Articles Posted in Property Division

homeA court determining property division and alimony is required to look at certain factors. What are known as the Ferguson factors related to property division include how much each party substantially contributed to accumulating property, the degree to which each spouse has disposed of marital assets, the market value of the assets, the value of the assets minus equitable factors, tax and other economic consequences, the extent to which property division can be used to eliminate sources of friction, the needs of the parties to achieve financial security, and any other factors that should be considered to make an equitable division.

The Armstrong factors to be considered in connection with an alimony award are the spouses’ income and expenses, the parties’ earning ability, the parties’ needs, the parties’ obligations and assets, how long the marriage was, the presence of minors, the parties’ age, their standard of living during the marriage and when support was being determined, tax consequences, spousal fault or misconduct, the waste of assets, and any other factor considered just and equitable to set alimony.

In a recent appeal, a woman sued for divorce, and the couple agreed that it was on the basis of irreconcilable differences. A chancellor had to decide issues of alimony, equitable distribution, and attorneys’ fees. A judgment of divorce was executed, in which the divorce was granted and the marital assets were divided. The wife was awarded $1,360 on a monthly basis from the husband’s retirement account, with this payment to be made for 12 years. The wife appealed on the grounds that no specific findings were made and that the chancellor had failed to make specific findings about alimony.

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manIn a recent Mississippi appellate case, a wife filed for divorce on the fault-based grounds of adultery and habitual inhuman treatment. The couple married in 2004 and then separated in 2011. They had no children.

The husband owned a bail bonding business, and the wife worked as an admissions registrar. She also worked as an office manager at her husband’s bail bonding business. She owned a home in Vicksburg when the couple married. It had two mortgages and was worth $100,000. The husband also owned a home before and during the marriage, which was located in Vicksburg, owned without a mortgage, and worth $46,120. The couple lived at the wife’s property, and she quitclaimed her interest in that property to her husband.

The couple wanted to get money to build their marital home, so they refinanced what had been the wife’s property, and the husband paid off the second mortgage. They sold it for $100,000 and got a $50,000 loan on the other property, and with those proceeds they built their marital home. That home was valued at $380,000 and had a mortgage balance of $180,000. The husband held title to the property, but it was the marital residence until the couple decided to divorce. The couple also built a house nearby that was valued at $226,300. They paid in full for the home, and the husband took title. They also bought different cars and had marital debt of $279,749.61 when they decided to divorce.

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The entire concept of property division in a Mississippi divorce is rooted in fairness. In every divorce case, our Chancery courts are charged with the task of determining what is fair on a case-by-case basis. Typically, in a divorce, each spouse’s subjective view of fairness differs. Each spouse generally wants to keep as much of the marital property for themselves as possible following a divorce. And because of this general feeling and inherent goal of retaining everything possible in a divorce, a divorce can get ugly–and get ugly fast. In some cases, spouses have taken the “if I can’t have it, no one can” approach and dissipated–or wasted–marital assets that were otherwise subject to equitable (fair) distribution in divorce. A spouse’s wasteful dissipation of marital assets is a surefire way to complicate the divorce, prolong the divorce, increase attorney costs, and–most importantly–upset the Chancellor presiding over the divorce case. In other words, wasteful dissipation could be considered a “cardinal sin” in a divorce case.

“Wasteful dissipation is, by definition, ‘to indulge in extravagant pursuit of pleasure.'” Lowrey v. Lowrey, 25 So. 3d 274, 293 (Miss. 2009) (citing Webster’s II New College Dictionary 330 (1995)). Wasteful dissipation may occur during the marriage–typically in the time leading up to, or during, a period of separation–or while a divorce is pending. Accordingly, wasteful dissipation of marital assets is a prime consideration in both property division and alimony determinations in Mississippi. See Ferguson v. Ferguson, 639 So. 2d 921, 928 (Miss. 1994); Armstrong v. Armstrong, 618 So. 2d 1278, 1280 (Miss. 1993). Remember, alimony–or post-marital spousal support–is only awarded to balance the scales of fairness between the spouses following property division. Williamson v. Williamson, 81 So. 3d 262, 274 (Miss. Ct. App. 2012) (finding error where the lower court considered alimony prior to property division). So, the overarching purpose of examining any waste of marital assets is to ensure that one spouse has not inequitably wasted property that the other spouse would have been entitled to in a divorce.
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Who gets the house? This is the million dollar question I get from many of my clients. Simply put, the answer to who gets the marital home in a Mississippi divorce is not always an easy answer. The marital home or residence is often the largest marital asset the parties possess, so it is not unreasonable for both spouses to want to retain or keep the marital home in a divorce. However, in some instances it is not reasonable, fair, or financially sound for one or either spouse to retain the marital home after divorce. And ultimately, it is up to the chancellor in the divorce proceeding to determine who gets what in a divorce, including who gets the house.
who gets the house.jpgIn Mississippi, chancery courts and chancellors are given vast discretion in awarding certain marital property to either divorcing spouse. Johnson v. Johnson, 650 So. 2d 1281, 1288 (Miss. 1994) (citations omitted); Boykin v. Boykin, 445 So. 2d 538, 538-39 (Miss. 1984) (“there is no reason why a chancellor, under the broad discretion granted him, cannot in his decree award possession of the marital residence to either party.”). As it pertains to awarding the marital home to either spouse, chancellors generally consider the equitable distribution factors laid out in Ferguson and they also “consider all the awards to the payee[recipient] spouse and the concomitant burden placed upon the payor spouse.” Brooks v. Brooks, 652 So. 2d 1113, 1124 (Miss. 1995) (referring to Brendel v. Brendel, 566 So. 2d 1269 (Miss. 1990)); see generally Ferguson v. Ferguson, 639 So. 2d 921 (1994). Essentially, when awarding the marital home to either spouse, chancellors are charged with determining what is fair as well as assessing whether an award of the marital home to one spouse will place an unreasonable burden (usually an unreasonable financial burden) on the awarding spouse. Thus, if a spouse is going to fight to keep the marital home in a divorce, he or she should have a good reason to do so and should make sure that he or she can afford to keep the house.
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Do not “sit” on your right to enforce or collect on a divorce judgment. Let me repeat that: DO NOT wait too long to enforce a divorce judgment or any incorporated alimony, property settlement, or child support judgment. I give this counsel to all prospective clients that contact me asking whether they should bring their ex-spouse back to court to enforce alimony, property settlement, and/or child support agreements/provisions associated with a divorce judgment (collectively “divorce judgment”). If a person does not timely seek to enforce a divorce judgment, the law can and will bar enforcement of that judgment by way of the statute of limitations.

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In assessing any case, one of the very first things an attorney does is determines whether the statute of limitations has ran on a client’s claim. The statute of limitations sets a particular time period for claims and causes of action to be filed so as to ensure that such claims are “ripe” for judicial determination. If a person files a claim or seeks to enforce a judgment outside the statute of limitations–after the legally prescribed time to bring the claim has ran or expired–then the person’s otherwise viable claim will be barred by the statute of limitations because it is considered untimely, or “stale.” Despite very few narrow exceptions where the doctrine of laches or equitable estoppel applies, if the statute of limitations has expired on a given claim or right to enforce, then recovery or relief cannot be had on such a claim. See e.g., Nicholas v. Nicholas, 841 So. 2d 1208, 1212-13 (Miss. Ct. App. 2003). This concept equally applies to divorce judgments, including alimony, property settlement, and child support provisions/judgments included in, or attached to, a final judgment of divorce.
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From cases involving work-related injuries to those involving injuries arising from car accidents, personal injury litigation is a constant staple in our courts today. Generally, the result of these types of legal matters is either (1) an agreed-upon, financial settlement between the parties or (2) a money damages judgment awarded by a court of law. These personal injury “awards,” including workers’ compensation awards, are often paid out over time. So the remainder, or the outstanding amount of such monetary settlements and awards, still owed at the time of divorce can garner extra attention in divorce proceedings when it comes to property division.

As mentioned in a few of my earlier posts, Mississippi is an equitable distribution state whereby chancery courts equitably, or fairly, divide marital property–or property acquired or accumulated during the marriage or for the benefit of the marriage–upon divorce. Hemsley v. Hemsley, 639 So. 2d 909, 915 (Miss. 1994). The issue then arises whether a particular spouse’s personal injury award, settlement money, or any remainder thereof constitutes marital property subject to equitable distribution.
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In most divorces, there is almost always some sort of property dispute–insofar as it relates to classifying marital and separate property for the purpose of property division. Depending on the asset(s) at issue, these disputes can be very complex and taxing on both the courts and parties involved. Over the years, Mississippi courts have adopted or developed tools to help Chancellors decipher what constitutes “marital” property in divorce/property division cases. One of these tools is known as the “family-use” doctrine.

Remember, Mississippi is an equitable distribution state whereby only marital property is subject to property division. Accordingly, a spouse’s ownership or title to certain property is not outcome determinative of each party’s rights to that property in light of a divorce action–there is no presumption of ownership to titled spouses in Mississippi divorces. Pearson v. Pearson, 761 So. 2d 157, 163 (Miss. 2000). Thus, the first step Mississippi courts go through in property division is classifying each spouse’s property to determine what is and is not “marital” property. And this is where the “family-use” doctrine kicks in.
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It may come as a surprise to some, but a divorcing spouse’s financial or ownership interest in a business may be classified as “marital property” by a court when dividing property in a divorce. As an equitable distribution state, Mississippi courts are required to divide marital assets fairly, or “equitably,” between divorcing spouses. Marital assets may include any economic or ownership interest in a business, especially such interests in a closely-held business. Closely-held businesses often include family businesses or other small businesses whereby a spouse is a sole proprietor, shareholder or stockholder, partner, or otherwise owns a financial or ownership interest in the business. Like any other property owned by a spouse in a divorce, in terms of property division, Mississippi courts first classify a spouse’s business interest as marital property, separate property, or a mixed asset (part marital, part separate property). valuation.jpg

A business interest acquired by a spouse during the marriage or purchased with marital funds may be considered marital property. MacDonald v. MacDonald, 698 So. 2d 1079, 1083-84 (Miss. 1997). For example, where a husband starts a new business, joins a partnership, or even buys stock in an already existing business during the marriage, the husband’s interest in any of those situations will likely be classified as marital property, and it may be subject to equitable distribution in a divorce. On the other hand, a business interest acquired and owned by a spouse prior to the marriage will generally be classified as separate property. In addition to business interests owned prior to the marriage, any business interest acquired by gift or inheritance during the marriage may be classified as separate property. McKissack v. McKissack, 45 So. 3d 716, 718 (Miss. Ct. App. 2010). But remember, even separate property–including gifts and inheritance–may be classified, or converted into, marital property if it is commingled or designated for familial use during the marriage. Lastly, a business interest may be classified as a mixed asset–a mixture of separate and marital property. The most common example of when a business interest may be classified as mixed property is where the business interest owned prior to the marriage (otherwise classified as separate property) appreciates–or gains financial value–during the marriage. As a result, the “[a]ppreciation of the value of any non-marital asset [separate property] may be taken into account to arrive at a fair division to the extent the non-titled spouse had made a contribution toward the appreciation of value” or where the owning-spouse’s efforts during the marriage caused or contributed to the business interest’s appreciated value. Carrow v. Carrow, 642 So.2d 901, 907 (Miss. 1994). In such a case, the appreciated value of a business interest can be calculated by subtracting the value of the business interest at the time of the marriage from its current value.
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In the wake of a divorce, it is not uncommon for spouses to start claiming what is “their” individual property. However, simply “claiming” property as your own does not make it so. Property that a divorcing spouse thinks he or she independently owns–even pre-marital property–may very well be “marital” property subject to property division in Mississippi. In Mississippi divorce cases, one of the key determinations to be made is whether the property owned by the parties is “separate” property or “marital” property.

his hers ours.jpgAt common law, states treated property in a divorce as either “titled property” or “community property.” “Titled property” (or “separate property”) states maintained that property titled to, or legally owned by, an individual spouse, separate and apart from the marriage, was exempt from property division in a divorce. As a result, the titled spouse was able to wholly retain the property after the divorce. On the other hand, “community property” states treated all property owned by both spouses as part of the “community” or marriage. Consequently, regardless of which spouse held title to the property, the property owned by both spouses in community property states was generally subject to equal (50/50) division in a divorce. These two property division concepts are still prevalent in many states today. But, Mississippi is neither a true “titled property” state nor a true “community property” state. Instead, as mentioned in one of my early posts, Mississippi is known as an “equitable distribution” state, which could be seen as a mixture of the two property division doctrines.
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Along with custody disputes, the division of marital property is often a source of contention for many couples seeking divorce. Depending on the duration of the marriage, the amount of property acquired will fluctuate. But generally, the longer the marriage, the more property or “stuff” is acquired. One of the most common questions I get when a client comes to me seeking a divorce is: “What’s going to happen with all my stuff?” The simple answer is whatever is classified as marital property will be “equitably” divided, while non-marital property is treated as separate property belonging to the titled spouse.

Since 1994, in divorce cases, Mississippi chancery courts have applied the doctrine of equitable distribution when dividing marital property. See Ferguson v. Ferguson, 639 So. 2d 921 (Miss. 1994). Thus, when it comes to property division, Mississippi is not a “community-property” state whereby all of the divorcing spouses’ assets, regardless of whether they were acquired during the marriage or not, are divided equally (50/50) upon divorce. Carter v. Carter, 98 So. 3d 1109, 1113 (Miss. Ct. App. 2012). Instead, Mississippi is what is called an “equitable distribution” state.
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