E. Governments and Shared Parenting
III. The Equal Division Rule and the Spouses’ Adjustment of Behavior
The previous sections concluded that in the great majority of marriages the nonmarket contribution equals the financial contribution as long as the work efforts of the spouses
46Principles§ 5.05 cmt. e, at 840.
47See among others ALLEN M. PARKMAN,No-Fault Divorce: What Went Wrong?Boulder-San Francisco-Oxford 1992, pp. 39–42 and p. 143–44.
are viewed as dependent on each other. The key to this understanding is the adjustment of behavior that takes place in marriage. A certain quantity of domestic work has to be done in the family, and if one of the spouses performs less, the other must perform more.
Given the premise that outsourcing of childcare and a substantial amount of housework is not an appropriate alternative, if one spouse performs more than her share of the services that are consumed, she has contributed indirectly to the other spouse’s investments of his income during marriage. ThePrinciplesrecognize the loss side of domestic work, but they more seldom recognize the contribution side. ThePrinciplesdo not discuss the interdependence between the spouses’ work effortsin any depth – they focus on the moral relationships rather than the economic relationship.
People do not view marriage primarily in terms of economic advantage, and rightly so. Nevertheless, economic contributions should not be concealed. Professor Katharine Silbaugh maintains regarding property division that while one might decide that the amount of contribution should not be the decisive factor, one nonetheless benefits from a clearer examination of those contributions in deciding proper outcomes.48
Spouses form a work unit, but also a consumption unit and an investment unit. The fact that spouses adjust consumption and investments to each other is an important recognition when analyzing the effects of the property division rule. As mentioned earlier, the ALI proposes an equal division rule, where premarital assets, as well as gifts and inheritance, are excluded from division.49The failure to acknowledge the spouses’ economic adaptation has some unfavorable effects regarding property division, when only the assets acquired during marriage are divided equally. A fundamental adaptation lies solely in the fact that most spouses must be content with one dwelling; it is in the nature of family life that both parties live in one family home. If both have previously owned a house, one of them will in most cases sell his or her house when they start living together. If only one of them owned a house before the marriage, the other is in most cases prevented from future investments (savings) in a house. Whether the parties are independent of each other or not, the majority can afford only one house. If the dwelling has been paid off at the start of the marriage, this adjustment of behavior can lead to unfortunate results in cases where only assets acquired during marriage are divided. Owing to the increase both of wealth and in the frequency of remarriage, it is not uncommon for one spouse to bring a house, a car, or other property into the marriage, while the other spouse brings little property. If such basic investments are already available to the family, it is natural for the spouses to apply most of their disposable income to current expenses during marriage.
The party without property will benefit from the other party’s investments during the marriage, but will be hard hit when nothing is saved for equal distribution when the spouses part company. In order that one party shall not come out of the marriage empty- handed, the less wealthy party (or the other party) must put aside part of his or her income during the marriage in case of a possible breach. But how many people would do such a thing in practice? Spouses live in a community of life, one of the consequences of which is that they form a consumption unit, the parties eat the same food, they go on the same holidays and so forth. And the parties adjust this level of consumption to the fact that basic investments, like a family home, are already available. The prerequisite
48Katharine Silbaugh,Commodification and Women’s Household Labor, 9Yale J.L. & Feminism81, 119 (1997).
49Principles§§ 4.09(1), 4.03.
for equal division rules where only the assets acquired during marriage are divided seems to be that the spouses should make dispositions with a view to their long-term financial gain.50
If the house is acquired before the relationship starts, but the mortgage is paid off during marriage with the spouses’ earnings, which are marital property, the nonowning spouse is better off, for such assets are divided equally irrespective of the ownership of the dwelling.51However, to the extent that the principal balance of the loan is not reduced during marriage, a home acquired on credit before marriage is presumed to be separate property, which means that the appreciation on that portion of the house is characterized as separate property.52As long as most couples must be content with one dwelling, the nonowning spouse should share in the price rise (and fall) in the real estate market. The family home holds a unique position and the appreciation on this portion of the house should be divided equally, whether or not the appreciation is related to any effort of the spouses. If the nonowning party cannot share in the rise in the market, he or she will be “trapped by” the housing market and be poorly equipped disproportionately to acquire a new dwelling on the dissolution of marriage (and vice versa regarding price fall). For a similar reason, the question may also be raised whether, as Section 4.06 (2)(a) provides, it ought to be the case that the paying spouse alone should benefit from the appreciation on a corresponding share of the dwelling when a mortgage on a house bought during marriage is paid off with separate property. Normally, the appreciation of that portion of the house is caused by the original acquisition of the house (and the borrowing), and not by the kind of property (separate or marital) that is used to pay off the loan.
Sometimes it is fortuitous whether a spouse consumes or invests an inheritance or a gift, which is separate property, during marriage – and the fortuity of this depends on factors that seem irrelevant when viewedex post. Say, for example, that the husband uses his inheritance to pay off his consumer loan because this loan has a higher rate of interest than the mortgage. The husband acts on the basis of what appears profitable and rational at the time of the disposition, and not with a view to what he himself would have earned most from, that is, keeping his inheritance invested in the house. Or consider a second example:
often both spouses will inherit in the course of the marriage, and in such cases, it is not unusual to see that the first inheritance is saved, while the second is consumed. For when the second inheritance comes into being, the spouses considered as a unit already have a capital reserve, and seen in this light it is rational behavior to consume inheritance number two. A third example: the family spends the husband’s inheritance because it is composed of liquid assets, but keeps the wife’s inheritance, which is real property. The factors that in relation to thePrinciplesappear as extraneous circumstances or matters of chance have their basis in rational behavior seen from the spouses’ point of view. When it depends on matters of chance or irrelevant factors as to whether separate property is consumed
50T. SVERDRUP, “Marriage and Cohabitation: Community of Life or Community of Work?Working Papers in Women’s LawNo. 51, Department of Public and International Law University of Oslo (1999) and T. SVERDRUP, Maintenance as a Separate Issue – The Relationship between Maintenance and Matrimonial Property, in K. BOELE- WOELKI (ed.)Common Core and Better Law in European Family Law, EFL Series, No. 10, Intersentia, Antwerp (2005) pp. 119–34.
51Principles§ 4.06 (3).
52Principles§ 4.04. The same holds good even for cases where the house is acquired during the marriage, see Principles§ 4.06 illus. 4, reporter’s note, at 687–91.
or invested during marriage, fact-finding about whether an inheritance was consumed becomes important. The spouses will easily feel estranged in such a legal system.53
These examples have a common feature; they arise from the fact that spouses adjust their behavior during the marriage, with regard to savings, investments, and consumption. This behavior leads to inadequate results in economic settlements based on the thinking that there should be a balance between contributions and returns, namely, that only those assets acquired during marriage by means other than gifts and inheritance is subject to equal division. Spouses adjust their economy according to the total amount of income, investments, and expenditure. When only assets acquired during marriage are subject to division, this mirrors a concept of reciprocation between contributions and returns that overlooks this adjusting behavior. As we have seen, one spouse’s behavior is also a reflection of the starting position of the other spouse, as both form an investment and consumption unit. A spouse adjusts the level of consumption to the fact that basic investments are already available to the family.
Sections 4.12 and 4.03(6) should alleviate some of these unfortunate effects of the Principles. Section 4.12 gives spouses in long-term marriages a share in one another’s separate property.54According to Section 4.03(6), property acquired during a relationship between the spouses that immediately preceded their marriage is treated as if it were acquired during marriage.55These are important provisions that to a greater degree take into consideration the fact that spouses interact within the framework of an economic unit.
Section 4.12 is justified by the fact that spouses after many years of marriage do not think of their separate-property assets as separate.56Their expectations of sharing in one another’s greater assets increase correspondingly. The longer the marriage, the more likely it is that the spouses will have made economic decisions premised on such expecta- tions.57The Principlesmaintain that the rationale for Section 4.12 is consistent with the approach taken in Section 5.04 to compensatory payments.58The spousal sense that property is communally, rather than individually, owned has its source in the relation- ship of the parties; the duration of marriage provides an administrable measure of that relationship.59
The problems described above are not so much related to the duration of the marriage as to the unique position of the family home as a dwelling and capital reserve, and to the fact that one spouse’s separate property could be a hindrance for the spouses’ investments during marriage. Because of the rationale for Section 4.12, this section aims both too low and too high to address these problems. The section fails to financially secure those spouses in medium-length marriages of seven to fifteen years, where divorce is frequently occurring. If the wife owned a house at the time of their marriage, and they as a result consumed most of their income during the marriage, the husband will receive 8 percent of the value of the house after nine years of marriage, and the wife will retain 92 percent.60
53Fact-finding has become a dominant part of property division cases in Norway since 1991 when the country introduced a rule that excluded the value of inheritance, gifts, and premarital assets from the property subject to equal division.
54Principles§ 4.12, at 769. 55Principles§ 4.03 (6), at 650.
56Principles§ 4.12. 57Principles§ 4.12 cmt. a, at 771.
58Principles§ 4.12 cmt. a, at 771–72. 59Principles§ 4.12 cmt. b, at 773.
60In this case 16% of the house is marital property according to the proposed section (a) in Illustration 1 of the Principlesat page 774. After fifteen years of marriage, he will receive 20% and she will retain 80% of the house (40% is marital property).
On the other hand, the full value of separate property is normally subject to recharacter- ization, and recharacterization takes place whether the separate property in question was an impediment to capital accumulation during the marriage or not. A recharacterization rule that is connected both to the family home and to the duration of marriage seems more appropriate.