Getting to an Equitable Division of Debts and Property
Issues that need to be resolved in a divorce proceeding may include the division of debt and property. It must be an equitable division.
If the parties are unable to agree on how to divide the debts, then the court will do its best to divide them fairly (equitable division). Generally, if there are joint debts incurred for a purpose benefiting the whole family, both spouses will be equally responsible for the joint debts. If there is debt associated with property such as a car loan, the spouse who keeps the property is entitled to paying the debt.
According to Utah law, both spouses contribute to the property acquired during a marriage, regardless of the income source. There also needs to be an equitable division of marital property, meaning a fair division. Determining what a fair distribution of property is requires looking into several factors, such as the age and health of the parties, the length of the marriage, their occupations, and amounts of income.
The property being divided is typically either real property or personal property. Real property is land and anything permanently attached to it, for instance a house. Real property will usually be considered marital property if it was purchased during the marriage even if only one spouse has their name on the deed. Personal property is generally property that can be moved, such as cars, furniture, and jewelry. Similar to real property, personal property that has a legal title and was purchased during the marriage will usually be considered marital property even if only one spouse’s name is on the title. When dividing personal property, the general rule is to allow each spouse to set up their own home; therefore, if there are two of one item, each spouse will receive one of them.
An example of such a division of debt and property is the Bowen v. Bowen case decided in 2001. The wife claimed that the division of property and debts was inequitable and that the trial court abused its discretion in failing to properly identify premarital and marital property and debts. Bowen v. Bowen, 2001 UT App 248. Equity generally requires that each party retain one-half of the marital property and share one-half of the marital debt. The trial court awarded the husband the majority of the marital assets and gave all of the debt incurred to the wife. This distribution was unjust and did not achieve a fair, just, and equitable result between the parties. Thus, the trial court’s findings did not justify its unequal division of property and debts, so the case was reversed and remanded to the trial court.