Indiana Law and the Distribution of Marital Property During a Divorce

Many states have laws relating to property ownership and division among married couples who divorce, which provide for the division of only what is known as “community property.” Community property states follow the legal rule that all assets acquired or debts incurred during the marriage are considered “community property” which is then divided between the spouses at the time of divorce. This means, if one or both spouses came into the marriage with significant assets or property or acquire property or assets by inheritance or other limited circumstances during the marriage itself, then that property is considered the separate individual property of that spouse and is not subject to division at the time of divorce. However, it is a common misnomer that every state is a “community property” state. Only nine states (Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin) are true “community property” states.

Nevertheless, the myth that every state is a community property state leads many Indiana residents to believe that Indiana follows the community property approach. Although Indiana law does not support this rule, the belief persists among many Indiana residents that only property acquired after marriage will be divided upon divorce. Indiana residents are surprised to learn during the divorce process that all property either spouse owns, both individual, as well as assets and property acquired before the couple married, is subject to a 50-50 division during the dissolution of marriage proceedings in Indiana.

What is Community Property?

In a state that follows community property rules, a home bought by a couple during their marriage would be community property as would be any cars acquired during their marriage. This would be true regardless of whose income was used to purchase the vehicles or the home. Those assets would be subject to division at the time of divorce. However, if the husband entered the marriage driving a classic car that has appreciated significantly in value or the wife’s mother died and left her a sizeable inheritance two years into the marriage, both of those assets typically would be considered individual property and would not be subject to division during divorce proceedings in a community property state.

Indiana Law Regarding Property Distribution in the Event of a Divorce

This is not true in Indiana, however. Indiana is NOT among the states that utilize the concept of community property for assets and debts acquired or incurred by a couple during their marriage. Under Indiana law, there is a rebuttable presumption that a 50-50 split of the couple’s property upon divorce is a fair and reasonable division upon dissolution of their marriage. This means a 50-50 split of all the assets and property owned by the couple, both jointly and as individuals, regardless of whether the property or asset was acquired before or during the marriage. This is a fancy way of saying that the couple owns everything in common, regardless of when the asset or property was acquired and who it nominally belongs to. There is no distinction between what was owned or obtained by a husband or wife before the marriage and what was acquired by the couple during their marriage under Indiana law. Therefore, in the example above, the wife’s inheritance or the husband’s classic car would be factored into the 50-50 split of assets.

This does not, however, necessarily mean each item will always be split down the middle. After all, if the divorcing couple owns a single vehicle jointly, then the court cannot physically split the car in two and give half to one spouse and half to the other spouse. The same is true if the couple jointly owns a home; one spouse will generally continue to live in the marital home while the other spouse moves out and arranges to live elsewhere. Therefore, a court presiding over that couple’s divorce likely will not order each asset or item owned by the couple either jointly or individually to be sold at auction, and the proceeds divided equally among the soon to be ex-spouses. Instead, the court will award possession of the house to one of the spouses but, in recognition of the fact that both spouses have an equal interest in the home or car, will then award the majority of the couple’s cash or retirement savings to the other split in order to obtain the 50-50 split reflected in Indiana law.

Are There Exceptions to This 50-50 Split in Indiana? Is it Common That Courts Deviate from the 50-50 Split?

Every marriage is indeed unique, as is the financial situation of every divorcing couple. Some couples may be heavily indebted despite having multiple sources of income during their marriage, whereas other couples who were able to make it on a single income may have done an excellent job of financial planning and may have no debts and significant assets upon dissolution of their marriage. Or a divorcing couple may feature one party that had significant pre-divorce assets whereas the other partner had little to no assets when they first married.

Each of these circumstances is unique. However, to family court judges who may have spent a career practicing family law and years on the bench, the occurrence of the type of unique situation which requires the judge to deviate from Indiana’s standard 50-50 rule may be rarer than divorcing couples believe. The judge thus may not find the circumstances to be unique even if the parties think they are. This is one reason it is so important to have an experienced Indiana family lawyer representing you in connection with your divorce, as an experienced attorney will be able to demonstrate to the judge why your particular situation requires diverging from the typical 50-50 split.

Also, the parties can always avoid the 50-50 rule through a written settlement agreement in which the parties choose how they wish to divide property amongst themselves in an Indiana divorce. Courts encourage parties to settle disputes amicably, and a divorcing couple that decides to deviate from the typical 50-50 rule in a written settlement agreement may have a good reason for doing so. They can memorialize whatever other arrangements they have come to in a written settlement agreement and not be subject to the whims of a judge that knows next to nothing about the couple and their particular situation.

Contact Experienced Indiana Family Law Attorney David Frangos if You Are Planning on Initiating a Divorce Proceeding and Have Questions Regarding How Property will be Divided

The concept of community property among married couples in Indiana is only a myth. Indiana law is relatively strict in providing for a 50-50 split of all marital assets and liabilities when a couple divorces in the Hoosier state. It is not unusual for those involved in a divorce to be lost or misinformed, particularly as it relates to the financial aspects of divorce.  However, these issues in a divorce are arguably the most overlooked and essential of all. It is critical to understand your particular situation and what you can expect upon dissolution of the marriage to enable you to plan for your new life after your divorce properly has been finalized.

Contact experienced Indiana family attorney David Frangos of Frangos Legal if you are in a situation where divorce may be on the horizon. Indiana’s rules regarding how the ownership of property is designated in the event of a divorce are very different than some other states and how the process of that division takes place can also be entirely different. David is not only familiar with the law on the issue of property ownership and division in the event of a divorce in Indiana, but advocates for his clients, so they emerge from divorce in the best situation possible. If you need an experienced Indiana divorce and family attorney, then contact David Frangos of Frangos Legal today for a Free Consultation and Case Review by emailing us, by telephone at 317-245-3707, or by booking online.