Dividing assets and debts during a divorce can be one of the most complex and contentious issues. In Hawaii, property division follows the principle of equitable distribution, meaning assets and debts are divided fairly—but not necessarily equally. Understanding how this process works can help divorcing spouses prepare for what to expect.

Understanding Equitable Distribution in Hawaii

Hawaii courts follow the equitable distribution model, which means property is divided based on what is fair and just, rather than simply splitting everything 50/50. The court considers various factors when making these determinations, ensuring that both parties receive a fair share of marital assets and debts.

Marital vs. Separate Property

Before dividing property, the court must determine whether an asset or debt is marital or separate property.

• Marital Property: Includes assets and debts acquired by either spouse during the marriage, regardless of whose name is on the title. Common examples include real estate, bank accounts, retirement savings, vehicles, and business interests.
• Separate Property: Includes assets acquired before the marriage, gifts or inheritances received by one spouse alone, and property explicitly designated as separate in a valid prenuptial or postnuptial agreement.

In most cases, only marital property is subject to division, while separate property remains with the original owner. However, separate property can become marital property if it is commingled, such as when one spouse deposits an inheritance into a joint bank account or uses separate funds to improve a shared home.

Factors Courts Consider in Property Division

When determining how to divide assets and debts fairly, Hawaii courts consider several factors, including:

1. Length of the Marriage – Longer marriages may result in a more equal distribution, while shorter marriages may see each party retaining more of what they brought into the relationship.
2. Contributions of Each Spouse – This includes financial contributions, such as income and investments, as well as non-financial contributions, like homemaking and raising children.
3. Economic Circumstances of Each Spouse – Courts assess each spouse’s earning capacity, employment prospects, and financial needs after the divorce.
4. Standard of Living During the Marriage – Judges may try to ensure both parties maintain a similar standard of living post-divorce, if possible.
5. Custodial Arrangements – If one spouse has primary custody of the children, they may be awarded the family home to provide stability for the children.
6. Dissipation of Assets – If one spouse has wasted marital assets (such as excessive gambling or reckless spending), the court may adjust the distribution accordingly.

Dividing Specific Types of Property

Different types of assets are treated uniquely in a divorce settlement:

• Real Estate: The marital home may be sold and the proceeds divided, or one spouse may buy out the other’s share. Courts often prioritize the custodial parent keeping the home if children are involved.
• Retirement Accounts & Pensions: These are subject to division, often requiring a Qualified Domestic Relations Order (QDRO) to split assets without penalties.
• Business Interests: If one spouse owns a business, it may be valued and divided equitably, with the non-owner spouse potentially receiving a buyout or share of future earnings.
• Debts & Liabilities: Marital debts, including mortgages, credit cards, and loans, are divided just like assets. Courts aim to allocate debt fairly based on each spouse’s ability to pay.

Can Spouses Negotiate Their Own Property Division?

Yes, couples can reach their own property division agreement through mediation or direct negotiations. If both parties agree on asset distribution, they can submit a settlement agreement to the court for approval. This approach can save time, reduce legal costs, and provide more control over the outcome.

However, if spouses cannot agree, the court will step in and make decisions based on Hawaii’s equitable distribution laws.

Protecting Your Financial Future

Understanding how property division works in Hawaii is crucial for protecting your financial future. Whether negotiating a settlement or preparing for court, having a knowledgeable Hawaii divorce attorney can help ensure your assets and interests are fairly represented.

If you are facing divorce and need guidance on property division, consulting with an experienced family law attorney can provide clarity and help you navigate the process effectively.