Indiana Equitable Distribution Guide

Indiana takes a unique approach to dividing property in divorce that combines elements of both community property and traditional equitable distribution states. Under Indiana's "one-pot" theory, all property owned by either spouse—including premarital assets, inheritances, and gifts—goes into the marital estate for division. The court then presumes a 50/50 split is fair, though either party can present evidence to justify a different division. Understanding these rules is essential whether you're pursuing an uncontested or contested divorce.

This guide explains how Indiana Code 31-15-7-4 and 31-15-7-5 govern property division, what factors courts consider when deviating from equal division, and strategies to protect your financial interests.

Indiana's One-Pot Theory: Everything Goes In

Unlike most states that distinguish between "marital" and "separate" property, Indiana uses the one-pot theory. Under IC 31-15-7-4, the court "shall divide the property of the parties" including property:

• Owned before the marriage by either spouse
• Acquired during the marriage by either spouse individually
• Acquired by joint efforts during the marriage

This means inheritances you received from your grandmother, the house you bought five years before getting married, and retirement accounts accumulated during your career all go into the same pot for division. Indiana appellate courts have consistently reinforced that systematically excluding any asset from the pot is error.

The only categorical exclusion is property acquired by an individual spouse after final separation—the date the divorce petition was filed. Property and income earned after filing generally stays with the spouse who acquired it.

The 50/50 Presumption: Indiana's Starting Point

Once all property is in the pot, Indiana law creates a rebuttable presumption that an equal division is just and reasonable. This makes Indiana unusual among equitable distribution states—most don't presume equality.

The presumption isn't automatic, however. Either spouse can present evidence showing why equal division wouldn't be fair based on five statutory factors. If convinced, the court can deviate—sometimes significantly—from 50/50.

Five Factors That Can Change the Split

Under IC 31-15-7-5, a party can rebut the equal division presumption by presenting evidence concerning:

1. Contribution to Acquisition of Property

The court considers each spouse's contribution to acquiring the marital estate, whether income-producing or not. This includes both economic contributions (wages, business ownership) and non-economic contributions (homemaking, childcare, supporting a spouse's career). A spouse who stayed home to raise children while the other built a business has made valuable contributions that courts recognize.

2. Property Acquired Before Marriage or by Gift/Inheritance

While premarital assets, gifts, and inheritances must be included in the pot, their source can justify an unequal division. Courts routinely give weight to the fact that one spouse brought significant assets into the marriage or received an inheritance. The longer the marriage, however, the less this factor typically influences the outcome.

3. Economic Circumstances at Disposition

The court evaluates each spouse's financial situation at the time of divorce, including the desirability of awarding the family residence to a custodial parent. This factor addresses immediate needs—if one spouse has primary custody of children, keeping them in the family home may justify that spouse receiving more of the real estate equity.

4. Conduct Related to Dissipation of Property

If one spouse wasted, hid, or misappropriated marital assets during the marriage breakdown, courts can hold them accountable. Dissipation includes gambling losses, excessive spending on affairs, transferring assets to relatives to hide them, or deliberately destroying property. The court may add dissipated amounts back to the dissipating spouse's column before calculating equalization.

5. Earnings and Earning Ability

Each spouse's current income and future earning capacity affects the analysis. If one spouse sacrificed career advancement to support the family or lacks marketable skills due to years out of the workforce, courts may compensate through property division. Conversely, a spouse with significantly higher earning potential may receive less property.

The Final Separation Date: When the Pot Closes

In Indiana, the "final separation" date is the date the divorce petition was filed—not when you physically separated or stopped living together. This date determines:

• What property is included: Assets in which either spouse had a vested or non-forfeitable interest before filing go into the pot
• What property is excluded: Assets acquired by a spouse "in his or her own right" after filing stay out
• Stock options and RSUs: Options that vest only after filing are excluded from the marital pot (though they may count as income for support)

The valuation date, however, can be any date between filing and the final hearing. Courts may even use different valuation dates for different assets—and this choice significantly affects who bears gains or losses during the divorce process.

Special Considerations for Complex Assets

Retirement Accounts and Pensions

Indiana includes vested and non-forfeitable retirement benefits in the marital pot. Courts apply a coverture fraction to isolate the marital portion of pensions:

Marital Portion = Plan Value × (Months accrued during marriage ÷ Total months of accrual)

For example, if a spouse accrued a pension over 240 months with 120 months during the marriage, the coverture fraction is 50%. The marital portion is then typically divided equally via a Qualified Domestic Relations Order (QDRO) or an offset arrangement.

Businesses and Professional Practices

Business interests go into the pot regardless of when they were started. Valuation typically requires expert appraisers who analyze historical financials, normalized earnings, and comparable sales. The court's choice of valuation date (filing vs. hearing) can significantly impact business value, especially for volatile enterprises.

Real Estate

The family home is often the most valuable and emotionally significant asset. Learn more about who gets the house in a divorce. Options include:

• One spouse buys out the other's equity interest
• The property is sold and proceeds divided
• Deferred sale when minor children need stability
• Awarding the home to the custodial parent under factor (3)

If one spouse made premarital down payments or used inheritance funds, the court considers this under factor (2) when deciding the equitable split—but must still include the home in the pot first.

How Indiana Divides Debts

Debts receive similar treatment to assets—debts incurred before the filing date are typically included in the marital pot and allocated equitably. Courts consider:

• Purpose: Was the debt for joint/family expenses or purely individual?
• Timing: Was it incurred during the marriage or after filing?
• Who benefited: Student loans often go to the degree-holder; joint credit card debt may be split
• Dissipation: Debts from gambling or affairs may be assigned entirely to the responsible spouse

Post-filing debts are generally excluded from the pot. The "necessaries doctrine" may create creditor liability for essential medical care during separation, but this affects creditor rights—not the inter-spousal allocation in divorce.

Student Loans

Student loans incurred during the marriage are included in the pot but commonly assigned to the degree-holder, particularly when the degree primarily benefits that spouse. If one spouse supported the household while the other pursued education, this contribution factors into the overall equitable analysis.

Credits for Post-Filing Payments

When one spouse makes payments on marital debts or maintains marital property after filing, Indiana courts have discretion to award credits or set-offs. Key considerations include:

• Principal reduction credits: If the paying spouse reduced mortgage principal from post-filing income, they may receive credit
• Carrying cost credits: Taxes, insurance, and necessary repairs may warrant partial reimbursement
• Exclusive occupancy offset: Courts may reduce credits when the paying spouse also enjoyed exclusive use of the property
• Avoiding double counting: If the court values an asset at sale (capturing post-filing payments), additional credits may duplicate the benefit

Tax Considerations in Property Division

Under IC 31-15-7-7, Indiana courts must consider the tax consequences of property disposition. However, only direct, inherent, and necessarily incurred taxes count—not speculative future taxes.

For example, if the court orders the sale of an appreciated asset, capital gains tax will reduce net proceeds and should factor into equalization. But hypothetical taxes from a sale years in the future shouldn't reduce current asset values. Courts have remanded cases where tax consequences weren't properly considered.

Practical tip: Different assets have different after-tax values. $100,000 in a taxable brokerage account is worth more than $100,000 in a pre-tax 401(k) because the retirement account will be taxed upon withdrawal.

Practical Tips for Indiana Property Division

1. Document everything: Gather bank statements, retirement account statements, tax returns, and property records from before and during the marriage
2. Track sources: Even though all property goes in the pot, documenting inheritances, gifts, and premarital assets strengthens arguments for unequal division under factor (2)
3. Consider timing: The filing date seals the pot—property acquired after filing stays out. This affects strategic decisions about when to file
4. Calculate coverture fractions: For retirement accounts, determine the marital portion before negotiations
5. Get expert valuations: Businesses, real estate, and professional practices require professional appraisal to ensure accurate division
6. Account for taxes: Compare after-tax values when negotiating who gets which assets
7. Consider the 60-day waiting period: Indiana requires at least 60 days from filing before a divorce can be finalized—use this time to prepare financial documentation

Estimate Your Indiana Divorce Costs

Property division complexity significantly affects divorce costs. Use our calculator to estimate expenses based on your situation:

Next Steps for Your Indiana Divorce

Understanding Indiana's unique one-pot approach to property division is essential for protecting your financial interests. Key takeaways:

• Indiana puts all property into one pot—including premarital assets, gifts, and inheritances
• The court presumes 50/50 is fair, but this can be rebutted with evidence
• Five statutory factors determine when unequal division is appropriate
• The filing date is critical—it determines what property enters the pot
• Retirement accounts use coverture fractions to isolate marital portions
• Courts must consider tax consequences of the property disposition

For official forms and filing information, visit Indiana Courts Self-Service Center or Indiana Legal Help. Given the complexity of Indiana property division, consulting with a family law attorney is strongly recommended for divorces involving significant assets.