Divorce
Dissolving a marriage is a difficult task, almost always more painful and challenging than building one. It involves separating lives that have been naturally intertwined over the course of the marriage. “The problem of attempting to do justice to parties in a divorce action as to the division of property … is undoubtedly one of the most perplexing situations ever to confront a court.” MacDonald v. MacDonald, 236 P.2d 1066, 120 Utah 573, 580 (Utah 1951). When judges themselves openly acknowledge the challenge in making such divisions, it should be apparent that preparation is critical in advancing your vision of what an equitable division will be.
At its most basic level, the marriage consists of dividing up assets and liabilities. While some people believe that the fair way to do so is to simply divide everything in half and give half to each party, the courts have far wider latitude in making those divisions. See Utah Code Annotated 30-3-5 (2009) (stating that the court can divide assets “equitably” rather than equally). That involves considerations beyond just a review of a balance sheet.
When dividing assets, the court looks at the relative positions of the parties. Factors such as whether one spouse will be providing primary care for minor children; if one spouse has been a homemaker during the course of the marriage; the ability of the spouses to earn future income; and sometimes the underlying cause of the divorce.
An important asset subject to division is a retirement benefit accrued by a spouse during the course of the marriage. In Utah, the formula is often referred to as the Woodward formula, so called because it was first articulated in the case of Woodward v. Woodward, [Case Cite 656 P.2d 431-Utah 1982]. Basically, the court will create a fraction by dividing the number of months that the spouse accumulated retirement benefits during the course of the marriage by the total number of months that the spouse accumulated retirement benefits. While not perfect, this number represents the portion of the retirement that is an asset of the marriage. Then, the court takes half of that amount and then awards that portion of the retirement to the non-retiring spouse. This is not the end of the process, however. Most employers will not simply divide the retirement and pay it over to the non-retiring spouse. That spouse must also have a Qualified Domestic Relations Order (often referred to as a “Quadro”) in order to effect the ultimate division of the retirement.
While not always a consideration, the Social Security benefits to be collected by each party is another asset to be considered in the final division of assets. See Olsen v. Olsen, 2007 UT App 296, 22, 169 P.3d 765. The court will not likely order payment of Social Security benefits from one party to the other, as federal law preempts state law on that matter, but will make offsets in distribution of marital assets in order to take disparities in those benefits into account.
Likewise, when dividing debts and obligations of the marriage, courts will take into account all of the same factors as dividing the assets. In fact, if there are not many assets to be divided, the court will attempt to balance the equities through the assignment of debts. In many cases, if an obligation is associated with a marital asset, the person taking the asset will also be responsible for the corresponding debt. As with the assets, the court has broad discretion in apportioning those debts.
Before the court has the opportunity to address the division of assets and liabilities on a permanent basis, the parties to the divorce action have the first shot at trying to work out the financial issues. While mediation is required by Utah state law (see Utah Code Annotated 30-3-39 (2009)), it allows the parties to address important issues and play a direct role in creating the final division of property. Mediation allows a party to “pick and choose” which assets are most important in the final analysis.