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Posted by attorney Michael Lawrence
Filed under: Family law

In a divorce, Kentucky law requires that property be divided "in just propoertions" or equitably. Equitably may or may not be evenly. When dividing a home that one of the parties owned before the marriage Brandenburg v. Brandenburg, 617 S.W.2d 871 (Ky. Ct. App. 1981) is the Kentucky case on point. The Brandenburg Court stated that “the interests of the parties were the same percentages as their respective contributions to the total equity in the property. In other words, there is to be established a relationship between the nonmarital contribution and the total contribution, and between the marital contribution and the total contribution. These relationships, reduced to percentages, shall be multiplied by the equity in the property at the time of distribution to establish the value of the nonmarital and marital properties." If you can find a copy of this case online it has a detailed explanation of the formula used in Kentucky and numerous examples of its application.

Brandenburg set forth two analogous formulas for determining Non-Marital property and Marital property. The formulas are (N-MC) / (TC) x (E) = Non-marital property and (MC) / (TC) x (E) = Marital Property. To compute the formula you will need four numbers which the Brandenburg Court defined as follows:

Nonmarital contribution (N-MC): The amount of equity you had in the house the day you got married plus any non-marital money you invest in the house at a later date is generally your non-marital contribution (N-MC). Brandenburg defined this as the equity in the property at the time of marriage, plus any amount expended after marriage by either spouse from traceable nonmarital funds in the reduction of mortgage principal, and/or the value of improvements made to the property from such nonmarital funds. (For nonmarital funds to be traceable they generally must be kept in a separate account and not commingled with marital funds.

Marital contribution (MC): The amount of the mortgage paid off during the marriage from marital funds is generally the marital contribution (MC). Brandenburg defined this as the amount expended after marriage from other than nonmarital funds in the reduction of mortgage principal, plus the value of all improvements made to the property after marriage from other than nonmarital funds.

Total contribution (TC) is defined as the sum of nonmarital and marital contributions. Simply add the N-MC and the MC to get the Total Contribution (TC).

Equity (E) is defined as the equity in the property at the time of distribution. This may be either at the date of the decree of dissolution, or, if the property has been sold prior thereto and the proceeds may be properly traced, then the date of the sale shall be the time at which the equity is computed.

For example, if you owned the home prior to marriage and had $10,000 in equity the day you were married your N-MC was $10,000. If during the 3 year marriage you made payments totaling $5,000 of principal the MC is $5,000. So the TC is $15,000 ($10,000 + $5,000).

*If you refinance there may be some dispute but generally if you refinanced at the same amount it should have no effect. If you refinanced and your mortgage became greater (because you pulled equity out of the house) you can generally subtract that amount from the MC. If you refinanced and your mortgage became less (because you made a payment) you can generally add that amount to the MC.

Now you will need the percentages for the N-MC and the MC. Simply divide N-MC by TC ($10,000 / $15,000 = .6667) and MC by TC ($5,000 / $15,000 = .3333) to get the respective percentages. In the example above the N-MC is 66.67% and the MC is 33.33%.

Last step. Multiply those percentages by the current equity you have in the home (E). The N-MC would be your non marital portion and the MC would be divided equitably between you. In the example above if there were $20,000 in equity in the home at the time of the divorce the N-MC would be $13,334 ($20,000 x 66.67%) and the MC would be $6,666 ($20,000 x 33.33%). So in this example the spouse with the non-marital contribution would get $13,334 plus the parties would split the $6,666 equitably.

Now courts are allowed to deviate from this formula but it serves as a good general rule and starting point. If either of you contributed to the house payments, maintenance, or improvements from "traceable" non-marital funds that will need to be considered and makes this somewhat complex formula even more complex. I encourage you to retain a divorce attorney in your county to review the details of your case. They will be able to help you with any additional calculations and will be familiar with the tendencies of the local judges. I hope this was helpful. Best of luck.

Here is an actual example of the formula being used by the Court in Brandenburg :

ILHARDT PROPERTY: This property was purchased by the husband for $15,900 on December 16, 1968, $900 being the down payment and the husband executing a mortgage of $15,000. Prior to marriage, the husband reduced the mortgage principal by $352.80, the court below finding the value of the property at marriage to be $15,900 and the nonmarital equity to be $1,252.80. After marriage and before sale on July 18, 1975, the mortgage principal was further reduced by $1,176.00... The sale price was $32,500, which was applied in the following manner: $13,471.20 was applied to extinguish the mortgage on the property, leaving a balance of $19,028.80.

Applying the formula, we find:

nmc = $1,252.80 (the equity at marriage)

mc = $1,176.00 (mortgage principal reduction during marriage)

tc = $2,428.80

e = $19,028.80

1,252.80 / 2,428.80 = 51.6% x 19,028.80 = 9,815.25 - Value of nonmarital property

1,175.00 / 2,428.80 = 48.4% x 19,028.80 = 9<213.55 - Value of marital property

(July 2012)

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