Domestic Relations Resource Guide - Section I: Substantive Law

1. Determine "During the Marriage"
   The court is required to make a finding in its final judgment entry as to the term of the marriage. [R.C. 3105.171(G)]

   • The statute contains a presumption defining the term of the marriage (i.e., the date of the marriage ceremony to the date of final hearing). [R.C. 3105.171(A)(2)]

   • The court may specify different dates (i.e., a de facto date) if it determines that the use of either or both those dates would be inequitable.

     • De facto commencement [Bryan v. Bryan, 8th Dist. Cuyahoga No. 97817, 2012-Ohio-3691]

     • De facto termination [Rhoades v. Rhoades, 11th Dist. Ashtabula No. 2013-A-0051, 2014-Ohio-1869; Rogers v. Rogers, 10th Dist. Franklin No. 96APF10-1333 & 96APF01-67, 1997 WL 559479 (Sept. 2, 1997)]

     • Factors to consider for a different (de facto) termination date:

       • Termination prior to final hearing still may apply even though one party provides support for at least part of the separation

       • The parties separated on less than friendly terms

       • Testimony indicates the marriage was over a year prior to the date of separation

       • One party cohabits with another shortly after separation

       • The parties never engage in intimate relations as married spouses after separation (regardless if on a few occasions the party returns to the marital residence)

       • The parties cease living together and maintain separate residences

       • The date the divorce complaint was filed

       • The parties’ discussions of possible termination of their marriage prior to actual separation

       • No financial entanglement (parties use separate bank accounts, separate life insurance, separate credit cards)

       • No meaningful attempts at reconciliation

       • Separate business activities

       • Both parties are involved in extramarital relationships

       • The parties take separate vacations with other sexual partners

       • The parties have not served as a social host for the other

       • The parties have not attended social, business, or school events as a couple since the time of separation

       • The parties cease contributing to each other for each other’s benefits as partners would do in a joint undertaking

       • Totality of the circumstances and equitable considerations

   • Dates should be consistent for all the property absent an explanation for the use of different dates for different assets. [Kachmar v. Kachmar, 7th Dist. Mahoning No. 08 MA 90, 2010-Ohio-1311]

2. Determine the Marital Estate: Marital Property vs. Separate Property
   The court must identify and distribute all the property owned by the parties at the time of the divorce. Each asset and liability must be designated as either “marital” or “separate” (i.e., non-marital).

   • The fiduciary nature of the marital relationship does not lend itself to hard and fast rules.

   • R.C. 3105.171(E)(3) requires each spouse to fully disclose all property and debt; marital, separate, and other assets, debts, income, and expenses – not just marital.

   1. Presumptions in play when defining the marital estate:

      • The parties are considered to have contributed equally to the acquisition and production of marital assets. Marriage is considered a financial partnership.

      • Marital fault, other than financial misconduct, does not impact property division.

      • The division of property must be made prior to and without regard to any award of spousal support. [R.C. 3105.171(C)(3)] It is error to offset property division against spousal support.

      • The ultimate goal of property division is to disentangle the parties’ economic partnership.

      • Property division is not modifiable, except by agreement of the parties. [R.C. 3105.171(I); Sayegh v. Khoury, 5th Dist. Muskingum No. CT2017-0010, 2017-Ohio-2889; Walsh v. Walsh, 157 Ohio St.3d 322, 2019-Ohio-3723]

        • Civ.R. 60(B) cannot be used to circumvent the prohibition.

      • Tracing: commingling separate property with marital property does not destroy the identity of separate property except when the property is not traceable. [R.C. 3105.171(A)(6)(b)] Transmutation of separate property into marital property has been virtually abolished.

      • Title to property does not determine whether property is marital or separate. [R.C. 3105.171(H)]

   2. Terms of Art Used in Property Division

      1. Distributive award: an award from the separate property of one spouse made in order to achieve equity. A distributive award must be made in a fixed amount. It must not be contingent on any future event.

      2. During the marriage: the beginning and ending dates of the marriage are used for determining whether assets owned by the parties at the time of the divorce are marital or separate and for valuation of those assets.

      3. Marital property:

         • Property owned on the termination date of the marriage that was acquired through a monetary, in-kind, or labor contribution of a spouse during the marriage

         • Income acquired during the marriage

         • Appreciation of assets acquired during the marriage

         • Appreciation of separate property and income from those assets, accrued during the marriage, attributable to the labor, money, or in-kind contribution of either spouse [Middendorf v. Middendorf, 82 Ohio St.3d 397, 1998-Ohio-403]

         • Retirement benefits and other deferred compensation

      4. Passive income and appreciation: If a separate asset produces income or appreciates in value, but there is no monetary, in-kind or labor contribution by either party during the marriage, the income or appreciation is separate property. Also, depreciation of separate property creates a separate, non-marital loss.

      5. Personal property: defined by common law; includes tangible and intangible personal property

      6. Separate property: R.C. 3105.171 contains provisions pertaining to separate property:

         • The commingling of separate property does not destroy its identity as separate property, except when its identity is not traceable. [R.C. 3105.171(A)(6)(b)]

         • Separate property must be disbursed to its owner, unless the court makes a distributive award. If the court does not award separate property to its owner, the court must make specific findings of fact. [R.C. 3105.171(D)]

         • The burden to show that property is separate property is on the proponent.

   3. Six Categories of "Separate Property" Defined [R.C. 3105.171(A)(6)]

      1. Traceable inheritances;

      2. Traceable pre-marital property;

      3. Traceable passive income and appreciation;

      4. Property acquired after a decree of legal separation and property excluded by antenuptial agreement if it can be traced;

      5. Compensation for personal injury, if it is not attributable to expenses paid from marital funds. A claim for loss of consortium is the claimant’s separate property. The amount of separate property from a personal injury, if not clearly delineated, should be calculated after deducting lost wages, attorney fees and expenses for prosecuting the claim;

      6. A gift received by a spouse during the marriage is presumed to be marital property, unless it can be proved otherwise by clear and convincing evidence to have been given to only one spouse.

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      A standard that requires proof offered in a case to be highly likely or certain – more than apreponderance of evidence, but less than beyond areasonable doubt.

3. Valuation of Assets
   Valuation of all marital assets is mandatory.

   • The final decree must set forth the valuation of assets so that the court of appeals is able to conduct a meaningful review of the division of property. [Kaechele v. Kaechele, 35 Ohio St.3d 93]

   • The value of each marital asset must be determined to carry out the mandates of R.C. 3105.171(C).

   • If neither party submits evidence of the value of an asset, the court may order the parties to obtain a valuation. [Roberts v. Roberts, 10th Dist. Franklin No. 08AP-27, 2008-Ohio-6121]

   • Expert testimony may be needed for valuation of certain assets.

   • A court may accept testimony of the owner as to the value of an asset. But, see Raymond v. Raymond, 10th Dist. Franklin No. 11AP-363, 2011-Ohio-6173. The husband’s opinion of the value of the marital business was not admissible absent a showing that he had knowledge or experience dealing with the business sufficient to form an intelligent opinion as to value.

   • The court must state a rational evidentiary basis for assigning a value to an asset.

   1. Real Estate

      • Know how to determine the passive appreciation of one spouse’s pre-marital equity in real property. Methods vary among appellate districts.

      • Develop a method for determining the marital interest in separate real property when there is a reduction in the mortgage balance from marital income during marriage.

      • The valuation of commercial real estate may require the opinion of a qualified appraiser.

      • The court may not average appraisals or testimony about value. The court must choose one value.

      • Methods used:

        • Income capitalization approach

        • Cost approach

        • Market approach

   2. Pensions and Retirement Assets

      • Identify the parties’ retirement assets.

        • Different types of plans, public and private [See table below for examples]

        • Utilize the specialized vocabulary when discussing pensions (e.g., participant, alternate payee, accrued benefit, marital coverture formula, etc.)

        • Vested vs. non-vested retirement assets

        • Qualified vs. non-qualified plan

        • Identify the different kinds of court orders which must be used when dividing retirement assets: e.g., QDRO, DPO, and COAP.

      • When dividing retirement assets, the final entry should contain an explanation for the method chosen by the court. Assign responsibility to prepare the appropriate court order according to terms of decree. Set a specific date for submission of the order and ensure the order is submitted.

      • The court order dividing a retirement asset cannot violate federal and state law and the limitations imposed when dividing pensions.

      • Defined contribution plans: Thrift Saving Plan

      • Social security benefits can be considered only when dividing a government pension. [R.C. 3105.171(F)(9)]

Additional Resources

• Internal Revenue Service, Types of Retirement Plans

• Internal Revenue Service, Qualified Domestic Relations Order

• Investor Junkie, 7 Most Popular Employer-Sponsored Retirement Plans

• Pension Benefit Guaranty Corporation

1. 3. Pension Issues During Trial

      • Although the court may understand the limitations inherent when dividing a retirement asset, the record should contain sufficient evidence to explain the details of the pension for the benefit of the parties and the court of appeals.

        • The court must have sufficient evidence to determine the present value of a defined benefit pension, even if the court order divides the pension in kind.

        • The evidence required to determine the present value of a retirement asset:

          • The age of plan participant at time of trial;

          • The age of plan participant at first eligible retirement date;

          • The amount of the accrued monthly benefit earned as of the date of trial;

          • Interest rate used to reduce future stream of income to present date;

          • Whether the monthly benefit will increase due to cost of living adjustments, and if so, the amount of the COLAs; and

          • The mortality tables used by the expert.

      • The limitations of a present value calculation make the valuation inherently suspect and speculative. The expert witness should provide detailed evidence to explain the facts they assumed in making the calculation, the method they used to determine the present value and how the valuation may change if different assumptions are made.

      • If trial counsel has not solicited sufficient information from the pension evaluator, the rules of evidence permit the court to ask questions of the expert. The court must have sufficient testimony to support its decision about the award of the retirement asset. Further, the evidence must allow for a meaningful review by a higher court, in the event of an appeal.

      • When dividing a pension in kind with a QDRO or similar order, the separation agreement or final decree must include language which creates a separate interest QDRO and which also provides for a qualified pre-retirement survivor annuity (QPSA). These provisions are necessary so that the alternate payee will receive his/her share of the pension should the participant die before retirement.

      • Qualified domestic relations orders, division of property orders, and court orders acceptable for processing are merely orders in aid of execution. The underlying divorce decree must contain sufficient terms to allow for the creation of a QDRO, DOPO, or COAP, which will be acceptable to the plan administrator. These orders cannot be used to fill in terms which are missing in the decree.

   4. Business Interests, Closely-Held Corporations, Partnerships, Farms, etc.
      The valuation of a business interest requires the opinion of a qualified expert witness. A court may not adopt an opinion of an expert witness which is not supported by an adequate rationale and evidentiary basis; nor may a court choose a value between the experts’ valuations without citing evidence which supports that conclusion.

      • Methods commonly used for valuation of a business interest:

        • Income approach: Capitalization of excess earning

        • Asset approach: Liquidation value; value of equipment, inventory, accounts receivable

        • Market approach: Arms-length transaction for sale

      • Examples:

        • Key man life insurance

        • Buyout provision in business entity

        • Stock options earned during the marriage

        • A loan owed to one spouse from a wholly owned company

   5. Disability Benefits
      Disability payments may be income or property – separate or marital. Appellate case law varies per district.

   6. Other Assets to be Valued and Awarded to One of the Parties
      This is not an exhaustive list:

      • Vehicles (consider debt which encumbers the vehicle)

      • Household items and personal effects

      • Custodial accounts or college savings plans for children of the marriage

      • Goodwill of professional practice or other proprietorships or business

      • Frozen embryos (This is an evolving area of law. Check your appellate district's case law.)

      • Pets and livestock

      • Burial plots

      • Collectibles

      • Airline miles

      • Accumulated sick leave and vacation benefits, especially with public employees

      • Other health-care related benefits (e.g., health savings accounts, home health care insurance, flexible spending accounts)

      • Stock options, limited partnerships, cash surrender value of insurance policy

      • Government subsidies (e.g., farm)

      • Crypto or other virtual currency or assets

4. Valuation of Debts
   The valuation of debt is calculated in the same manner as assets or property. The court must make specific findings as to whether it is marital or separate. Courts assign responsibility for debts of the marriage e.g., credit card debt, student loans, mortgage associated with real estate, automobile loans, etc. Consider requiring refinancing of joint obligations, if possible.

   This determination is extremely fact driven and varies with each individual case.

5. Equal Division of Property Unless Inequitable
   The division of property must be equal unless an equal division would be inequitable.

   Factors which may justify awarding one spouse more than half the marital estate:

   • Failing to disclose marital or separate property, income, debts or expenses. [R.C. 3105.171(E)(5)]

   • Financial misconduct [R.C. 3105.171(E)(4)]

   • Substance abuse

   • Gambling

   • Violating a temporary restraining order

   • Domestic violence

   Factors to consider when dividing property [R.C. 3105.171(F)]

   • The duration of the marriage

   • The assets and liabilities of the parties

   • 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 custody of the children of the marriage

   • The liquidity of the property to be distributed

   • The economic desirability of keeping an asset or an interest in an asset intact

   • The tax consequences of the property division

   • The costs of sale, only if the asset is ordered sold in the decree

   • Any division of property in a separation agreement that was voluntarily entered into

   • Retirement benefits

   • Any other factor that the court expressly finds to be relevant and equitable

6. Separation Agreements
   R.C. 3105.10(B)(2) states that a separation agreement may be enforceable if the court determines it would be in the interest of justice and equity to require enforcement.

7. Bankruptcy
   Courts must determine the effect of bankruptcy case filing on divorce proceedings. Questions to ask:

   • Was there relief from an automatic stay and does the stay apply?

   • What is the jurisdiction of bankruptcy court vs. domestic relations court?

   • Under what chapter of the Bankruptcy Code was the bankruptcy filed?

   • Is this a joint or separate filing?

   • Was there an adversary proceeding in the bankruptcy court?

   • Has there been a discharge?

8. Tax Considerations: Effect of Taxes on Property Division
   See Internal Revenue Service Publication 504: Divorced or Separated Individuals

9. Practice and Procedure for Property Division

   1. Pretrial Conferences
      The goals of pretrial conferences are to identify and determine the fair market value of all marital and non-marital property.

      • Establish procedures which require that parties disclose and assign values to all property owned by both spouses prior to the final hearing.

      • Issue a pretrial order that contains:

        • Temporary restraining orders to maintain status quo and prevent the sale or transfer of property;

        • Deadlines for filing a pretrial statement or financial disclosure statement which identifies all property owned and all liabilities owed by the parties; [Civ.R. 16]

        • Requires an exchange of documents, including income tax returns, bank statements, quarterly pension statements, summary plan description for defined benefit pensions, appraisals of real property, mortgage information, credit card statements and valuation reports;

        • Language to prevent the disclosure of private financial information to persons not associated with the case;

        • A provision that the parties execute and deliver to opposing counsel an authorization for independent verification of retirement assets; and

        • Sets time limits for depositions and completion of discovery.

      • Create a filing system to protect the private financial information of the parties. Utilize a “family file.” [Sup.R. 44] Establish an understanding with the clerk of court to safeguard parties’ privacy, including information shown on public docket.

      • Before the first pretrial, review pretrial statements of both parties for accuracy and completeness. With counsel and the parties present, address property division issues in detail. If appropriate, encourage parties to sign stipulations regarding the ultimate disposition of any assets not in dispute.

      • As needed, order parties to get an appraisal for real estate, to determine the present value of retirement assets or to hire any experts which may be needed to determine the fair market value of marital property; decide which spouse pays for the evaluator(s) or if the expense should be divided.

      • Issue an order which has specific dates for the exchange of discovery and expert reports. Include consequences and/or sanctions if a party fails to comply with the court order.

      • If asked, articulate the court’s philosophy on specific property division issues, e.g., how costs of sale are handled, best method to divide a public employment pension (by use of a Division of Property Order [DPO], or by awarding the entire pension to the member), whether a social security offset is appropriate, how to divide real property that is under water, who pays credit card debt, etc.

   PRACTICE TIP:

   Be prepared. Best practice is to memorialize what occurred at the pretrial in an order of the court and the responsibilities assigned to each party so that the case makes progress at each pretrial. Set the next court date with parties and counsel present to avoid scheduling conflicts and unnecessary delays. Develop forms for ruling on motions to compel, motions for protective orders, and other discovery problems.

   2. Prepare for Trial and Pretrial Orders

      • Issue a court order to control the attorneys, the witnesses, the presentation of evidence and the time needed for trial.

      • Set the trial date by agreement of counsel, so that the date will not be preempted by another court. State whether the trial will proceed, even if counsel of record is unavailable.

      • In the order, include provisions regarding continuances, exchange of witness lists, expert reports, copies of exhibits, pre-marking of exhibits, etc.

      • Limit time for trial, by agreement of counsel; state whether the court will continue day-to-day vs. non-consecutive trial dates.

      • Order one of the parties to prepare stipulations on issues where parties agree, e.g., shared parenting plan, child support, tax exemption, etc. Order the other party to prepare stipulations regarding statutory factors for property division and/or spousal support.

   3. Conducting the Trial

      • Post rules which apply during trial, so that the attorneys and parties can comply with your expectations.

      • Be prepared. Show counsel and parties that you understand the issues before the court; state them on the record. Research the controlling case law for your appellate district on any disputed property division issues in the case.

      • Speak slowly and clearly so you are understood on the record. Before opening statements, introduce yourself, the attorneys and the parties. Throughout the proceedings, remind the participants that it is not too late to compromise and settle.

      • Be mindful that you are creating an oral record, not a visual record.

      • Take ample notes during trial so you will be able to make the required findings of fact for the final decree. Explain to the parties why you are typing during the trial.

   Additional Resources

   • Supreme Court of Ohio Bench Card, Equitable Division of Property