Dividing assets is a critical part of most Oregon divorce cases. Oregon is an equitable distribution state, meaning that the judge presiding over a divorce will split the property between spouses equitably. While the division must be just, it does not have to be equal. The court will accept the party’s preferences regardless of equality or fairness as a general rule. However, if there are assets that the party cannot agree on, the court will divide them using a set of factors discussed below.
Presumptions in Marital Property Division
In dividing property, the court must determine which property belongs to the marriage and which each party acquires separately. In most cases, marital property refers to all property the couple acquired or earned during the marriage. Whereas separate property refers to property each party owned before their marriage. Further, the separate property includes property that only one party received during the marriage. For example, inheritances and gifts may be separate property. Under Oregon law, marital property must be divided; in some cases, separate property may be divided.
Factors Influencing Equitable Distribution
Property division varies from case to case, and there is no exact formula that the courts follow. However, in the interest of a just and equitable outcome, there are certain factors that the court will look to in making their determination.
Some factors include:
- Number of assets or properties
- Expenses associated with dispensing properties
- Tax repercussions on each party
- Retirement accounts and pension plans related to an asset
- Medical expenses
- Each party’s role and contributions to the union
An attorney is crucial to preparing a compelling case for the equitable distribution of assets during an Oregon divorce.
Recent Oregon Equitable Distribution Case
The Court of Appeals in Oregon addressed a domestic relations case where a wife appealed from a general judgment of dissolution, arguing that the trial court erred in awarding the husband $125,000 of the wife’s inheritance as an equalizing payment. The record indicates that the husband filed for bankruptcy in 2009, and the court dismissed the case in 2011 when he did not meet the terms of his payment plan. The couple separated in 2009, and the wife moved out of the marital home. The husband stopped paying the mortgage, and the house foreclosed in 2011. The home was in the husband’s name, and the wife did not use money from her inheritance to prevent the home’s foreclosure.
The parties had limited assets but for the wife’s inheritance. The husband had significant debts from the outstanding debt of their home and failed business prospects. The trial court determined that the husband’s debts were marital and divided them in half between the parties. In its decision, the court held that it is clear that the wife kept her inheritance separate by keeping it in a different account and not using it to resolve the husband’s bankruptcy debt. However, the court held that the wife failed to rebut the presumption of equal contribution despite these findings. The court ordered the wife to pay an equalizing judgment from the inheritance to the husband.
The appeals court reasoned that under ORS 107.105(1)(f), the trial court’s property division must be “just and proper.” A just and proper division requires considering the statutory factors in ORS 107.105(1)(f) and equitable factors. In this case, the lower court’s reasoning for the equalizing judgment was that the wife refused to use the inheritance of the marital estate. Specifically, the court referenced that the wife refused to save the marital home from foreclosure.
The appeals court explained that the lower court’s reasoning did not correctly apply the statutory and equitable factors. The court placed the wife in a Catch-22 concerning her inheritance. In sum, the trial court applied under the pretense of equitable considerations, a presumption that the wife’s inheritance was subject to division with the husband, contrary to the statutory directive. The court modified the trial court’s judgment to remove the equalizing judgment.