When a couple divorces, one of the issues the judge overseeing the case must resolve is how the couple’s debts and assets are distributed. When it comes to dividing assets after a divorce, Oregon is an “equitable distribution” state. This means that the court will not necessarily split a couple’s assets down the middle and instead consider various factors when making the “who gets what” decisions.
However, before a court can divide property, it needs first to determine whether the property is marital property or separate property. In most states, marital property includes all assets a couple acquired during the marriage, while separate property refers to those assets that a spouse owned before getting married. Oregon, however, is different in that assets obtained by a spouse before the marriage may be subject to equitable distribution. Additionally, if separate assets are commingled with marital assets during the marriage, courts may determine that the comingled separate assets became marital assets.
Even certain assets that are acquired during the marriage, however, may not be considered marital property. For example, gifts from one spouse to another and assets inherited by only one spouse fall outside the scope of marital property. Additionally, the proceeds from certain lawsuits and government benefits may also be considered separate property, even if acquired during the marriage.
For example, an Oregon appellate court recently issued an opinion in a divorce case involving the husband’s receipt of a lump sum social security disability (SSD) award. The wife claimed that the court should consider the lump sum award as marital property; however, the court disagreed. Specifically, the court found that the SSD award “is not property in the traditional sense subject to division by the Court.”
Once a court classifies all of a couple’s assets as either separate or marital property, the next step is to divide all marital assets in a way that is “just and proper in all the circumstances.” Unlike many other states, Oregon does not contain a list of factors that courts must consider when engaging in the equitable distribution analysis. This provides judges with immense discretion. However, typically, courts will consider the following factors when dividing a couple’s marital property in an Oregon divorce:
- The length of the marriage.
- The financial and non-financial contributions of each spouse to the marriage.
- Tax consequences of the distribution decision.
- Either spouse’s ongoing commitments to care for the couple’s children.
- The education and employment prospects of each spouse.
Notably, however, courts may consider the amount of separate property a spouse owns when determining what is “just and proper.” Going back to the recent case discussed above, the court held that, although the husband’s lump sum SSD award was not marital property subject to division, the court could consider the award when distributing the couple’s remaining property.
As this case illustrates, the issues surrounding the division of property in an Oregon divorce can be very complex. Those who see divorce on the horizon should reach out to a dedicated Oregon divorce lawyer as soon as possible to ensure that their interests are protected.