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Ohio Property Division
Property Distribution Laws in Ohio

In Ohio the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the property is divided by the Court of Common Pleas within the Judgment of Divorce.

Factors in Equitable Distribution

An equitable distribution state, Ohio uses the dual classification model, and the appreciation of separate property is separate. When spouses are unable to reach a settlement, the Court of Common Pleas distributes the marital assets between the two spouses in an equitable fashion. Equitable does not mean equal, or even half, but rather what is deemed by the Court of Common Pleas to be fair.

Property acquired during the marriage is subject to distribution. In Ohio, "during the marriage" means the period of time from the date of the marriage through the date of the final hearing for divorce or for a legal separation. However, if the court determines that using either or both of these dates is inequitable, the court selects dates that it considers equitable. In that case, the phrase "during the marriage" means the period of time between the dates selected by the court.

In dividing marital property and deciding whether to make a distributive award (money one spouse pays to the other in lieu of property, if dividing the actual property would be too difficult or undesirable), the court considers a variety of factors.

In dividing the marital estate, the court, guided by the Ohio Code - Sections: 3105.171, considers:

  • the length of the marriage;
  • the assets and liabilities of the spouses;
  • the desirability of awarding the family home, or the right to reside in the family home for reasonable periods of time, to the spouse with custody of the children of the marriage;
  • the liquidity of the property to be distributed;
  • the economic desirability of retaining intact an asset or an interest in an asset;
  • the tax consequences of the property division upon the respective awards to be made to each spouse;
  • the costs of sale, if it is necessary that an asset be sold to effectuate an equitable distribution of property;
  • any division or disbursement of property made in a separation agreement that was voluntarily entered into by the spouses;
  • any other factor that the court expressly finds to be relevant and equitable.

Marital Property vs. Separate Property

Both spouses are considered to have contributed equally to the production and acquisition of marital property. Therefore, Ohio law requires that marital property must be divided equally, unless such a division would be inequitable. In such a situation, the court must divide the property equitably instead of equally.

Marital property includes personal and real property acquired and owned by either spouse or both together; active appreciation of separate property due to one spouses contributions, such as improvements; and participant accounts in state and municipal deferred compensation plans, to the extent set forth in the applicable statute.

Separate property includes an inheritance to one spouse during the marriage; property acquired by a partner before the marriage; passive income and appreciation acquired from separate property during the marriage; property acquired by one spouse after a decree of legal separation; property excluded from the couple's marital property by a premarital agreement; a spouse's personal injury compensation, except for loss of earnings during the marriage and compensation for expenses paid from marital assets; and any gift given to only one spouse.

Separate property stays separate, even if it is mingled with another type of property (such as marital property), unless the separate property is not traceable back to its source.

Valuing and Dividing Property

Some assets have a readily ascertainable value, such as a bank account, publicly traded stock, and other liquid assets. If the spouses cannot agree on the value of assets, however, the court must decide the value. The value of assets such as homes, cars, jewelry, pensions and retirement accounts may be determined by obtaining expert appraisals.

Appraising a private business can be difficult. In those situations, it is usually necessary to retain accountants and other experts. This process can often be costly and time consuming. Unless the parties agree to accept the value determined by one expert, the court makes a decision based on evidence and testimony.

First, the court classifies assets and liabilities, property and debt, as marital or separate. Then it assigns a monetary value to the marital property and debt. Finally, it distributes the marital assets between the two parties in an equitable manner.

The Marital Home

In Ohio, as in many jurisdictions, the equity in the marital home is often one of the biggest assets the spouses divide. The equity is the market value of the house, less any debts or liens against it. Equity is established by determining what the current market value of the home is at the time of separation. Once the spouses agree to a current market value, any debts associated with the property (mortgage, taxes, home equity loans, etc.) are deducted from the market value to arrive at the equity to be divided. 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:

  • The spouses sell the home and divide the proceeds.
  • One of the parties may refinance the home and buy out the other party.
  • One spouse (usually the custodial parent) remains in the home with the exclusive use and possession for a certain period of time (for example, until the youngest child graduates from high school), then either buys out the other spouse or sells the home and divides the proceeds.

Pensions and Retirement Accounts

Retirement benefits, including IRA's, 401-K plans, pensions, and deferred compensation, are considered marital property and subject to division by the court to the extent that they were acquired by either or both of the spouses during the marriage.

In Ohio vested pensions are marital property. A pension vests when all the requirements to receive the pension have been met. Unvested pensions are also marital property. Until the pension has vested, the person under whom the pension is maintained has only an expectancy of interest in the pension.

Several different methods of valuation are used in determining how much a marital asset is worth, depending upon the asset to be valued and the level of agreement between the parties. Courts generally accept the value when the spouses mutually agree on a value of a particular asset. Experts may be retained by the parties or by the courts to determine the value of marital assets if the parties cannot agree. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.

In Ohio 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:

  • Defined Contribution Plans: A defined amount of money belonging to the employee. The employee and/or the employer make defined contributions. The balance of the plan is constantly changing, but its value is definable at any given point. 401(k)s, 403(b)s and profit sharing plans fall into this category.
  • Defined Benefit Plans: A retirement benefit where an employer promises to pay a benefit to an employee sometime in the future, based upon some type of formula. Normally, this formula is based on the employees salary near the end of his or her career and the number of years he or she worked for the employer before retirement. Defined benefit plans are much more complicated to value and often require the professional evaluation of an actuary to determine exact values.

In Ohio if spouses share in each others 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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