Division of property within a divorce procedure

Dividing property between a couple can cause disagreement, both when married and especially when divorcing. Our property is a symbol of our status, our financial and personal security. In the article below I will put aside the feelings and anger and refer to the legal aspects of property division within a divorce.

This area includes a range of legal issues you should know so you can realize your rights in the best way. In the article below I will review in detail the subject of division of property when in a divorce procedure, as follows:

Which subjects should be regulated, within the divorce procedure?

Before I review the actual issues connected to the division of the property between a couple going through a divorce, I’ll review, in short, the divorce procedure itself. This procedure, in fact, is made up of a few separate legal procedures. The first is the actual divorce. In Israel, a couple who want to get a divorce need to do so by filing a claim to the Rabbinic court. This court has the sole authority to deal with matters regarding marriage and divorce, by the force of the Law of Rabbinic courts (marriage and divorce), 5713-1953. The Rabbinic court has the authority to deal not only with marriage and divorce but also with claims connected to the divorce, such as custody, property etc. I’d like to clarify by stating that the term “marriage and divorce” includes not only the “divorce claim” itself but claims for alimony, the money stated in the Ktuba, and claims for reconciliation. This means that the Rabbinic court can rule in these matters too, although, in these matters, there is another parallel jurisdiction, as I will explain below.

Another subject that needs to be regulated within the divorce procedure is the subject of custody over the children and the sum of child alimony.

Custody is the parent’s right to be the main person responsible for his/her children, where the other parent, who is not the custodial parent, gets to have “visitation rights” i.e. regular days during the week and weekend where he/she gets to spend time with his/her children. The custodial parent gets the children in his/her possession, with all that is implied. So, if the couple haven’t reached an agreement regarding the custody of the children, this issue will be decided by the court.

As a footnote, I’d like to add that the custody of the children will be decided by the court according to one standard which is the best interests of the child/children. Only these interests will determine which parent will be the custodial parent.

The next issue is alimony. The obligation to pay alimony is an absolute obligation, stemmed from the Jewish law (in cases of a Jewish couple) and is intended so the father’s children will have a respectable existence, even if they do not live under the same roof. The sum of the alimony will relate to a number of aspects such as: the father’s salary, the lifestyle the children are accustomed to etc. this being said, alimony is an absolute obligation so the father has to make the payments in any case. There are some outstanding cases which I will not refer to in this article. As with custody, the couple might not reach an agreement regarding the sum of the alimony the father should pay and they could find themselves fighting in court over this issue. A claim for alimony can be filed at the Rabbinic court but also in the family court too.

How is the property divided within the divorce procedure?

Within the divorce procedure, the couple will determine the issues of custody, alimony and of course, the divorce itself. But this is not the end since they have accumulated common property, during their life together, which should be divided. A couple starting a family accumulate common property such as an apartment, vehicles, business reputation, mutual funds / unit trusts, provident funds, savings and other property. There are cases where the partners come in to the marriage with personal property which they acquired before the beginning of the relationship. This property supposedly has no connection to the other spouse.

Legally, the matters of division of property between spouses are regulated in the law called the Financial Relations Law, 5733-1973. This law states the “default” regarding division of property, called “Resources Balancing Arrangement”. According to this law, all the common assets of the couple will be divided in an even way. This arises the question: what are “all the common assets” the law refers to?

The answer is – the law defines the term “all the assets” as any type of property be it material or spiritual property. This means that all the common assets which could be an apartment/s, vehicle/s, compensation payments, savings, business reputation, provident funds etc.

As mentioned, according to the law, all the common property will be divided in an even way, but, every rule has an exception. The exception is expressed in the types of assets that will not be taken in to account when arranging the balancing arrangement. The law states that the following will not be included: old age pension, pension being paid due to disability/handicapped or widow’s pension. In addition to this, another exception is property that one of the spouses received before the marriage, or as a present or as an inheritance received by one of the couple, before or during the marriage.

Moreover, if a couple have agreed, in writing, about property that will not be balanced between them, i.e. the couple can sign an agreement which will determine a different division of property when divorcing. To clarify, the law states a legal default, so to speak, but the couple can disagree, if they so wish. The agreement between the couple is known in legal jargon and a financial agreement (or prenuptial agreement) which I will refer to later.

The last exception I’d like to refer to is a clause in the law that states that the court is entitled, in special circumstances, and if one of the parties so ask, to rule that the division of property will not be done in an “equal” way but rather in a different way that the court will decide upon, regarding the circumstances. If the court does come to this decision it will have to take in to account, among other assets, the future assets of the couple such as intellectual property benefits received in the future and the earning capacity of each spouse.

Simulations of property division according to the Financial Relations Law

In the previous section I referred to the legal default of the financial relations law, that the property should be divided equally, and that there are exceptions. I will now demonstrate this with a few examples:

  1. One of the partners had two apartments before the marriage, the other partner had one apartment before the marriage. One of the partners has a book that was written by him/her during the marriage. In such a case, the apartments were the parties’ property before the marriage, so, when dividing equally, these apartments will not be taken in to consideration. On the other hand, the book is a different story (no pun intended). Due to the fact that it was written during the time of marriage, the royalties received are considered “spiritual property” which is part of the “total assets” of the couple. The royalties that the other partner will be entitled to will be part of the arrangement of balanced assets.
  2. The couple have a business they started together and an apartment. In this case, the business and the apartment are “classic” common assets so, according to the arrangement of balanced assets, they will be divided equally, whether by sale or by transfer, according to the couple’s wishes (if they renounced legal decision).
  3. A couple have an apartment, 2 vehicles and one of them has an apartment he got by inheritance. In this case, the common apartment and the vehicles are assets to be balanced because they are part of the common assets, and should be divided equally, by sale or physically. The apartment that the one partner has by inheritance will not be taken in to account in the arrangement of balanced assets.

As a footnote to this part, I’d like to note that the examples above were given as examples and, in real cases the court could come to different conclusions, due to special circumstances. Please take these examples with “a pinch of salt”.

What is a financial agreement?

As mentioned above, one can dispute the default balancing agreement suggested the law, by signing a financial agreement (or prenuptial). This agreement is signed by the couple before the marriage or during it. The purpose of the agreement is to regulate the division of property, if the day comes and the couple decide to divorce. Legally speaking, this agreement is complex and needs legal knowledge, experience and the ability to understand the needs and wants of the couple, so as to transform these needs and wants to a legal and binding document. I usually recommend that couples sing a financial agreement because I have seen, in many cases, how this can prevent expensive and long legal disputes during the divorce procedure and it also assists the divorce procedure to be easier and faster. Allow me to explain a few more details regarding this agreement –

A financial (or prenuptial) agreement is no ordinary agreement where both parties can sign it and act accordingly. For this agreement to get legal validation, a court has to authorize it. It is not enough to sing in the presence of a lawyer but it has to be submitted to the family court and be authorized by it. The court will examine the financial agreement, usually the court will not interfere as long as the judges do not suspect that the couple (or one of them) do not understand its content and meaning.

What is the cost of drawing up a financial agreement?

Writing, editing and submitting a request to authorize a financial agreement (and the agreement itself, obviously) is a job requiring knowledge, experience and time. In order to benefit from these, one should seek help from a lawyer who deals in family law. The fee for editing and submitting a financial agreement ranges from a few thousand NIS up to tens of thousands of NIS. The fee will be derived from the work needed and the time it take to create the agreement. If the financial agreement is complex, includes a large number of assets, then the fee will be higher, in accordance. If the financial agreement is short and does not have many conditions, divisions and property, the fee requested will be lower.

Is it worth my while signing a financial agreement?

I am asked by clients, many times, if they should sign a financial agreement. One of the claims made is that this agreement has a “chilling” effect which will harm the relationship and the trust between the young couple. To be frank, this claim cannot be dismissed offhand because in some cases, these feeling have some truth in them. On the other hand, I feel that a financial agreement is not meant to build or harm the trust between a couple but rather to prevent future disputes between them. I feel that signing a financial agreement has more benefits than drawbacks, the main advantage being the ability to prevent future disputes. In addition, the agreement has direct influence on the future economic certainty of the couple. I also think that an additional strength of signing a financial agreement is that it shows maturity and better judgment of the couple. The downside of signing such an agreement is that it could affect the trust between the couple, as mentioned before but I feel that this shortcoming can be overcome quite easily if you understand that the agreement is not intended to create trust between the couple but rather to reflect a healthy and clever approach to life and the future.

Can one sign a financial agreement without a lawyer?

The answer to this question is yes, one can, but I strongly recommend against. As a rule, a person can represent him/herself in any legal case, the same goes for signing a financial agreement. The couple can draw the agreement themselves and request its authorization by the court. However, a person without legal education might not have the legal knowledge that will enable him/her to draw an agreement that will prevent future dispute and conflict. As in other fields of life, when we need expert advice, we go to an expert. The same goes for legal matters. It is best to rely on a professional, i.e. a lawyer.

Can a financial agreement be cancelled?

A financial agreement that is authorized in a court is like a court verdict and is binding, for both parties. It is very difficult (if not impossible) to cancel a final verdict, the same goes for a financial agreement that was authorized by the court. The reason is, that such an agreement was reviewed by a judicial instance.

Therefore, these agreements are considered agreements already approved and tested in the past.

There have been cases where the courts did order cancelation of such an agreement but there are very rare. Examples for agreements that were canceled could be when a spouse signed the financial agreement under pressure, or if he/she didn’t understand what he/she was signing (the agreement was written in a language forging to the signer), or if the party signing was mentally unfit to sign due to the fact that in his/her mental situation, he/she was unable to understand the implications and meanings. But, as mentioned, cancelation of a financial agreement is very rare.

How do I submit a claim for division of property between a couple?

Regulating the division of property can be done during the divorce procedure. A property claim can be submitted in two ways: the first way is to file an attached claim to the divorce claim. In this case, the claim will be filed to the Rabbinic court. The second way is to file a claim for division of property at the family court. It is best to examine each case and get legal advice. There are cases where it is better to have an attached claim and others where a separate claim to the family court would serve you better.

Is it worth my while to have a mediation process regarding the regulation of the common property?

Mediation is a voluntary process the couple go to on their own account or by referral from the court. The mediation process is not judgmental. The mediator’s job is to mediate – bridge between the couple’s positions and get them to agree. The judge, on the other hand, has to decide which one of the couple’s claims are just, this includes couples in a process of division of property. A mediator is not supposed to determine which claims are just (nor does he/she have the authority to do so). Mediation is becoming more and more common in legal procedures (in all aspects of civil law and especially family law).

Using a mediation procedure has its benefits: the process is intimate, much less costly than a full legal procedure in the court, it’s confidential and efficient and faster than full legal procedures.

For these reasons, I feel that the mediation procedure is an important and welcome procedure and when claiming for division of property it is a possibility worth checking out. If the mediation is unsuccessful you can always go back to the court.

To sum:

Property division between a couple is one of the more difficult subjects during a divorce procedure. Our property is our financial security foundation.

Therefore, when it comes to a dispute over property between former spouses, the procedures are accompanied by emotions and primal instincts. The law determines that spouses who are in the process of divorce, will divide their property in an equal way, this is the legal default. However, as we detailed at length above, the Financial Relations Law gives the court the authority to deviate from “equal distribution”, upon occurrence of special circumstances. Moreover, partners can also challenge this default set by the law by signing a financial agreement.

In a property claim, the couple can try (and in some case it is recommended) to solve the dispute through a mediation process. I would like to end this article with a warm recommendation: always seek the services of a lawyer in family law. Property division matters are legally complex matters. Therefore, it is important to be accompanied by an expert in the law and in the field.