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Dividing Money and Property After a Divorce

Authored By: Lagniappe Law Lab

Introduction to Property Partition

When spouses are unable to agree on who will receive property and who will take responsibility for debts after a divorce, either spouse can ask the Court for a partition of community property.  In a partition proceeding, the Court will classify property as either community or separate and will divide the community property between the two spouses.  The Court can also resolve claims by the spouses that arise from the matrimonial regime.   

Classifying Property as Community or Separate

As part of a partition, the Court will classify each piece of property owned by the spouses as either "community" or "separate" property. The law governs how the Court makes the classification, depending on when the property was purchased or otherwise acquired and how it was purchased or otherwise acquired. 

Community Presumption

Things in the possession of either spouse during the existence of the matrimonial regime are presumed to be community, but either spouse may prove that a thing is their separate property. If either spouse asserts a separate property claim in a partition proceeding, the Court will evaluate the facts presented and determine whether the disputed property is legally classified as community property or separate property.

Dividing Community Property and Debts

Louisiana Revised Statute 9:2801 states the rules used by the Court in a partition of community property. 

Valuing Assets, Determining Liabilities, and Adjudicating Claims

First, the Court will value the assets as of the time of the partition trial.  This means that the value of property is not decided based on how much the spouses spent when they purchased it.  Instead, the Court will accept evidence from the parties to show how much the property is worth at the time of the partition trial.  Spouses can hire experts to appraise real property like lands and houses, and some experts will appraise valuable jewelry, art, or other home furnishings. 

The Court will also determine the liabilities.  Community debts are those that are incurred during the marriage for the benefit of the spouses jointly or incurred by one spouse during the marriage for the benefit of the other spouse.  

The Court will adjudicate the parties claims arising from the matrimonial regime.  If one spouse contributed to the education and training of the other spouse during the community, that spouse may have a claim for reimbursement if the community did not benefit from the education or training.  A spouse may also have a claim for reimbursement if that spouse used their separate property to pay community debts.  

 

Division and Allocation of Assets and Liabilities

 

Each Spouse Receives Equal Net Value

The Court will divide all of the community assets and liabilities and assign them to each spouse so that each spouse receives property of an equal net value.  The net value is the result of subtracting the amount of debt allocated to one spouse from the value of the property assigned to that spouse.  Each spouse will receive property of equal net value. 

To get to an equal net value for each spouse, in allocating assets and liabilities, the Court may divide a particular asset or liability equally or unequally or may allocate it in its entirety to one of the spouses. This means that certain specific property or money may not be divided 50/50.  The Court is allowed to assign property of a higher value to one spouse who is allocated more debt. In deciding how to allocate or divide the property or debt, the Court will consider the nature and source of the asset or liability, the economic condition of each spouse, and any other circumstances that the court deems relevant.  

 

Equalizing Payments

In some cases, the Court cannot create an equal net value distribution.  If the allocation of assets and liabilities results in an unequal net distribution, the Court will order an "equalizing payment." Equalizing payment can be cash or deferred payments, secured or unsecured, upon such terms and conditions as the Court shall direct.  The Court may order the execution of notes, mortgages, or other documents as it deems necessary, or may impose a mortgage or lien on either community or separate property, movable or immovable, as security.

 

Dealing With Unfair Allocations

Sometimes, an asset's monetary value is less than its emotional or sentimental value to the spouses.  The Court may not be able to divide such an asset equally or fairly. In the event that the allocation of an asset, in whole or in part, would be inequitable to a party, the Court may use alternative means. The Court may order the parties to draw lots for the asset, like a lottery system, or allow the parties to bid for the asset. The Court may order the private sale of the asset on such terms and conditions as the Court deems proper, including the minimum price, the terms of sale, the execution of realtor listing agreements, and the period of time during which the asset shall be offered for private sale.

Only in the event that an asset cannot be allocated to a party, assigned by the drawing of lots, or sold at private sale, can the Court order a "partition by licitation," or a public sale of the asset.  The Court may fix the minimum bids and other terms and conditions upon which the property is offered at public sale.  In the event of a partition by licitation, the Court must expressly state the reasons why the asset cannot be allocated, assigned by the drawing of lots, or sold at private sale.

 

Responsibility for Payment of Debts

As between the spouses, the allocation of a liability to a spouse obligates that spouse to extinguish that liability.  The allocation in no way affects the rights of creditors.  This means that when the Court allocates a debt to one spouse, that spouse is responsible to pay that debt until it is satisifed.  The other spouse is not responsible to pay the debt, but if the spouse to whom the debt is allocated fails to satisfy the debt, the other spouse may still be responsible to pay the creditor. If this happens, the spouse who was obligated to pay the debt will be obligated to reimburse the spouse who was not responsible but had to pay anyway. 

Last Review and Update: Oct 22, 2021
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