A regular part of the divorce process involves one party making payments or distributing assets to the other. This usually happens in the context of the division of marital property, or the payment of child support or spousal support. Less commonly, a court may order a “distributive award” from one party to the other in a divorce. A distributive award, sometimes referred to as “distributive property,” is one of the options that Ohio courts have to ensure fairness in divorce.
What is a Distributive Award?
A distributive award is a payment or payments made from one spouse to another in a divorce. These payments may be made out of real property or personal property, in one lump sum or in installments of fixed amounts over a span of time. They are not support payments, and they are not made from marital property. When a court makes a distributive award in a divorce, it distributes one spouse’s separate property to the other. We’ll discuss why that typically happens in a moment. First, let’s clarify what “separate property” is, and why it matters.
In a divorce, the couple divides up their marital property: generally, any property that either of them acquired during the marriage, with some very limited exceptions. Each spouse probably also has some separate property: assets they acquired before the marriage, and gifts or inheritances that spouse received during the marriage.
Ordinarily, in a divorce, if certain assets have been determined to be one spouse’s separate property, they cannot be awarded to the other spouse. In some circumstances, though, the court will “invade” one spouse’s separate property to ensure fairness in the divorce: this is a distributive award.
When Does an Ohio Court Make a Distributive Award in a Divorce?
The court might make a distributive property division just to make the division of marital property easier. For example, if much of the marital estate consists of a large asset that is difficult to divide, or that the parties can’t or don’t want to liquidate, the court could order one party to pay the other a certain amount from their separate assets in exchange for a larger share of the marital estate. A common reason would be one spouse “buying out” the other’s share of the marital home. A distributive award is made to facilitate, effectuate, or supplement a property division.
Another reason for an Ohio court to make a distributive award in a divorce is financial misconduct by one spouse. Such misconduct could include dissipating marital assets, concealing assets, or failing to disclose assets as required during the divorce.
Ohio courts expect parties to a divorce to deal honestly with one another and with the court. The purpose of a distributive award is not primarily to punish one party, though that may be the effect of the award; the real goal is to ensure that the overall division of property is a fair one, and that deceptive behavior is not rewarded.
How Courts Determine a Distributive Award
If a court believes that a distributive property award is appropriate in a divorce, it must, of course, determine how much the award should be for. Ohio law identifies several factors that go into an analysis of division of property:
- The duration 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 residential parenting (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 retirement benefits of the spouses, excluding the social security benefits of a spouse except as may be relevant for purposes of dividing a public pension;
- Any other factor that the court expressly finds to be relevant and equitable.
If one spouse has made a willful and substantial failure to disclose assets or debts to the other spouse, the court may choose either to make a distributive award or to award the offended spouse additional marital property of up to three times the amount the other spouse failed to disclose.
When a spouse engages in financial misconduct, the statute R.C. 3105.171(E)(4) provides the trial court with discretion to “compensate the offended spouse with a distributive award or with a greater award of marital property”. The statute defines financial misconduct so as to necessarily implicate wrongdoing such as on one spouse’s (intentional) interference with the other’s property rights or the offending spouse’s profiting from the misconduct.
If a spouse has engaged in financial misconduct, a distributive award or a greater share of marital property is made if a court finds the other spouse engaged in dissipation, destruction, concealment, or fraudulent disposition of assets. A court must find that (1) there was wrongdoing by one spouse that interferes with the other spouse’s property rights and (2) that wrongdoing results in a profit to wrongdoer or stems from an intentional act meant to defeat the other spouse’s distribution of assets. The burden of proving financial misconduct rests with the complaining spouse.
What to Do if You Believe Your Spouse is Hiding Assets
If you believe, or even suspect, that your spouse has hidden assets and is not disclosing them in your divorce, you should take immediate action. It is much easier for the court to help you get the share of assets to which you are entitled before your divorce is final.
However, even if you do not discover that your spouse concealed assets until after your divorce, you should still contact an experienced family law attorney to discuss your options. To learn more about financial misconduct or hidden assets in divorce, contact Melissa Graham-Hurd and Associates to schedule a consultation.