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Louisiana Property Division
Property Distribution Laws in Louisiana

In Louisiana the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the Louisiana District Court divides the property within the Judgment of Divorce. The best outcome is one where the spouses agree to an equitable division of their property. Louisiana is a Community Property state. Community property is all property and debt acquired from the date of marriage until the marital cut-off date. Unless the parties entered into a prenuptial agreement, the spouses own equally everything they acquired during the marriage.

Community property is property acquired during the marriage through the effort of either spouse, such as wages and employee benefit plans, property donated to the spouses jointly, and other property not classified as separate. Property owned before marriage, individual gifts during marriage and inherited property are separate property and not subject to division.

When the spouses cannot agree, the court determines values and then divides all assets and liabilities so each spouse receives one-half of the net value of the estate.

Factors in Equitable Distribution

All separate property like gifts, inheritances, and property owned prior to the marriage remains with each spouse; all other property is divided equally.

The court considers the needs of each spouse in dividing the property. Each spouse may ask the court for the marital home. Typically, the courts award the house to the spouse who has custody of the children. When making this decision regarding the marital home, the court considers:

  • the value of the spouses property;
  • the economic needs and circumstances of each spouse;
  • the needs of the children; and
  • on a case-by-case basis the contributions each spouse made to the acquisition of the community property as well as future earning potential.

Absent extraordinary economic circumstances, the conduct of the parties has no effect on the division of property.

The length of the marriage has no impact on the division of the community property. Of course, if a couple is only married for a short time, the amount of community property will be much less, since property owned by either spouse before marriage is considered separate property.

Marital Property vs. Separate Property

Separate property is any property owned before marriage, inherited property, and individual gifts. Marital property is all property of the marriage. Also, if the parties so desire they can enter into a matrimonial agreement before they marry to set up a separate property regime where each spouse's property remains separate.

Many couples establish a separate property regime before marriage. It can also be done once a couple is already married.

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 equally.

The Marital Home

Upon dissolution of the marriage, the home is community property. However, when children are involved, special considerations must be made for their well being, which will almost always affect the family home.

In Louisiana 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.) from are deducted 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

Generally a claimant (the party attempting to obtain a portion of their ex-spouse's retirement) is entitled to one-half of the other party's retirement that is attributable to the marriage. For example, if a person works at XYZ Co. for 30 years and was married for 10 of those years, the ex-spouse would be entitled to 1/6 (or 1/2 of 1/3) of the pension.

Problems happen when a person has been promoted after divorce. In those situations, the issues involved will be whether the promotion was given as a matter of course or earned through the extraordinary skill and effort of the party after divorce. These issues become complicated and demand good legal advice.

In Louisiana 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 Louisiana 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 Louisiana 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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