Equity and efficiency in american divorce

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Equity and Efficiency in American Divorce Law

The most established social contract one can enter into is marriage. When couples decide their marriage isn't working out, American divorce law provides the framework that governs which circumstances are valid reasons for terminating a marriage. The divorce law framework also addresses the allocation of resources to either party, should the marriage be terminated.1 This paper examines the equity and efficiency of divorce laws in the United States in terms of the allocation and division of property and assets.

In the United States, there are three ways that marital property can be divided upon termination of marriage. The first occurs when a couple seeking a divorce divides their property and debt among themselves, the second occurs when the couple seeks the help of a third party, like an attorney, and the third occurs with the help of the court system. The couple would submit their case to a judge, who will use the respective state laws to divide the property. A transformation from English common law to both equitable distribution and community property divorce laws has changed the standards and procedures for securing a divorce, eliminates gender presumptions, and restructures the economic foundations of divorce in the United States.

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There have been three distinct legal systems governing the property of married couples in the United States, historically. Before the 1970's, states could be divided into three systems regarding the allocation of property and assets. The first is common law property, second is community property, and third is equitable division. The most popular of these is the common law property methods, which is employed by forty-one states currently. The common law rules focus on equal division of property, but allocates according to the contribution of assets. Nine states use the community rule, which divides property equally with very few exceptions. While these rules are used, the family court system has the final word in dividing property amongst divorcing couples. If the family court system decides it would be in the best interest to award one party most of the property in question, it is their discretion to do so.

Due to English common law, nearly every state's divorce law has required to provide a legislatively recognized reason for separation in the past. This changed when King Henry VIII introduced civil marriage as a means of getting around the rules of the Church.1 Due to this, divorces were granted when there were grounds, or pre-defined reasons. It was until 1969 in the United States that this law was used. To justify a divorce, the “innocent” party had to demonstrate to the courts that the “guilty” party had committed a marital offense. The term used for this is “fault,” which essentially means either the husband or wife had engaged in serious marital misconduct. Other grounds for which the court would administer a divorce are desertion, conviction of a felony whereby one party had been sentenced to prison, alcoholism, impotence, adultery, or poor treatment. The “innocent” spouse had to prove that the “guilty” spouse had taken part in one of these offenses. A flaw in this system, however, comes by requiring one of the parties to prove that the other party is in offense to one of the grounds, even if both parties are seeking a divorce. The protestor, or plaintiff, could be denied a divorce if they forgive the defendant for the behavior that provided grounds for divorce; recrimination, of which the plaintiff who had given grounds for divorce were not entitled to the aide of the courts; connivance, which means the defendant's misbehavior is a direct result of the plaintiff's own conduct; and collusion, in the case that the plaintiff conspired with the defendant to give evidence of grounds for divorce.1

English law didn't recognize any grounds for divorce until the mid-nineteenth century. According to Posner, this could have protected the weaker spouse more effectively than allowing divorce for cause would have done. A system that allows divorce for any cause could give a husband incentive to treat his wife badly so she would initiate the divorce. Posner advocates that “allowing divorce for cause makes economic sense, as it enables at least a rough comparison between the costs to the children of divorce and the cost to a wronged spouse of remaining married.”1 He contends that voluntary dissolution of marriage terminates the policies designed to protect the children. It is written in English common law that the wife's adultery is more significant to the husband than a husband's adultery is to his wife, because the wife can conceive a child belonging to another man. This takes an economic disadvantage for the husband, who would otherwise be raising a child of his own and supporting his own wife. However, a husband's habitual adultery could distract him from his wife's and children's needs and impose just as high as costs on her as if she bore a child from another man.1

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Gains from marriage declined as women continued to enter the workforce. Because of the increasing rate of divorces, more flexible divorce laws came about as a result of high law enforcement costs. The big legal reform to this in many states was to add a no-fault ground, such as “irreconcilable differences,” that goes with not assigning any blame to either party that marriage misconduct does. As with fault, the party claiming that there were irreconcilable differences did not need the other party's consent to file for divorce. However the party being accused of fault was allowed to defend him or herself in an attempt to prevent the divorce. In many states, the addition of “irreconcilable differences” as a new ground for divorce within the legal framework amounted to unilateral divorce. This introduces us to the concept of divorce upon the request of one spouse, regardless of the other's wishes. In contrast, the fault-based system prevented one spouse divorcing another on a singular basis, but permitted divorce for which both parties agreed.5 The implementation of a no fault divorce made it more important that courts adopted a careful economic approach to calculating divorce to keep allocation of property fair and balanced, from men to women. Often times, the man has to obtain his wife's consent for a divorce, which enabled her to bargain for a very generous settlement of, mostly, his property.

In the United States, circa 1960's and 1970's, many states reformed divorce laws to eliminate “demonstration” of some form of fault. States changed their laws to remove fault. The types of reforms they adopted and the timing of legal changes were varied in different states during this time. In addition to the passage of these “unilateral” divorce laws during this period, states were different in how they divided marital property. The states changed from a common law organization to equitable division, which gives judges discretion in allocating marital property according to state laws and what the judge sees as fair. In equitable distribution states, divorce laws maintain that judges must consider specifics before awarding property to any party. Some of the following specifics that the judge must consider are: length of marriage, age, health, occupation, sources of income, amount of income, situation of life style, liabilities and needs, contribution to the marital estate, assets and liabilities, behavior of the parties during the marriage, vocational skills and employment eligibility, and tax consequences.

The common law in America is derived from the laws of the United Kingdom, which were developed and refined over centuries from the, possibly, millions of court cases. This is different from the equitable laws because equitable doesn't relate to the word “equal,” while common law attempts at making a fair distribution of wealth between parties. In the forty-one equitable distribution states in the United States, the court decides what is fair, reasonable, and equitable division of the assets would be. The court could award one party nothing, or award one party everything. The reasoning behind this is that the specific marital factors contribute to how the courts can divide property since one party may have a signed agreement with their spouse as to who gets what. Most states divide property according to these equitable distribution statues, but parties often have misconceptions about what is subject to be allocated. In some states, funds given to a spouse, even before a marriage, are still available to be divided in a matter of divorce. These funds become part of the marital estate, and thus, are eligible to equitable division. It is hard to determine how much funds each party would get because often times the husband enters the marriage wealthy, but the wife contribute motivation to have further success. For example, if a husband and wife marry, the wife could claim she supported the husband while he went through graduate school, and if it weren't for the wife supporting the estate, the husband would never have the opportunity to further his education to create a higher level of income.

Community property is everything that a couple owns together. States like Arizona, California, Idaho, Louisiana, New Mexico, Texas, Nevada, Washington, and Wisconsin are the only states to have community property laws from which allocation of property will be half and half for each party should the marriage end in divorce.6 The community property system assumes that both spouses have contributed equally in partnership to the economic assets of their marriage, whether a spouse was homemaking or earning a salary. This means both the husband and wife equally own all money earned by either one of them from the beginning of the marriage until the date of separation. In addition, all property acquired during the marriage with “community” money is owned equally by both the wife and husband, regardless of who purchased it. Each partner has a legal claim to half of this property, regardless of who actually acquired the property or how. Furthermore, any property owned by either individual before the relationship began also becomes community property if it is connected with other community property during the time of the relationship. The same can be said for community debts. All debts contracted from the beginning of the marriage until the date of separation are considered community debts, which makes each spouse equally liable for the debts. A little trick that some spouses may do is to keep credit cards, home mortgages, or car loans open as long as possible because they know that each person is equally liable, which means they would be able to enjoy the items they enjoy without having to pay full price for them.

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While there is this idea of community property, there is also separate property. Separate property is everything a spouse may own individually, including anything owned prior to the marriage, anything inherited or received as a gift during the marriage, and anything either spouse earned after the date of separation. This is not eligible for division. This could also include anything either party has given to each other, but must be in writing that it is separate property. It is important for each party to retain receipts in order to track down where the property came from and who allocated it, so as to refute any question from where it came. For example, a husband may have contributed the down payment for a house, got married, then paid off the mortgage with community property. The husband, in this case, would be reimbursed for the down payment if he could prove his separate moneys were used to pay for it. Similar to separate property, separate debts belong to one party only. All debts accrued before the marriage are the sole responsibility of that participating party and are non-transferrable unless under written agreement.

Marriage is sanctity between two people, legally defined as a man and a woman. However, when marriage isn't working out and the best thing to do is to terminate it, the law must be brought in to question the distribution of property and assets, so as to provide a fair but legal means of division. In the English common law, we find nearly every state's divorce law has required providing a legislatively recognized reason for separation and has changed under King Henry VIII. Currently, it recognizes certain faults that would make marriage eligible for termination. Under community property, found in states that were formerly under Spanish law, we find that equitable distribution relies on when property was allocated and the means of which property was allocated. If community property, meaning both spouses contributed to the earning of said property, is up for division—the community property could be equally distributed among the parties. This isn't to say that property would be distributed half and half, but the property would be evenly distributed based on factors like wealth and earning power. Thirdly, in the equitable distribution states, which mainly occupy the northeastern United States, acquired property, regardless of legal title, is subject to equal or unequal division. The presence of "equate" and "equal" within the word “equitable” does not mean a spouse will automatically receive half of everything. In the 41 equitable distribution states in the U.S., the court decides what is a fair, reasonable, and equitable division of the assets. The judge, in equitable distribution states, must consider factors which make property division legal. This is different in common law states where property is distributed as according to the law set forth, based on how the misconduct had affected the marriage. These laws have been in place in order to ensure that property would be equally, and rightfully, distributed to the correct parties should a marriage be terminated. The question of what property becomes whose is one that these laws try to address—while it may not seem fair at times, it has been deemed as optimal for efficiency. I think these laws are efficient because they don't single one person out as evil, rather, they try to figure out why the property is in possession. If a piece of property is in existence because of a male who performed serious misconduct, that property is still entitled to that male. However, given the law and circumstances, the property should be distributed evenly. I do think that the common law has its flaws, however, being that divorce trials were often filled with charged and countercharged that under minded the meaning of marriage in the first place—to not be greedy but to come together as one unit. I think the common law has some bugs to work out, especially since one couple could not divorce unless it was proven that a serious offense took place. I think the equitable distribution law makes more sense because it allows for a divorce to take place and to worry about which property gets distributed and to whom it becomes owned by.

Endnotes

  1. 1Mnookin, R.H., Divorce. Harvard Law Review, Retrieved Dec. 1, 2008, from
  2. <http://www.law.harvard.edu/programs/olin_center/papers/pdf/231.pdf>, p. 1
  3. 2The History Channel website, Divorce, Retrieved Dec. 1, 2008, from
  4. <http://www.history.com/encyclopedia.do?articleId=207694>
  5. 3Ibid, <http://www.history.com/encyclopedia.do?articleId=207694>
  6. 4Posner, Richard A., Economic Analysis of Law 7th ed., New York, NY: Wolters Kluwer, p. 148
  7. 5The Equality in Marriage Institute, Who Gets What Where, from
  8. <http://www.equalityinmarriage.org/wdget.html>
  9. 6Divorce Education Center, Community Property and Separate Property in a Divorce, from <http://www.legalzoom.com/divorce-guide/community-property-separate-property.html>