Marital Property in Alabama

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A marital property agreement can be important in terms of providing clarity about ownership of certain assets, as well as avoiding expensive disputes in the event of divorce.

The experienced legal team at Alabama Divorce & Family Lawyers, LLC, can help you negotiate a fair marital property agreement. This may be done in the form of a prenuptial agreement, a postnuptial agreement, a common law marriage agreement or in the midst of divorce in a marriage settlement agreement.

It’s important to understand that absent an agreement drafted before or during the union stating otherwise, all marital property may be divided under a plan of equitable distribution.

Marital property may include actual assets, as well as the appreciation of real property, business profits or investments that occurred during the marriage.

What is Equitable Distribution?

Alabama is considered an equitable distribution state, as opposed to a community property state. What this means is property and debts shared by divorcing parties are divvied up in a way that is most fair and equitable.

However, equitable does not mean equal. This is a common misconception. Rarely is the split 50-50, and the judge will take into account a host of factors when deciding how to divide the property.

The law does not spell out a fixed standard on how property has to be divided in these cases. Rather, the trial court is given a broad amount of discretion in determining equitable division. It’s important to have a knowledgeable divorce lawyer on your side throughout this process because whatever the judge decides is usually not disturbed on appeal unless the party can prove clear abuse of judicial discretion or an error of law.

Some factors the judge will weigh in deciding how to divide assets and debts:

  • Length of the marriage
  • Age and health of each spouse
  • Each spouse’s contribution to the education or increased earning power of the other
  • Standard of living during the marriage
  • Whether one parent provided services as a wage earner, parent or homemaker
  • Type, course and value of property
  • Any relevant tax consequences of distributing the property
  • Individual needs of each spouse, including the present and future earning potential
  • Alternate sources of income (i.e, retirement benefits, disability benefits and/or health insurance)
  • Living arrangements for any children involved
  • Fault of either individual if that contributed to the breakdown of the marriage (if the marriage is filed on fault-based grounds)

It’s important to note that just because property was owned by one spouse prior to marriage, does not necessarily mean he or she will walk away with it. The judge may assign a greater portion of value for that house, but it will probably still be deemed marital property, the value of which is subject to distribution.

What is Marital Property?

There are basically two kinds of property in an Alabama divorce: Separate and marital.

In divorce, marital property is subject to equitable distribution, while separate property is not.

Property that may be considered in a divorce could include:

  • Houses
  • Vehicles
  • Jewelry
  • Clothing
  • Bank Accounts
  • Pensions
  • Retirement Accounts
  • Investments
  • Cash Value of Life Insurance Policies
  • Family-Owned Businesses
  • Tax Credits and Tax Refunds
  • Trademarks
  • Gifts From One Spouse to Another

All property acquired by a couple during their marriage will be considered marital property. Meanwhile, property that was acquired before marriage or through inheritance is generally considered separate property.

However, separate property can become marital property, and this is sometimes where it can get tricky. One example we might offer is a wife who inherits a house from her family, but the husband invests his time and/or money paying the mortgage, covering repairs or making improvements. In that case, the court could consider that property marital property.

Similarly, if the property was used for the benefit of the marriage, it could be deemed marital property, even if it was separate at the outset. This is sometimes referred to as “commingling” property.

If a couple files for legal separation prior to divorce (which is not a requirement), any asset acquirement or appreciation of those assets after that point (assuming marital property was not used in the process) may be deemed separate property.

Whatever agreements are drafted prior to divorce regarding property distribution will serve as clarification and, absent any major issues with the contract, will be upheld.

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