Equitable Distribution of Assets in Divorce in Alabama


Equitable Distribution of Assets in Divorce in Alabama

By Robert Steiner MS, M.Ed, JD 

Introduction

In Alabama, the equitable distribution of assets during a divorce involves dividing marital property and debts between spouses in a manner that is fair but not necessarily equal. Understanding how assets and debts are classified and distributed can significantly impact the outcome of a divorce settlement.

Classification of Property

Marital Property: Marital property encompasses assets and debts acquired by either spouse during the marriage. This includes:

- Income: Salaries, wages, and bonuses earned during the marriage.

- Real Estate: Homes, rental properties, and other real estate acquired during the marriage.

- Vehicles: Cars, motorcycles, boats, and other vehicles purchased during the marriage.

- Investments: Stocks, bonds, mutual funds, and other investment accounts established during the marriage.

- Personal Belongings: Household items, clothing, jewelry, and other personal property obtained during the marriage.

- Jointly Titled Property: Bank accounts, investment accounts, and other assets held in both spouses' names.

- Retirement Benefits: 401(k) accounts, pensions, IRAs, and other retirement accounts accumulated during the marriage.

Separate Property: Separate property includes assets acquired before the marriage or through inheritance or gifts specifically designated to one spouse. Examples include:

- Pre-Marital Assets: Property and cash obtained before the marriage.

- Inheritance: Assets received as inheritance by one spouse, provided they were not commingled with marital property.

- Gifts: Gifts given solely to one spouse, not intended to benefit the marriage.

However, separate property can become marital property under certain circumstances. For example:

- Use of Separate Property for Joint Expenses: If a spouse uses separate funds to pay for shared marital expenses, such as mortgage payments or family vacations, those funds may be considered part of the marital estate.

- Increase in Value Due to Marital Efforts: If the value of separate property increases due to the efforts of either spouse during the marriage, such as improvements made to a separate property home, that increase may be classified as marital property.

Settlement of Assets

Negotiated Settlements: In many divorce cases, spouses negotiate a settlement agreement that outlines how assets and debts will be divided. This negotiation may be facilitated by their attorneys or through mediation. The agreement should account for the equitable distribution of marital property and ensure that both parties agree on how to handle any separate property issues.

Court Orders: If spouses cannot reach an agreement, the court will intervene and determine the distribution of assets. Alabama courts use the principle of equitable distribution, which does not require a 50/50 split but seeks a fair division based on various factors, including:

- Length of Marriage: Longer marriages may result in a more balanced distribution of assets.

- Contributions to the Marriage: Contributions can include financial support, homemaking, and childcare.

- Economic Circumstances: The financial needs and earning capacities of each spouse are considered.

- Marital Misconduct: In some cases, misconduct by one spouse, such as wasteful spending or infidelity, may influence the distribution.

Types of Settlements:

- Property Division: This involves dividing physical assets such as real estate and personal belongings, and financial assets like bank accounts and investments.

- Debt Allocation: Debts acquired during the marriage, such as credit card balances and loans, are also divided. Each spouse may be responsible for a portion of the debt or jointly liable.

- Retirement Benefits: Often, retirement accounts are divided through a Qualified Domestic Relations Order (QDRO), which ensures that each spouse receives their share of the retirement benefits accrued during the marriage.


Conclusion

Equitable distribution in Alabama divorces aims to divide marital assets and debts in a fair manner, considering various factors unique to each case. By understanding the classifications of marital and separate property and the methods for settlement, spouses can better navigate the division of assets and work towards a fair resolution in their divorce proceedings.

For further information or to discuss any legal matters, please contact Attorney Robert Steiner at (205) 826-4421 or via email at robert@steinerfirm.com. Whether you have questions about this article or need personalized legal advice, he is available to assist you.