poverty than divorced men. That’s certainly not true in all cases. However, it is an additional factor to consider.
Kona Divorce Lawyers and Property Settlements
Typically, a retirement account and the family home are the two largest assets in divorce cases. These two things are also the most difficult items to divide. So, Kona divorce lawyers often tackle these large items first. Then, in many cases, the remainder of the property division falls into place.
Retirement accounts are tricky not just because of their high dollar value. An IRA or 401(k) also has an emotional value. It represents financial security and the fruits of savings. Division is even more delicate if the account owner has been married before and the account has already been split once.
Many times, Kona divorce lawyers propose an offset. For example, the account owner might agree to pay more alimony in exchange for a larger share of the retirement account.
Nonowner spouses must also be mindful of their options in these cases. Typically, they can either take a cash disbursement, roll the money into another account, or do nothing and take a share of distributions when the account owner retires. All these options have pros and cons.
As for the house, it is often in the best interests of the children for them to remain in the family home. However, the nonresidential parent may have a substantial equity share, especially after a long marriage.
An owelty deed of partition may be the answer. The residential custodian keeps the house, and the nonresidential parent obtains a lien for his or her current share of the equity. Later, when the residential parent sells the house, the nonresidential parent cashes in the lien.
Work with Thorough Divorce Attorneys in Kona
Marital property division is often the most complex part of marriage dissolution litigation. For a confidential consultation with an experienced Kona divorce lawyer, contact Olson & Sons, L.C. Convenient payment plans are available.