The Income Conundrum in Indiana Divorce Law

Business litigation and family law partner Drew Soshnick authored an article for the Indiana Lawyer titled, “The income conundrum in Indiana divorce law,” that addresses the confusion around whether payments are considered income or property in Indiana divorce cases.

In the article, Soshnick provides background about the dispute on how payments are classified in divorce cases in Indiana. He outlines the following points of unclarity that arise around payments: are they passive earnings or earned income, are payments accrued and paid prior to a divorce filing, or are payments partially accrued and paid after a divorce filing? According to Soshnick, the determination of these questions ultimately affects the division of marital property. He adds that the conflict over inclusion of income in marital estates is expanded by the fact that Indiana does not have classic alimony, as other states do, nor provides for spousal maintenance except in very limited circumstances.

Soshnick references cases that indicate it has been the law in Indiana that future earnings are not considered marital property to be divided in the division of marital estates. He then highlights examples of how confusion arises: for example, a small business owner who signs a contract prior to a divorce filing but must perform work and services after filing in order to fulfill contractual obligations and the payments are then made after the filing.

As a solution to the conundrum, Soshnick suggests amending the Indiana Code to speak directly to “income” and what categories, if any, fall under the statutory definition of “property.” He also notes that the Indiana General Assembly could revisit the Indiana Dissolution of Marriage Act and how and when spousal maintenance applies.