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Selling Assets Before Divorce In Utah

Selling Assets Before Divorce In Utah

During marriage, couples acquire the rights to some of the property and assets, as well as debts, acquired by one or both of them. Marital property doesn’t include things that are considered “separate property owned by either spouse, for example, property owned before marriage, inheritance, gifts, property specifically excluded by valid prenuptial agreements, and property gained after legally separating. In addition, keep in mind that you are also on the hook still for your separate debts from before marriage.

There are two ways states divide marital property: equitable distribution and community property. Utah is an equitable distribution or common law state, which is the majority marital property legal system. However, large numbers of people, especially in the Western U.S., live in community property states. This means marital property in Utah isn’t automatically assumed to be owned by both spouses and therefore should be divided equally in a divorce. In Utah, marital property is divided “equitably” or fairly, which may not be an even 50-50. Usually for longer marriages, it is about 50% to each party. For short-term marriages, the court generally puts people back to their position before the marriage, such as giving people what they had before the marriage and typically what they made during the marriage. Parties can agree on how they want to divide the property outside of court, but a judge will review it to ensure it’s fair.


In a divorce, the distribution of property depends on which property belongs to the marriage marital property and which property belongs to each of the two spouses separate property.

Generally, marital property is property acquired or earned during the marriage, including earned income. Property used for the benefit of the marriage, even if it started out as separate property, may also be considered marital property. Separate property includes anything that belonged to one spouse before marriage and was kept separate throughout the marriage. It could also include property given only to one spouse during the marriage, like a gift made to the husband alone or an inheritance that the wife received from a member of her family.

The most common types of property divided at divorce are real property like the family home, personal property like jewelry and clothing, and intangible financial assets like income, dividends, and benefits. All of the marital property must be divided between the spouses when the marriage ends, and marital debts must also be divided. The spouse who owns separate property gets to keep that property–it can’t be awarded to the other spouse.

Rather than rely on a hard and fast set of rules when splitting property between spouses, judges in Utah have discretion to consider a variety of factors unique to each marriage. Despite the court’s relative freedom to decide what is fair, it should always consider the length of the marriage and how the spouses acquired the marital property. It should also look at the conditions each spouse will face alone after the divorce, such as medical needs, and childcare costs. Each spouse’s level of education and earning potential are also relevant. Judges may divide property unequally after taking these factors, and others, into account.

Alimony Determined as Part of Equitable Division

In Utah, courts consider alimony as part of the equitable division of marital property. Alimony is a payment from one spouse to the other to help the recipient spouse maintain a lifestyle as close as possible to the standard of living the parties enjoyed during the marriage and specifically, at the time they separated. If it is more equitable, the court might base alimony on the standard of living at the time of trial. The court also has the option to base alimony on the standard of living at the time of marriage if the marriage was short and there are no children. To determine the amount of alimony due, the court may consider either spouse’s fault in the deterioration of the marriage. The court also evaluates the recipient spouse’s financial resources, earning capacity, and whether that spouse worked in a business owned or operated by the obligated spouse (the one who has to pay). Additionally, the court looks at the obligated spouse’s ability to pay, the length of the marriage, who has custody of the children, and whether the obligated spouse’s earning capacity increased because the recipient spouse contributed to education or training during marriage. If one spouse is at the threshold of a major change in income because of the collective efforts of both spouses, that change also will be a factor in how the court divides the marital property and in the alimony award. Conversely, for a short marriage, the court could attempt to put the spouses back where they started as newlyweds, in terms of financial resources. Generally, alimony payments can last only as long as the number of years the marriage existed.

Marital Settlement Agreements

Throughout the process, divorcing spouses have opportunities to agree between themselves on what is a fair division. They can decide to sell certain assets and divide the proceeds, while allowing each spouse to keep certain other assets. Whatever agreements the spouses make, they can submit a marital settlement agreement to the court and a court will generally accept the agreement without further involvement. On the other hand, if the spouses cannot work together, or if there are certain items of property that they cannot agree on, then the court will decide for them.

How to Protect Your Real Estate Assets During Divorce

Emotions and divorce are never a good combination. You need a logical mind when splitting your property. If not, you could end up losing your hard-earned money and property unfairly.

Get an Accurate Value of Assets

Most people tend to forget the implication of tax on investment, such as deferred tax payment on retirement accounts. An early withdrawal could also come with a penalty. Put such factors into consideration when appraising the value of property and investments.

Choose Your Battles

Not everything is worth fighting for, and divorce attorneys are expensive. Before making any petition, compare the cost of the attorney to the value of the item you are trying to reclaim from your soon to be ex-spouse.

Get Prepared Before Filing for Divorce

You need to keep in mind that everything is divisible during a divorce settlement. Take measures before filing a divorce to protect what you can, and gather key evidence supporting any claims you intend to make in court.

Consider Using a Mediator

Like we mentioned earlier, divorces are expensive. In addition to sharing some of your property with your spouse, you end up paying hefty attorney fees. A mediator will be much cheaper and can facilitate your divorce agreement.

Make an Inventory of Your Non-Marital Assets

Revocable Trust

A revocable trust is a type of trust where the terms of the agreement can be changed or cancelled by the grantor. The income earned from the collective assets under a trust is distributed to the grantor, and property only transfers to the beneficiary upon the death of the grantor. By establishing an asset protection trust, you transfer ownership of your assets to the trust and only earn income derived from these assets. This means that the trust legally owns the assets and not you, and any divorce company coming after this property or its appreciation would be wasting their time. However, the trust is not always fail-proof. A trust will be effective in protecting your assets if the property was acquired before marriage, and the income obtained from the trust is not commingled with marital funds. Marital assets placed in a revocable trust can be divided in divorce settlements. You also need to be careful when drafting the trust. Ensure that the terms and conditions do not portray the trust as marital property.

You can also establish a discretionary trust. This is where the trustee has the ultimate authority to decide who becomes beneficiaries to the trust, and how and when they can receive the assets. The assets will remain under the ownership of the trustee, and they can deny access to the property during the divorce.

Maximize on the Equity of your Property

You can protect the real estate assets you have control over and have purchased individually by maximizing on its equity. Equity often determines the real value of a property. By subtracting any loans secured with the property from the property’s market value, divorce attorneys are able to determine the amount that should be split between the divorcing parties. Maintaining negative equity is the best bet at protecting your assets.

Prove That it is a Premarital Asset

All assets in a marriage are considered marital estate unless you can prove that they are non-marital. For real estate that you acquired before the marriage, you need to prove that any loans associated with the asset were cleared before you got into the marriage. Failure to which, the courts could declare that the asset only has partial non-marital value.

You can also prove that the asset was

• Excluded in a valid prenuptial agreement

• An inheritance

• A gift to you only, and not to both parties

• Proceeds from a personal injury settlement

Consider Setting up a Land Trust

If you have real estate acquired before the marriage, you can set it up in a land trust. Just as a land trust offers protection from creditors and litigators, it can protect you from losing your property during divorce. A land trust offers protection by maintaining your privacy with regards to ownership of real estate. The land trust will be the legal owner of the estate, and your name will not appear in any public records that identify property ownership. Only the trust name will exist.

Create a List of Assets

One of the easiest ways to start the property division process is for each spouse to create a list of assets and identify which spouse should receive it in the divorce. When you’re both finished with your list, you can come together to compare. If you have a dispute, work together to resolve it and determine who should get the property. It’s important to be transparent through the property division process. Both spouses must identify all assets that they acquired throughout the marriage, which includes bank accounts, insurance policies, vehicles, retirement accounts, pensions, real estate, recreational vehicles and equipment, and anything else that holds value. If you agree to a property settlement and later find out that your spouse didn’t disclose an asset, you can ask the judge to reopen your case to re-evaluate the property division. In addition to potentially losing assets later, the guilty spouse may also face fines or penalties from the court if the judge believes your ex intentionally failed to disclose or hid information the asset. Honesty is always the best policy when it comes to disclosure.

Generally speaking, courts will accept the fair market value (FMV) of each item, which is what you can get for the item if you sell it on the open market today, not what you paid for it.

Value Your Property

Another important step is to determine what the property is worth. Generally speaking, courts will accept the fair market value (FMV) of each item, which is what you can get for the item if you sell it on the open market today, not what you paid for it.

Determine If the Property Is Marital or Separate

Whether you’re in a community property or equitable distribution state, if you own separate property, it will remain in your possession. That said, you must first categorize and agree that the assets were separate before you can move forward. Each spouse should identify the owner of each asset. If there is a disagreement about whether an asset is marital or separate, the person claiming the item will have to prove to a judge that it’s owned separately. You can do this by showing the date of purchase, where the funds came from to purchase the item, and how the item was kept separate during the marriage. Marital debt is not excluded from property division in a divorce. If you acquired joint debt during your marriage, like a mortgage, car payment, or tax debt, you will probably have to split that between the two of you during your divorce. If you owned a credit card in only your name, and you never used it for marital purposes, like groceries, you may be solely responsible for the amount owing.

Remember, while the court can assign the debt to either (or both) spouse, it can’t change the contract you have with your creditors. For example, if the judge requires your spouse to pay off a joint credit card, but your ex fails to pay the monthly payment to the creditor, the credit card company can (and will) still come after you for payment. Unless you want your credit score to be in jeopardy, you’ll need to pay it, and ask the court for reimbursement from your spouse later.

If you and your spouse can agree on all of the terms of your property and debt division, you can create a property settlement agreement to present to the judge. Your agreement should list each asset and debt, the owner, and the value. If you want to be sure that you’re not making a bad deal, you should ask an experienced attorney to review the agreement before you sign it. In most cases, the judge will honor your agreement. However, if a party without a lawyer agrees to a property settlement that awards more than half of the property to the other spouse, the judge may want to investigate before approving it. No court wants to see a spouse walk away with an unfair distribution of property.

Free Initial Consultation with Divorce Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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