When courts decide how to divide property in a divorce, the court must first classify each asset as either marital or separate property, place a value on the property, divide the property based on the factors set out in Ferguson v. Ferguson, 639 So. 2d 291 (Miss. 1994) and then award alimony if necessary.  This process is referred to as Equitable Division, not to be confused with equal division.

Marital property is essentially any property that was acquired during the marriage, although there are variations and exceptions to that general rule. Normally gift and inheritances are considered separate property as well as assets purchased or acquired before marriage.

The factors the Court uses to determine how to divide property classified as “marital” are:

1. Substantial contribution to the accumulation of the property. Factors to be considered in determining contribution are as follows:

a. Direct or indirect economic contribution to the acquisition of the property;

b. Contribution to the stability and harmony of the marital and family relationships as measured by quality, quantity of time spent on family duties and duration of the marriage; and

c. Contribution to the education, training or other accomplishment bearing on the earning power of the spouse accumulating the assets.

2. The degree to which each spouse has expended, withdrawn or otherwise disposed of marital assets and any prior distribution of such assets by agreement, decree or otherwise.

3. The market value and the emotional value of the assets subject to distribution.

4. The value of assets not ordinarily, absent equitable factors to the contrary, subject to such distribution, such as property brought to the marriage by the parties and property acquired by inheritance or inter vivos gift by or to an individual spouse;

5. Tax and other economic consequences, and contractual or legal consequences to third parties, of the proposed distribution;

6. The extent to which property division may, with equity to both parties, be utilized to eliminate periodic payments and other potential sources of future friction between the parties;

7. The needs of the parties for financial security with due regard to the combination of assets, income and earning capacity; and,

8. Any other factor which in equity should be considered.

As you can see by the factors, the process is not an exact science and the result is unique to the individuals before the Court.  It is important for divorcing individuals to be aware of the factors the court is required to consider so that they will better understand the process and be able to assist the attorney in focusing on those facts necessary for equitable division.

One of the most overlooked issues in divorces are the potential tax consequences.  Often, spouses are so focused on just getting divorced that they take actions that are not in their financial best interests.  It is also common for spouses to be so emotionally distraught over the course of a divorce that they refuse to consider options that will benefit them when filing their tax returns.  One example is when spouses have the option of filing a joint return but stubbornly refuse to do so, without realizing that the tax burden could be lessened for both parties.  Here is a good article from Time.com that addresses some important taxation issues in divorces.  And since it is tax time, here’s another that addresses some common mistakes people make in filing their annual returns.

Recently, a company called SafeGuard Marketing Management, Inc. began selling a product called “Divorce Insurance.”  You certainly have to admire the ingenuity of a company to come up with a product like this.  However, the value of the product is questionable both morally and financially.  If you are contemplating marrying the love of your life, but at the same time anticipating a divorce, then you should probably just skip the pain and not get married.  The concept of “divorce insurance” trivializes marriage and in my view, encourages people to make no effort to resolve their differences.  In fact, it would actually provide an incentive to divorce and contribute to the destruction of many families.  If potential spouses want “insurance” against divorce, then their money would be better spent by investing in premarital counseling and marriage counseling, if problems arise.   Here is an article written by an attorney in California that expands further on the topic.

A very important, but often overlooked, tool in avoiding nasty divorces is a thorough prenuptial agreement.  Here is an excellent article on the need for prenuptial agreements in estate planning but it is just as applicable in the divorce context.

It is nearly impossible to read the news and not see something about Jon and Kate Gosselin, their divorce and their television show, Jon and Kate Plus 8.  The television show follows the Gosselins as they raise sextuplets.  While you cannot help but feel bad for the children as their publicity-hungry parents divorce in the public eye, it is nevertheless interesting from a divorce perspective to see how the dissolution of a marriage in the public spotlight mirrors those of people who quietly divorce without publicity - all are driven at some level by self preservation, the need for security, the need to “win” and greed.

One of the headlines today is “Kate Accuses Jon of Taking $200,000.” Apparently, Jon and Kate maintained over $200,000 in a joint account and after being notified that he would no longer be part of the show, Jon withdrew all but $1,000 of the money.  Perhaps Jon had a good reason for the withdrawal, but his “reason” had the effect of leaving his spouse and children with very little to make ends meet.

When two people separate and anticipate divorce, it is natural to be wary of the other’s intentions and to be mindful of your own financial security, especially when children are involved.  However, it is important to remember that in Mississippi, when money is withdrawn from an account held jointly with your spouse, that the money also belongs to your spouse.  This does not mean withdrawing money is improper (unless a court has prohibited any withdrawals), but you may ultimately have to account for the money if a court decides that you overreached and withdrew more than your share of the marital funds.  In the Gosselin matter, Kate withdrew $100,000 earlier this year and was ordered to return the money.  Now that Jon has done the same thing, it is hard to imagine a court not ordering him to return some or all of the funds to his wife, especially considering she is now raising their eight children alone.

When withdrawing funds from a jointly held account while a divorce is pending, it is important to be reasonable and know that you may be ordered to return all or some of the money, even if it has been spent.  While winning the race to the bank may be beneficial, the benefit may only be temporary.