Could My Spouse Get Less Than Half?

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January 5, 2011

A recent atypical appellate case, Carlson and Carlson 136 Or.App. 291, has lawyers scratching their heads and wondering what may come next for divorce law. The decision in this case could signal a change in the way divorce courts analyze the division of business interests in cases where one spouse, the “breadwinner,” primarily tends to his or her business while the other, the “homemaker,” primarily tends to maintaining the home.

Trial judges in Oregon have typically been squeamish about placing exact numbers or percentages on parties’ financial contributions to a marriage, especially when the parties have contributed in different ways (i.e. economic vs. non-economic). Trial courts usually rely on a legal presumption that each spouse contributed equally to assets acquired during the marriage. Often, breadwinners are overly confident that they can prove they deserve to keep the lion’s share of the marital assets, and so choose to go to trial. As a practical matter, though, proving the percentage each party contributed to marital assets is difficult to do at trial. For this reason, marital assets, including the value of business interests, are most often divided equally between the spouses.

The case of Carlson and Carlson is unusual in that the court exhibited no inhibitions about comparing the breadwinner-husband and homemaker-wife’s contributions to the husband’s business. Mr. Carlson came into the marriage with his business, which he grew substantially during the marriage. Mrs. Carlson, who was limited by health concerns, stayed home and tended to the house and their pets. She also decorated the business offices and spoke to her husband about business matters.

The court acknowledged Mrs. Carlson’s not-insignificant homemaking contributions, which allowed her husband to focus on his business. However, because she had not been an actual employee of the company and had not been responsible for raising any children, the court awarded Mrs. Carlson only 15% of the business’ appreciation, a major deviation from the usual 50%.

While it is still too early to tell what effects will be felt from the Carlson ruling, many divorce lawyers may feel tempted to cite the ruling in this case, especially if they represent business owners. However, this case involved unique circumstances that could restrict the extent to which this ruling can be applied, including an especially limited homemaker with no children to care for. While the basic scenario in this case may be common, the devil is always in the details.