Ohio Divorce & What to Consider When Making Separate Property Claims

Considering a divorce in Ohio, or wondering what you will owe or receive from the other spouse in an Ohio divorce?

Here are some more things for you to consider if there are claims of pre-marital or separate property interests in any of the assets. “Separate property” can be property inherited by one of the spouses (before or during the marriage) or it can be property gifted to one of the spouses (during the marriage) or it can be pre-marital property or increases in value or monies from premarital or separate property.

Separate property can be converted, during the marriage, to “marital property” or can be so intermingled with marital property that it is no longer identifiable or traceable back to its origin. Your lawyer (and you) have lots of fact-based things to think about.

How Are Separate Property Claims Dealt With in an Ohio Divorce?

What difference does it make?

So why do we care if the property is pre-marital or separate? Let’s assume that $20,000 of a husband’s premarital funds went into the down payment on a home purchased during the marriage and that now you have $30,000 in equity in the home and are getting divorced with your husband retaining the home and paying you for her half of the marital equity.  If your Husband did not make and prove a claim that his $20,000 payment was from premarital funds, he would owe you $15,000 for your half of the equity.

However, if he could prove the $20,000 down payment was premarital then that portion of the equity is not in the calculation for what is “marital” equity. Marital equity then would be $10,000 and he would owe you $5,000 for your half instead of $15,000. This same type of analysis would apply to retirement funds, stock investments, bank accounts and all assets where a portion of the asset is from non-marital, separate funds such as those described in the first paragraph above.

You have to prove your claims:

When it comes to Ohio divorce, if you are claiming the separate interest, you have work to do to prove it to the court.  If the other side is claiming the separate interest, they have work to do and your attorney will have to make sure that their “proof” is valid and backs their claim.

Many divorces now involve claims by one or both spouses that part of the property they now own, at the end of the marriage, is “separate” or that part of the value of property they own is due to the contribution of separate property to the asset (such as a down payment on a home where the down payment comes from premarital or inherited funds or funds gifted to just one of the spouses).

As cases go along, a good attorney will track assets and debts and identify those which may be separate or non-marital or those which one of the parties claims are separate or non-marital.

Since we are attempting to equitably allocate or usually “divide” the marital assets, to really determine what a client would deserve, from a “legal” or “mathematical” standpoint, we’d need to know lots more than just what the assets and debts are and what one or both spouses “claim” to be separate assets or debts.

Some of the main things I can think of needing proof, in the case where one of the spouses owned a home before the marriage, are values of the home when the client was originally married and then the value now, along with the amount of paydown on the mortgage during the marriage (and whether all of that pay-down was with “marital” as opposed to “premarital” funds). Also, relevant would be any work done to improve the home value during the marriage so that the value added from that “marital” work can be established as having occurred after the marriage and after the original valuation.

The plaintiff has the “burden of proof” and must go forward in the case first but, if that person is not making a separate property claim, they don’t need to do anything about the other party’s claim. The party claiming separate property must make and prove that claim. If a party is claiming any “separate” or premarital interest in anything, then that party should have to prove the separate interest or the other party will get half since the property is presumed to be marital.

Regarding real estate:

In Ohio divorce law, even if the premarital home were sold during the marriage, if some of the funds resulting from that sale are still somewhere in an account, the “marital” portion of those funds received would still have to be ascertained.  If the proceeds of the sale of the premarital home were reinvested into a present home, then the same logic applies and to determine what portion of the value of the present home is separate and thus due to one of the parties as that party’s non-marital distribution.

Regarding retirement funds and other accounts:

In relation to retirement funds, the same principles in Ohio divorce apply, and we need to know the premarital component and the marital contributions (as well as what appreciation or depreciation) there has been to each of those components before we can determine the premarital and marital values. As to debt, we’d need to know the present amount of debt and what portion, if any of that, was premarital.

Let’s look at the issue of retirement funds. If they existed before marriage, then one should have to establish what the retirement funds were worth on the day of marriage and then also at the time of the divorce, and at first glance you would think that the money we have now, over and above the money we had on the date of marriage would all be “marital.”  However, the premarital funds could have increased in value or decreased in value, during the marriage (as could have any funds put in during the marriage) and thus the present value is not necessarily all marital over and above the value starting on the day of the marriage.

Back to home or real estate values:

Back to the home value—what was just noted also applies regarding a home. Regarding the home, we have a value on the date of the marriage and then we have a present value and (if there were no marital improvements) the increase in value has all occurred upon what the value was before the marriage. However, if any improvements were done through marital funds or efforts and they added value, then we have to determine that value because part of the current value is then marital (not just passive appreciation on the premarital value).

If there was value added in the marriage, per marital effort or funds, then we have to determine how much that particular marital part of the whole value has appreciated also during the marriage so that we can make a marital claim on that part of the current value created from the use of marital funds or effort.

On the other hand, if we have been paying off a mortgage with marital funds (regardless of whether the husband the wife or both paid) then we have increased the equity with the payment of those funds, so we have to find out how much the mortgage has been paid down and therefore how much of the current equity was from marital payments.  (Remember there may have been some equity before the marriage.)

So you see, unless everything is to be split equally, there is a lot of math to do when it comes to Ohio divorce—and a lot of work searching records and establishing values when one party claims premarital interest in the home.  There is a certain amount due on the mortgage now and the home has a certain value now.  The claiming party has to prove both.  Once he or she proves both, if they are going to claim a premarital interest then they have to “trace” that back to before the marriage and show or trace all the gains and losses on that since the marriage (as opposed to gains and losses on the marital portion created from payments during the marriage).  Same thing with retirement funds.

Some of the records and experts possibly needed:

To get all the numbers one would need, or both would need:

1. Statements from time of marriage through present on values
2. REAL ESTATE APPRAISER(S) Appraisals from time of marriage and present on real estate with values for any marital funds or improvements put into the real estate creating any marital value
3. PENSION EXPERT AND ACTUARY Appraisals and tracing of retirement funds and stocks or accounts from before and during the marriage with a calculation of marital and separate values after all ups and downs of any funds or stocks including those in which retirement funds were held.

Summary:

These are just some thoughts for you while you are considering things.  I had mentioned in another article or blog that someone once said that they couldn’t understand how hard it supposedly was to be a divorce attorney when, “. . .  all you’re doing is just dividing things in half.”  I’ll bet that they hadn’t considered the problems raised or the work to be done when someone makes a separate property claim!

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William Geary is admitted to practice before the Ohio Courts, the Federal Courts for the Southern District of Ohio and the Supreme Court of the United States. He and the members of his firm concentrate their practice solely in Family Law matters. https://columbusfamilylawyer.com/