Part 5: Division of Property, Assets, and Debts in an Oregon Divorce
How Will You Divide Your Property, Real Estate, Investments, & Debts?
Your divorce in Oregon will include the court’s review and division
of all of your property and all of your debts, even those you have separate
from your spouse. In a divorce in Oregon, the term “property”
includes your home and all real estate, personal belongings, vehicles,
funds in your bank accounts or trusts, investments, stock options, retirement
benefits, pensions, and business interests.
Often, one of the most contentious phases of divorce can be the division
of assets as dictated by Oregon law. Property can have both substantial
emotional and financial value, whether it is your art collection or the
business you inherited from your parents. Your property may need expert
appraisal or to be sold; it is no longer solely under your control. It
is vital to the property division process that you and your spouse are
aware of the existence, nature and value of all marital and separate property.
You should obtain advice from an Oregon divorce attorney about what property
division is fair in your case, as division of assets may substantially
change your lifestyle, job expectations and retirement plans.
In a divorce in Oregon, whether you divide your assets and debts according
to a settlement, or you go to trial and have the court divide them for
you, the process is the same:
- Characterization of each asset and debt (as “marital” or “separate”);
- Valuation of assets (determining how much each item of property is worth); and
- Division of assets and debts (dividing the pool of property and debts between
you and your spouse).
Because of the importance of property division and the fact that the property
division cannot be changed after the divorce without proof of one party’s
failure to disclose assets, it is vital to understand the relevant Oregon
Marital Property And Separate Property
The Oregon divorce court’s first task in property division is to
determine the nature of your assets. Under Oregon divorce law, nearly
all property accumulated during the course of a marriage is considered
“marital” property. Some property, however, may be considered
the “separate” property of just one spouse, especially if
it was owned prior to the marriage, was inherited, was a gift, or is a
personal injury settlement or judgment. If you and your spouse have substantial
assets or complex ones (such as a business that must be valued), then
your Oregon divorce attorney will likely suggest that you hire a business
valuation expert or forensic accountant to determine the valuation and
disposition of such property.
Valuation Of Assets
Few spouses are able to agree on values for all of their property. Sometimes
assets will be sold to determine their value. Sometimes the court will
appoint a professional (paid for by the parties) to value the assets.
More often, each spouse will hire an expert to prepare a valuation, and
the court or mediator will decide values after reviewing the experts’
reports. The methods of valuation and the experts’ points of disagreement
are often hotly litigated by each side. If you have substantial assets,
it is essential that you hire not only a qualified Oregon divorce attorney
with experience valuing complex assets, but also the best valuation experts
for your case.
Division Of Assets In An Oregon Divorce
HOW DOES THE COURT DIVIDE PROPERTY?
Oregon divorce law follows “equitable distribution,” which
seeks fair, not always equal, division of property. While you and your
spouse may determine the division of your property and debts in a settlement
with the aid of your Oregon divorce attorneys, if you cannot come to an
agreement, the Oregon divorce court will divide it for you. The court
generally will not consider any marital “fault” when dividing
In making its division of property, the Oregon divorce court may consider:
- The cost of any sale of assets.
- The amount of taxes and liens on the property.
- The contribution of each spouse to the acquisition of the marital property,
including the contribution of each spouse as homemaker.
- Any retirement benefits, PERS, civil service, military and railroad retirement benefits.
- Any life insurance coverage.
- Whether the property award is instead of, or in addition to, spousal support.
In most cases of divorce in Oregon, the court will divide your total property
evenly between you and your spouse. However, if one spouse can show that
he/she contributed more to the acquisition of some of the marital property,
then the court will divide your property in whatever way is found to be
most just and proper.
WILL I KEEP MY SEPARATE PROPERTY?
Oregon divorce courts can divide even separate (non-marital) property as
part of an overall division of property. It is unusual for a court to
give separate property, such as assets acquired before the marriage, to
the other spouse in a property division, but the court is allowed to do
so under Oregon law if it is found to be just and proper in all the circumstances.
This includes any vehicles, houses, real property, bank or retirement
accounts that are listed in only one of your names.
Regardless of whether your property is owned jointly or separately, if
it was acquired during your marriage (unless acquired through gift or
inheritance), the Oregon divorce court will presume that you and your
spouse contributed equally to its acquisition, unless shown otherwise.
(This is true even if one spouse was a homemaker.) To show otherwise,
you must prove that you and your spouse did not contribute equally to
the acquisition of the marital property.
WHAT IF MY MARRIAGE WAS VERY SHORT?
When dividing the marital property from a “short-term” marriage,
the Oregon divorce court most often seeks to return the spouses, as nearly
as possible, to the financial position they would have held if no marriage
had taken place. “Short-term” has no exact definition, but
most often applies to marriages lasting less than two years. Usually a
court focuses not on the exact length of your marriage, but instead on
the extent to which you and your spouse have “commingled”
your financial affairs.
WHAT DOES THE FINAL PROPERTY DIVISION LOOK LIKE?
The final division of property will include a list of assets that you will
keep and a list that your spouse will keep, a list of debts that each
of you will be assigned to pay, plus, where appropriate, a cash payment
by one of you to the other and a list of any assets or debts to be kept
jointly. In some cases, your Oregon divorce judgment may not divide all
of your property, but instead give you rules about how to divide it in
the future. For example, the divorce judgment may explain how you are
to divide your personal property after the divorce, or provide rules about
how you must sell real property after the divorce.
CAN A PROPERTY DIVISION BE MODIFIED LATER?
The Oregon divorce court’s property division, once finalized in a
judgment, is non-modifiable except in rare exceptions. One exception is
for “omitted” assets, where a significant asset is left out
of the property division. The court’s authority in this instance
depends on whether the asset was omitted accidentally or intentionally.
WHAT IS PERSONAL PROPERTY?
Oregon law defines personal property to include assets such as furniture,
clothing, art, books, jewelry, household items and even pets.
HOW IS PERSONAL PROPERTY VALUED?
Personal property may be difficult for the Oregon divorce court to value
because these items may not have significant resale value yet may have
significant practical or sentimental worth. If at all possible, you and
your spouse, rather than the court, should agree on a division of your
personal property with the assistance of your Oregon divorce attorney.
It may be easier to do this if you omit the valuation process for personal
property items and simply list who will keep each item. You may be able
to agree on most items and leave a few disputed pieces, such as valuable
artwork, for the court to value and divide.
HOW DOES THE OREGON DIVORCE COURT DIVIDE PERSONAL PROPERTY?
The Oregon divorce court treats personal property just as it does other
assets: it characterizes the property (as marital or separate), values
it (using experts or sale value, if necessary) and then divides it as
part of the overall division of your assets and debts.
The division of personal property is often irrationally argumentative,
given that many personal property items are inexpensive or can be duplicated.
One of the benefits to experienced Oregon divorce attorney counsel is
that your attorney can give you a more objective analysis of the worth
of this property in the context of your case. For instance, a good divorce
attorney might advise you that you are better off giving up a certain
item than spending ten times its value in attorney fees arguing over it.
WILL I KEEP MY SEPARATE PERSONAL PROPERTY?
As with real property or accounts, some personal property may not be considered
a marital asset under Oregon law. Such items may include gifts (such as
wedding rings), inherited items or assets acquired before the marriage.
Strictly speaking, just as with all other kinds of property, the Oregon
divorce court is allowed to award such separate personal property to the
other spouse if it is “just and proper” to divide in this
way. As a practical matter, however, usually separate personal property
will stay with its owner.
HOW WILL THE OREGON DIVORCE COURT DIVIDE REAL ESTATE?
If your real estate is not divided by a settlement, the Oregon divorce
court will usually divide your jointly-owned real estate evenly. Typically,
one spouse will be awarded each real property and the other will receive
an “offset,” which is cash, or other property equivalent in
value, from your combined holdings, or the spouse awarded the property
will also be assigned an equivalent amount of debt (such as the mortgage).
The Oregon divorce court may also order that a property be sold and the
proceeds divided in a particular way. If one spouse used separate property
as a down payment on jointly-owned property, then the court might award
that spouse the amount of down payment and the estimated value of its
appreciation. The Oregon divorce court can also divide real estate located
in other states.
WILL I KEEP MY SEPARATE REAL ESTATE?
You or your spouse may own a home or other real estate that is titled in
only one spouse’s name. This may be because the property was purchased
that way, or because one spouse signed a quit-claim deed transferring
ownership solely to the other spouse. Even if the property is titled in
only one name, it may still be joint, marital property (if, for instance,
marital funds are used for its upkeep). Even if it is truly separate,
it will not necessarily stay with its owner. Separate real estate, like
all other kinds of separate property, is still subject to division in
a divorce in Oregon and possibly may be transferred to the other spouse.
The Oregon divorce court may divide any increase in equity of your real
estate, family businesses and other investments during your marriage.
For instance, even if you purchased your home as separate property before
you were married, the court could divide any increase in home equity that
occurred during your marriage. Similarly, even if you began your business
separately, the court could award your spouse half of the appreciation
during your marriage. The Oregon divorce court can also divide premarital
equity, just as it can divide other separate property, depending on the
particular circumstances of your case.
Bank Accounts And Trusts
Bank accounts and trusts, as with any other assets, may be divided by the
Oregon divorce court in your divorce regardless of whose name is on the
accounts or whether they are separate property. If your account values
are substantial or if the account includes both separate and joint funds,
then you may wish to have a forensic accountant track the history of the account.
With proper accounting, sometimes the Oregon divorce court will exclude
part of an asset from property division. For example, in dividing the
contents of a bank account, the court may divide only the portion of the
account acquired during the marriage, and give the remainder to the spouse
who separately (and pre-maritally) earned those amounts in the divorce
Vehicles are included in the “equitable distribution” of property
in a divorce in Oregon. Thus, vehicles are not necessarily granted to
the spouse who has title. Your best approach is to agree on a division
in a settlement, rather than having the Oregon divorce court value your
vehicles and divide them.
If your divorce property division will change the ownership of any vehicle,
make sure to change title with the Department of Motor Vehicles and to
inform your automobile insurance company.
Retirement Benefits And Pensions
Retirement benefits and pensions are also subject to equitable division
in your divorce in Oregon. Retirement benefits may be considered marital
property and the spouse who is not named on the account may be awarded
a share of it. If the retirement benefit or pension was earned during
your marriage, the Oregon divorce court will usually split it evenly between
you and your spouse. With careful accounting, the court may divide only
the portion of the account acquired during the marriage, and give the
remainder to the spouse who separately (and pre-maritally) earned those amounts.
There are several ways that businesses owned jointly by you and your spouse
can be divided in a divorce in Oregon. One method is an agreement in which
one of you “buys out” the portion owned by the other spouse.
Another method is for payments to be made from the co-owned business to
both spouses over a specified period. It is also possible for parts of
the business to be given to each spouse. Some spouses may be even able
to remain business partners after a divorce.
The Oregon divorce court usually will not order you to continue sharing
the business without both of you requesting it and showing that you can
remain professional with each other. As with other assets, it is essential
that you know the value of the business (often with the help of an appraiser,
and usually involving calculation of both present and future value) before
you agree to any division.
Even if a business is owned by only one of you, the Oregon divorce court
may divide the business, especially if it finds that the non-owner spouse
provided labor or otherwise contributed to the business.
If you are a business owner facing divorce in Oregon, look for an Oregon
divorce attorney with experience specifically in divorce involving business
valuation and distribution.
The Oregon divorce court has two options when determining how to divide
your investments in a divorce in Oregon.
- One option is to distribute the investment “in-kind” based
on equitable percentages (that is, fair shares between you and your spouse).
- Another option is a distribution based on the current value of the investment,
i.e. the “buy-out” option. One spouse keeps the investment
and pays the other spouse for half its value (or whatever division the
court decides is fair). This method requires a current valuation and analysis
of relevant income tax issues.
You and your Oregon divorce attorney, together with your tax professional,
should carefully analyze whether to ask the court to distribute your investments
based on either the “buy-out” option or the “in-kind” option.
Stock options are a company’s promise to sell company stock to its
employees at a specific price. Stock options (both non-vested and vested)
are considered property subject to distribution in a divorce in Oregon.
Because stock options are assets that may or may not be exercised, and
because their value may change over time, it can be a difficult task to
value and distribute stock options.
Just as with other kinds of property, the Oregon divorce court will determine
whether the options are marital or separate property. The court will usually
examine the date and purpose of the stock option grant. If the grant was
meant to reward past or present service to the company, then the grant
is probably marital property. However, if all or a portion of the grant
is meant to elicit future service to the company, or as future compensation,
then the grant may be separate property.
Vested stock options are usually more straightforward to value and divide.
Non-vested stock options are much more difficult to identify, value and
divide and usually require the involvement of tax and financial experts
in addition to an Oregon divorce attorney. Division of stock option assets
can be handled in two ways:
- The options remain with the employee spouse, and the court will have the
non-employee spouse buy out or receive an offset for half of the agreed
value of the marital stock options, as part of the overall division of
property and debts.
- The court will not include the value of the options in the overall property
division, but will instead require that the non-employee spouse be paid
in the future, when the options vest, rather than at the time of your
divorce in Oregon. This is called deferred distribution.
Your Oregon divorce attorney can work with the financial experts and help
you determine how best to approach the division of any stock options.
Stock options can, in some circumstances, be considered income for the
purpose of establishing or modifying spousal support. Your Oregon divorce
attorney and tax professional can help you analyze this when deciding
how to divide stock options.
Division Of Debts
The Oregon divorce court will divide your marital debts in whatever way
it finds “just and proper.” Division of marital debt is most
often divided equally between you and your spouse in a divorce in Oregon.
However, this may be rebutted by careful evidence that the debt was entirely
(or partly) incurred by just one spouse. As with division of marital property,
the Oregon divorce court is not restricted by whether a particular debt
is in the name of only one spouse. It may assign responsibility to pay
that debt to the other spouse when making the overall division.
Divorce Attorney Fees
Sometimes the Oregon divorce court will order one spouse to pay some or
all of the other spouse’s attorney fees. This can be done in two
ways: before or after the legal bill is incurred.
- The Oregon divorce court can order one spouse to pay a lump sum towards
future attorney fees and costs to allow the other spouse to pursue or
defend a divorce.
- The court can order that one spouse reimburse the other for attorney fees
and costs already incurred.
The court may order that a spouse who acts unreasonably or in bad faith
during the divorce pay all or some of the other spouse’s attorney
fees. For instance, a spouse who hides or fails to produce financial documents
may be ordered to pay the other spouse’s divorce attorney fees to
get those documents. The court may also consider whether each spouse has
made a good-faith effort to settle, and order attorney fees to be paid
by a spouse who refuses to accept a reasonable settlement offer.
Read More: Post-Divorce Financial Obligations