A New Look At Debt Assignment

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January 19, 2011

Debts — everyone has them, no one wants them. As a general rule, the debts incurred over the course of a marriage are split equally between the husband and the wife at the time of dissolution. However, in a recent case of first impression, the Court of Appeals modified this general rule in a specific circumstance.

In Ashlock and Ashlock, the wife decided that she did not want any of the 22 million shares of the husband’s Internet business, which had little or no value at the time of the divorce and substantial debt. Conversely, the husband asked to be awarded all of the business. The trial court acquiesced to the parties’ wishes and awarded the entire business to the husband. The trial court split all of the marital debt equally between the parties.

On appeal, the wife claimed that the trial court erred in assigning her half of the debt of the business. The Court of Appeals, deciding this issue for the first time, agreed with the wife. They stated that, as a general rule, if a business is awarded entirely to one party, the debts associated with that business should be assigned to that party as well.