Does record title matter in property division?
Many people considering divorce in Kentucky are surprised to learn that the state’s marital property law might not provide them an outcome they want.
In Kentucky, all property acquired between the date of marriage and an entry of a divorce decree or decree of legal separation is marital property. Unless one of a few limited exceptions applies, this is the case regardless of which spouse’s name is on the title, loan, account, or other ownership documents.
With that in mind, the Court is directed to divide that marital property in just proportions. Typically, that means assets are divided roughly equally between the spouses.
One asset that can be a source of litigation is a house. In most cases, a home purchased after marriage is marital property, and any equity accrued will be divided equally between the parties at divorce. The house will either be sold and each spouse will receive half of the proceeds or one spouse will stay in the home and compensate the other for their portion of the equity.
However, one exception to the standard marital property law is “property excluded by valid agreement of the parties.” KRS 403.190(2)(d). This exception comes into play when a spouse has signed a quitclaim deed on a piece of property that would otherwise be marital property. Spouses occasionally do this for tax or estate purposes, but such an action may serve to extinguish a spouses marital interest.
Kentucky Courts have set out a multi-part analysis for deciding when a marital interest may be extinguished due to “valid agreement of the parties,” and any person considering any title transfer or other action that could effect that status, should consult with a lawyer before making any decisions.
At that Law Offices of John Schmidt and Associates, we help people facing divorce or separation with these issues every day. Please call us to discuss your circumstances, and we will work with you to determine the best course of action to take during this potentially difficult and emotional process.