Archive for the ‘“What’s Mine is Yours” (Unless it’s Mine)’ Category

“What’s Mine is Yours” (Unless it’s Mine)

Saturday, June 9th, 2018

One of the most common questions received by our office on a daily basis is whether someone will be able to keep real or personal property following a divorce, including assets and increases in valuation. The answer, like so many others regarding the law, is “it depends.” Many people mistakenly believe that having title to an asset automatically means their spouse will not be able to make a claim to ownership of that asset, but this is not a safe assumption in any community property state such as ours. Several states including Mississippi previously had a separate property system where all property was awarded to the titleholder in a divorce, but this system was fundamentally flawed with regard to common jurisprudence and recognition of spousal contribution. Today, division of property is instead governed by an equitable distribution system and both the legislative and judicial branches of government have made accommodations for the disregard of contributions made to property by a non-titleholding spouse. Although “equitable” sounds like “equal” or “50-50,” it actually means “fair.” A chancellor will determine what constitutes a fair distribution of property not by determining the titleholder, but by relying on eight factors that were provided in the case Ferguson v. Ferguson. 639 So. 2d 921, 928 (Miss. 1994). These factors are summarized as follows:

  • (1) Substantial contribution to the accumulation of the property
  • (2) The degree to which each spouse has expended, withdrawn, or otherwise disposed of marital assets
  • (3) The market value and the emotional value of the assets
  • (4) The value of assets not ordinarily subject to distribution
  • (5) Consequences of the distribution (like taxes or legal issues with third parties)
  • (6) The extent to which property division may be used to eliminate future friction between the parties
  • (7) The needs of the parties for financial security with regard to assets, income and earning capacity
  • (8) Any other factor which in equity should be considered

The only type of property that is subject to equitable distribution upon divorce is marital property. According to accepted interpretation as outlined in Hemsley v. Hemsley, 639 So. 2d 909, 915 (Miss. 1994), all assets earned or acquired during the course of the marriage are presumed to be marital property. The well-known exceptions to this presumption are assets acquired before or outside of the marriage such as gifts or inheritances. Unfortunately, there is one delineating factor: these assets must be brought into the marriage by only one party and kept separate throughout the entire marriage. Co-mingling of assets will defeat this exception to the presumption of community property within the confines of a marriage. Therefore, it is possible for the court to find that property is divisible as marital property if the family has been using it throughout the marriage or if the court cannot trace your separate interest in the property. Rhodes v. Rhodes, 52 So. 3d 430, 437 (Miss. Ct. App. 2011). This process is called “transmutation” and applies to both real and personal property. Interestingly, though, Mississippi is one of the only states that does not presume that property is marital for the purpose of equitable distribution where there is joint title. Pearson v. Pearson, 761 So. 2d 157, 163 (Miss. App. 2000).

Other exceptions to the presumption that property is marital and equitably distributable include personal injury or disability awards, pensions, or property designated as separate by agreement. Pensions and other employment benefits are considered marital property for the purpose of equitable distribution but are not divisible if the funds accumulated before the marriage. Similarly, personal injury awards are usually divisible if they were provided to compensate for a loss belonging to the family rather than just pain and suffering of the individual. Mississippi courts have not directly addressed the classification of workmen’s compensation or awards for disability, but they are likely to be indivisible from the marital estate to the extent those awards are compensable for loss of wages or wage earning capacity.

Another notable exception to the presumption that property is marital is the value of a professional degree. The Supreme Court of Mississippi held in Guy v. Guy, 736 So. 2d 1042 (Miss. 1999) that a professional degree obtained by a student spouse was not property for the purpose of dividing the martial estate. In that case, the court (citing an older case from the Supreme Court of Colorado) found that an educational degree is not “property” at all because it is not inheritable, transferrable, or valuable for sale on the open market. Therefore, intellectual enhancements acquired during a marriage are not considered to be marital property.

Although professional degrees are not distributable upon divorce, a supporting spouse may have the right to compensation (called reimbursement alimony) if he or she contributed to the education obtained during the marriage. This is because it is presumed that a contribution was made with the expectation of achieving a higher standard of living for the family since a higher education typically equates to a higher income. According to the court in Guy v. Guy, a supporting spouse would be “left with nothing more than the knowledge that they aided their now ex-spouse in increasing his or her future earning capacity” without this repayment. 736 So. 2d at 1044. Reimbursement alimony is granted on the actual amount of funds provided towards the education and is most common in the divorces of young couples who typically have few assets and little money.

Matthew S. Poole has 14 years of experience and a successful track record in divorce cases. If you have any questions about property distribution or divorce in general, please don’t hesitate to call our office.

Written by Jessica Jasper, J.D. Candidate, Class of 2020, Mississippi College School of Law