Assets and Debts

When a couple goes through a divorce or legal separation, their shared assets, property, and debt obligations get divided. These divisions should be included on the Decree of Divorce. If the spouses cannot come to an agreement themselves, the court will decide how to "equitably" divide their debts and property. "Equitably" means fairly, not necessarily equally, though often an equitable division does indeed turn out to be a fairly equal split between the two spouses. Even if the spouses come to their own agreement, the court will evaluate the fairness of the agreement before setting it as a court order. The court order will be final: it can only be re-opened in very limited circumstances.

 

Property/Assets

Property is generally considered shared, or "marital," when it was purchased during the marriage, even if only one spouse's name is on the deed or title.

Property is generally considered separate, or "non-martial," when it was either owned by one spouse before the marriage began, or received as a gift or inheritance during the marriage. However, if separate property was combined with marital property (for example, an inheritance deposited in a joint checking account), it will likely be considered marital property.

Typically, in Utah, only your marital property and marital debts will be divided. Although you must include them on your Financial Declaration, your separate property and separate debts will not be divided between you and your spouse. These things will remain individual and separate, and thus the decree of divorce typically does not need to address them.

 

Debt

Marital ("Joint") Debts

The divorce decree must specify which spouse is responsible for paying which marital debts, obligations, or liabilities that arose during the marriage. The spouses will be required to notify respective creditors of these court-ordered divisions of debts, obligations, or liabilities. They must also update the creditors on their current addresses.

If the court only orders one spouse, we will say Spouse A, to make payments on a marital debt or obligation, Spouse B is still not entirely off the hook if Spouse B signed the original contract with the creditor and no new contract has been formed relieving Spouse B of his/her obligation. If Spouse B is still obliged to the creditor by contract, the creditor's claim remains unchanged. Upon receiving notice of the spouses' new addresses, the creditor will provide each of them with all statements, notices, and other similar correspondence required by law or by the contract. If Spouse A fails to make payments, the creditor can make a demand on Spouse B for payment. However, that is not to say there are not advantages for Spouse B, the spouse for whom the court did not order payments on the debt. Only Spouse A can get in extra trouble: Spouse A could be in contempt of court if payments are not made. And only Spouse A can continue to receive negative credit reports by the creditor, as well as reports of his/her repayment practices or credit history. However, Spouse B could receive such reports if Spouse A does not make payments and the creditor has thus demanded Spouse B to pay. See U.C.A. 15-4-6.5.

Separate Debts

If your spouse has a separate debt, incurred during, before, or after the marriage, you are usually not personally liable for that debt. When you are not liable, the creditor may not reach your income, property, etc. However, in certain circumstances you can be liable for your spouse's separate debt, as described in U.C.A. 30-2-5. One such exception is when the separate debt incurred during the marriage qualifies as a "family expense," which is an expense that benefited and promoted the family unit, such as the education of a child. The ex-spouses can be sued by a creditor, either jointly or separately, for a family expense.

 

Retirement

Your retirement and pension plan benefits might also be divided. Generally, anything paid into a retirement or pension plan by either spouse from the date of marriage to the date of divorce is considered martial property. Thus, some of the benefits might need to be split. Alternatively, the court might award the retirement or pension benefits to the contributing spouse, but something of equal value (such as equity from the home) to the other spouse. If the benefits are split, a QDRO must be prepared and signed by a judge. QDRO stands for "Qualified Domestic Relations Order" and outlines how exactly the benefits from the retirement or pension plan will be divided. It is wise for both spouse's attorneys to prepare a QDRO, compare them, and then either choose which one to use or have the court decide.

 

Life Insurance

If you have a life insurance policy and/or an annuity contract, you will need to review and update the list of beneficiaries so that the court can confirm with you that it is accurate according to your desires. If you do not remove your spouse from the list of beneficiaries at this time, the court wants to make sure that you understand that this means that as a beneficiary, he or she is still on track to receive funds under the policy or contract.

 

Filing taxes as "single" versus "married"

Your filing status is determined as of the last day of the calendar year. You are considered unmarried for the whole year if, on the last day of your tax year, you are divorced or legally separated. If you are divorced or legally separated on the last day of the year, you should file as either "single" or "head of household."