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Alabama Property Division
Property Distribution Laws in Alabama
In Alabama, the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the Circuit Court divides the marital estate within the Judgment of Divorce.
Alabama is an equitable distribution state. Equitable does not mean equal, or even half, but rather what the Circuit Court considers fair.
The court divides the marital property based upon the facts and circumstances of each individual case. The trial court judge enjoys great latitude when dividing and distributing marital property.
In dividing the property, the court first categorizes property as marital or separate assets, assigns a monetary value for each piece of property, and then distributes the property between the spouses.
Factors in Equitable Distribution
According to the Code of Alabama, Title 30, in dividing property, Alabama judges consider:
However, Alabama is one of eight jurisdictions that include separate property in the marital estate “providing the court finds a special showing of need by the non-titled spouse.”
In dividing property, the courts may also consider marital misconduct.
Marital Property vs. Separate Property
Property acquired from the date of the marriage through the date of separation is marital property and subject to distribution. Property each spouse owned before the marriage, or acquired during the marriage by gift or inheritance, is separate. Gifts and inheritances used to benefit both spouses as a married couple become marital property. Separate property that is commingled with marital property becomes marital. Untainted separate property obtained before or during the marriage remains immune from distribution. The separate property includes, but is not limited to, gifts and inheritances.
In order to establish an asset as separate property, it must remain under the control of the spouse claiming it. Property combined with joint property for the benefit of both spouses becomes marital. In Alabama, the appreciation in the value of separate property remains separate property.
In Alabama, marital and separate property means not only the obvious assets the couple owns such as “houses, automobiles, jewelry, clothes, bank accounts, and property,” but also includes “pensions and retirement accounts, investments, cash value of life insurance policies, family owned businesses, tax refunds, tax credits, [and] trademarks.”
Joint checking/savings accounts, separate money deposited in a joint checking/savings account, jointly owned real estate, gifts from one spouse to the other – all are marital. Property held immune - “untainted” as it is sometimes called - from commingling remains separate. This includes separate checking/savings accounts opened before the marriage, stock owned before the marriage; individual inheritances, and any property classified as separate under a prenuptial agreement of the parties.
Depending upon the asset and the agreement of the spouses, different methods of valuation are used to determine the value of a marital asset. When the spouses agree, courts generally accept what they say about the value of an asset. Absent an agreement, experts may be retained by the parties or by the courts to determine the value of marital assets. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.
The Marital Home
In Alabama, as in many jurisdictions, the equity of the marital home is often one of the biggest marital assets. The equity is the market value of the house, less any liabilities against the property, such as a mortgage, taxes, home equity loans. Normally, making this calculation requires a paid real estate appraisal or a real estate agent can prepare a market analysis for free.
From there, couples choose one of three options to divide the equity:
Pensions and Retirement Accounts
In Alabama, the court may include the retirement benefits and plans earned by both spouses as marital assets available for division.
Retirement benefits vary greatly but can generally be divided into two groups:
Alabama statute places several limitations on the inclusion of retirement benefits as divisible marital assets. These conditions include provisions that:
In Alabama, if spouses share in each other’s retirement or pension plan, a Qualified Domestic Relations Order must be completed. A QDRO is a written set of instructions that explains to a plan administrator that two parties are dividing pension benefits. The instructions set forth the terms and conditions of the distribution - how much of the benefits are to be paid to each party, when such benefits can be paid, how such benefits should be paid, etc.
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