When a couple decides to divorce, one of the most significant and often contentious issues is the division of property. In Hawaii, the process of dividing property follows specific laws that are designed to ensure a fair and equitable distribution. However, many factors come into play, making it essential for divorcing couples to understand how property division works in the state.

In this blog, we’ll explore the basics of property division in Hawaii, the difference between marital and separate property, and the factors the court considers to ensure an equitable distribution.

1. Hawaii Is an Equitable Distribution State

Unlike some states that follow community property rules (where assets are split 50/50), Hawaii is an equitable distribution state. This means that the court aims to divide marital property in a manner that is fair and just, though not necessarily equal. The court has broad discretion in deciding how property is divided, and several factors are taken into account to determine what is equitable in each case.

2. Marital vs. Separate Property

One of the key distinctions in property division is the difference between marital property and separate property. Understanding this distinction is crucial to knowing what may be subject to division during a divorce.

• Marital Property: This includes any assets or debts acquired by either spouse during the course of the marriage. Examples include: 
  • Income earned during the marriage
  • Real estate purchased together
  • Retirement accounts contributed to during the marriage
  • Joint debts, such as mortgages or credit card debt
• Separate Property: This refers to assets or debts that belong solely to one spouse, typically because they were acquired before the marriage or through specific means during the marriage. Examples include: 
  • Property owned by one spouse before the marriage
  • Inheritances or gifts given to one spouse during the marriage
  • Certain personal injury settlements

In most cases, separate property remains with the original owner, while marital property is subject to division.

3. How Does the Court Decide What Is Fair?

In Hawaii, the court looks at various factors to determine what is equitable in dividing marital property. The goal is to reach a fair outcome based on the unique circumstances of each marriage. Some of the factors the court may consider include:

• The length of the marriage: Longer marriages may result in a more equal division of property, while shorter marriages may lead to a division more closely aligned with each spouse’s individual contributions.
• Each spouse’s financial situation: The court will consider each spouse’s income, earning potential, and financial needs, particularly if one spouse sacrificed career advancement to support the family or raise children.
• Contributions to the marriage: Non-financial contributions, such as homemaking, caring for children, or supporting the other spouse’s career, are also considered.
• The age and health of each spouse: If one spouse is older or has health issues that affect their ability to support themselves, this may influence the division of property.
• The custodial arrangement of children: If one parent is granted primary physical custody of the children, the court may award them the marital home to provide stability for the children.

4. Division of Retirement Accounts

Retirement accounts are often a significant asset in divorce cases. In Hawaii, retirement accounts that were contributed to during the marriage are considered marital property and subject to division. The court may divide these accounts through a Qualified Domestic Relations Order (QDRO), which allows for the transfer of retirement funds without penalties.

It’s important to note that only the portion of the retirement account earned during the marriage is subject to division. Any portion that was earned before the marriage is typically considered separate property and remains with the original owner.

5. Debts Are Divided as Well

Just as assets are divided, so too are marital debts. In Hawaii, the court will look at the marital debts accumulated during the marriage, such as mortgages, car loans, credit card balances, and other liabilities. These debts are typically divided between the spouses based on their ability to pay and their respective contributions to the marriage.

Separate debts, like individual loans taken out before the marriage, remain the responsibility of the spouse who incurred them.

6. Prenuptial Agreements and Property Division

If you and your spouse signed a prenuptial agreement before getting married, this document may outline how property and assets will be divided in the event of a divorce. Prenuptial agreements can override Hawaii’s equitable distribution laws, provided they are valid and were created in accordance with state law.

It’s important to consult with an attorney to ensure that the terms of your prenuptial agreement are enforceable during the property division process.

7. Can Property Division Be Settled Out of Court?

Yes. Many couples prefer to settle property division through mediation or negotiation rather than having a court make the decisions. In fact, the court often encourages couples to come to their own agreement on property division, as this can save time, reduce costs, and result in a more amicable resolution.

Through mediation, a neutral third party helps facilitate discussions between both spouses to reach a mutually agreeable settlement. Once an agreement is reached, it is submitted to the court for approval, ensuring that the terms are fair and legally binding.

8. What Happens If We Can’t Agree?

If you and your spouse are unable to reach an agreement on property division, the court will intervene and make the decisions for you. This can lead to a longer, more contentious process, but the court will ultimately determine a division that it considers equitable based on the factors discussed earlier.

Navigating Property Division in Hawaii

Property division is a complex process that requires careful consideration of each spouse’s contributions, needs, and future financial stability. In Hawaii, the goal is not necessarily to divide property equally but to divide it fairly. Understanding the laws surrounding property division can help you make informed decisions during your divorce and ensure that your financial interests are protected.

If you’re facing property division in Hawaii, consulting with an experienced family law attorney can provide valuable guidance and help you achieve a fair outcome.