Different states have different ways of dealing with disposing of marital assets and debts in the event of a divorce. North Dakota is an “equitable division" state.
Knowing how property will be divided in a divorce is only part of the equation; the other part is understanding what property is subject to division. That property is known as "marital property." Property that is usually not subject to division in a divorce is "separate"or "non-marital" property.
As a general rule, any property acquired by either spouse during the marriage, and any debt incurred by either spouse during the marriage, is considered marital and must be divided at divorce. There are limited exceptions. All of this sounds pretty straightforward, but North Dakota property division is more complex than it appears at first glance, as you will see from the common misconceptions below.
Marital property is that acquired "during the marriage," and those three words are very important to understand. Many people assume that "during the marriage" means between the date of the marriage and the date of the divorce.
In fact, North Dakota law gives the divorcing couple the right to decide upon a date for valuation of marital property. If the court is unable to agree on a valuation date, the court will choose a date. This is typically the date that one party was served with a summons for divorce, or the date the parties last separated, whichever is earlier.
Why does this matter? Some assets, such as stock portfolios and retirement accounts, can fluctuate wildly in value. A difference in valuation date can mean a difference in many thousands of dollars in assets available for division.
Equitable division does not always mean that marital assets and debts are divided exactly equally or on a 50/50 basis. Rather, equitable distribution means that the judge in the case will weigh a number of factors known as the Ruff-Fischer guidelines.
These guidelines, set forth in the 1952 case of Ruff v. Ruff and modified in the 1966 case of Fischer v. Fischer, require the court to consider "the respective ages of the parties, their earning ability, the duration of the marriage and conduct of the parties during the marriage, their station in life, the circumstances and necessities of each, their health and physical condition, their financial circumstances as shown by the property owned at the time, its value at the time, its income-producing capacity, if any, whether accumulated before or after the marriage, and such other matters as may be material." The Ruff-Fischer guidelines are used in both property division and spousal support determinations.
While the court strives to make an equitable distribution, that doesn't necessarily mean that the parties will be pleased with the outcome. It is always preferable, if possible, for the parties to reach an agreement on distribution of their debts and assets rather than putting that determination in the hands of the court.
Property owned by either party before the marriage is not excluded from division, valuation, or consideration in a divorce in North Dakota. Unless the property is specifically excluded by a premarital agreement, there is a presumption that "all property held by either party, whether held jointly or individually, is to be considered marital property." Hitz v. Hitz, 2008 ND 58, para. 11, 746 N.W.2d 732. The court must include all assets and debts in the marital estate, wherever their origin and whether held jointly or individually to determine the total value of the marital estate. Courts in North Dakota "have never held that property brought into a marriage or acquired by gift or inhertance by one spouse be irrevocably set aside to that spouse." Id.
Once the total value of the marital estate is determined, the Court weighs the Ruff-Fischer guidelines in determining what is an "equitable" division. "Whether [the property was] accumulated before or after the marriage," as indicated above, is part of the consideration for the Court in who is awarded that particular item of property in the equitable division.
If one spouse inherited a cottage from family, for example, that asset would probably be included in the total value of the marital estate. But the fact that the cottage was inherited by one spouse and not both, could weigh in favor of awarding the cottage to the spouse that inherited it, and possibly also that the equitable division of the marital estate would weigh more in favor of the inheriting spouse than the non-inheriting spouse. Conversely, if awarding the inheriting spouse the cottage would tip the division of marital property so heavily in favor of the inheriting spouse so as to be "inequitable", the court could award the non-inheriting spouse a portion of the equity in the cottage or award the non-inheriting spouse other marital assets to balance out awarding the cottage to the inheriting spouse.
For many years, spousal support was at least in part based on the "disadvantaged spouse doctrine." Under this doctrine, if a party had forgone opportunities or lost advantages as a consequence of the marriage, and contributed to the supporting spouse’s increased earning capacity during the marriage, they were "disadvantaged" and deserving of support.
Currently, spousal support is determined based only on consideration of the Ruff-Fischer guidelines . While it is possible the facts that might lead a court to consider one spouse "disadvantaged" would also lead to an award of spousal support under the Ruff-Fischer guidelines, the Ruff-Fischer analysis is the one that matters.
While one party's need for spousal support is an important consideration under the Ruff-Fischer guidelines, it is not the only one. The court must also balance one spouse's "need" with the other spouse's "ability to pay." Additionally, buried in the middle of the list is "the conduct of the parties during the marriage." Conduct includes behavior such as adultery, which means that a spouse seeking alimony who committed adultery during the marriage could have any award of support reduced by their conduct. Similarly, a spouse who is asked to pay alimony may find him or herself paying more as a result of adultery or other misconduct during the marriage. Adultery, however, is more commonly part of the court's consideration under the Ruff-Fischer guidelines when such "conduct" affects the parties' finances.
While it's true that North Dakota courts are bound by the Ruff-Fischer guidelines when making determinations regarding property division and spousal support, your attorney still makes a big difference in the outcome for a couple of reasons.
The first is that these guidelines are not a formula: you don't just plug in numbers and get an amount of spousal support or assets that a spouse is entitled to. If your case is before a judge, an experienced North Dakota family law attorney will present the evidence the judge needs to make a determination.
Another reason it is important to have a skilled attorney is that with your lawyer's help, you may be able to reach an agreement that meets your needs without having to go in front of a judge. Not only are you likely to be more satisfied with the outcome of an agreement you helped negotiate, but the less you need to appear in court, the lower your legal fees are likely to be.
For more information on property division and spousal support in North Dakota divorce cases, Fremstad Law invites you to contact family law attorney Lesley Foss at (701) 478-7620 or complete our online form.
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