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Hawaii Property Division
Property Distribution Laws in Hawaii

In Hawaii, 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 marital estate within the Judgment of Divorce.

Hawaii is an equitable distribution state, and all property is considered for distribution. Equitable does not mean equal, or even half, but rather what the Family Court considers fair.

Hawaii law requires a division of property in divorce to be equitable, meaning that it must be fair but not necessarily equal.

Hawaii does not grant divorce based on fault. However, the judge may consider fault in dividing property, particularly economic misconduct (dissipation) affecting marital estate, such as gambling or drug use. The court divides the marital property based upon the facts and circumstances of each individual case, so the trial court judge enjoys great latitude when dividing and distributing marital property.

There is no fixed formula for determining what is equitable. Each case depends on its own facts and circumstances. In deciding the distribution of assets and liabilities, the court considers: each spouses age and health; his or her abilities, including employability; his or her overall economic condition; any effect of childrens needs; and any culpable behavior, such as failing to disclose income or assets, or violating a restraining order.

Factors in Equitable Distribution

Equitable distribution means that the property will be divided as the court sees fit. When the parties cannot reach a settlement on their own, the Family Court decides which property and debt is marital, assigns a value to the property and debt, and then distributes marital assets between the spouses.

According to the Hawaii Statutes - Title 580 - Chapters: 47, in dividing the property the court considers:

  • the respective merits of the parties, the relative abilities of the parties;
  • the condition in which each party will be left by the divorce;
  • the burdens imposed upon either party for the benefit of the children of the parties: and
  • all other circumstances of the case.

Marital Property vs. Separate Property

Hawaii courts refer to property a couple acquires after marriage as marital.

The judge may divide all of a couples property in any manner that seems fair, regardless of who owns it, whose name is on the title, or when it was acquired.

If one spouse owns property before marriage, or acquires it by gift or inheritance, a court usually considers that property to be separate and awards it to the original owner in a divorce - but not always. Hawaii 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.

Appraisals help a couple determine the value of real property as well as items like antiques or artwork. Retirement assets can be very difficult to evaluate and may require the assistance of an actuary, CPA, or other financial analyst.

Spouses can divide assets by assigning certain items to each spouse, or by selling property and dividing the proceeds. Some couples agree to keep the family home until children are out of school. Others may keep investment property in hopes of appreciation.

The court also assigns all debt accrued during the marriage, including mortgages, car loans, and credit card debts, to one spouse or the other. If the couple cant agree on how to divide property and debts, a judge decides, taking into account all of the circumstances of the case.

Valuing and Dividing Property

The spouses - or the court if the spouses cant agree generally assign a monetary value to each item of property. The court classifies property marital or separate, then establishes a value. Finally, it distributes the assets.

Marital and separate property can become mixed, which is called commingling. Mixing makes it difficult to divide property equitably. A premarital bank account belonging to a husband becomes marital property if the wife makes deposits to it. A house owned by the wife can become marital property if both husband and wife pay the mortgage and other expenses. If the spouses arent able to decide what belongs to whom, the judge decides.

A couple making their own agreement can divide assets in whatever way they see fit. Some couples have a premarital agreement defining property as separate or marital. If there is a prenup, it can make dividing property much easier.

The Marital Home

In Hawaii, 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 Hawaii 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 Hawaii, 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 Hawaii, 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, and how such benefits should be paid.

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