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Vermont Property Division
Property Distribution Laws in Vermont

In Vermont the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the Family Court divides the property within the Judgment of Divorce.

Vermont is an equitable distribution state. It follows the all property model, and appreciation of separate property is marital. When the spouses fail to agree, the Family Court distributes the marital assets between the two parties in an equitable fashion. Equitable does not mean equal, or even half, but rather what is deemed by the Family Court to be fair.

The court presumes that marital property will be split equally between the spouses. From there, the court considers factors that may shift the balance from one spouse to the other. Ultimately, however, the division must be a fair division that reflects the past efforts and future needs of both spouses.

Factors in Equitable Distribution

According to Vermont Statutes, Title 15 Section 751, the court may consider all relevant factors, including but not limited to:

  • the duration of the marriage;
  • the age and health condition of the parties;
  • the occupation, source and amount of income of each of the parties;
  • vocational skills and employability;
  • the contribution by one spouse to the education, training, or increased earning power of the other;
  • the value of all property interests, liabilities, and needs of each party;
  • whether the property settlement is in lieu of or in addition to maintenance;
  • the opportunity of each for future acquisition of capital assets and income;
  • the desirability of awarding the family home or the right to live there for reasonable periods to the spouse having custody of the children;
  • the party through whom the property was acquired;
  • the contribution of each spouse in the acquisition of the marital property;
  • the respective merits of the parties.

In considering adjustments, the court considers the spouses’ monetary and non-monetary contributions to the economic community, any appreciation, income, and the use of separate funds for the benefit of the marriage, and non-monetary contributions include homemaking, child-care services, and other unpaid work. The length of the marriage, the ages and health of the spouses, and their respective occupations or employable skills, the contributions of the spouses to the education, training, or increased earnings of the other spouse – all are considered. Additional factors are whether a spouse prefers a property interest instead of or in addition to a spousal-maintenance payment, and if there are children, whether the custodial spouse receives the family home or at least the right to live in it.

Usually, the court accepts any fair and reasonable agreement that the spouses can negotiate, and they have ample opportunities to work out a fair division. A fair division may mean trading: sell the family home, split the proceeds, let the wife keep her retirement benefits, and give the husband the vacation cabin.

On the other hand, if the spouses cannot work together, then the court will decide for them.

Marital Property vs. Separate Property

Generally, marital property is property acquired or earned during the marriage. Property benefiting the marriage, even if it started out as separate property, may become marital property. Separate property includes anything that belonged only to one spouse before marriage and was kept separate throughout the marriage. It includes property given only to one spouse during the marriage, like a gift or an inheritance.

Property Defined

Property is either marital or separate, and it includes assets and liabilities. All of the marital property must be divided between the spouses when the marriage ends. In Vermont, the court may make the total division more equitable by including the separate property of one or both spouses. Marital debts must also be divided.

Valuing and Dividing Property

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 Vermont, 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

In Vermont 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 Vermont 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 employee’s 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 Vermont 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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