Just specify that the debt is a separate debt of the Party A, and that Party B will pay it, and then reach a 50/50 division in the Property Division worksheet as you normally would.
Let’s explore how this works.
To clarify, this is a situation where the Party B is paying Party A’s separate debt from Party B’s share of the marital assets. We want to get Party B’s share of the marital assets to be the right share to make this fair.
Let us assume for this example that Party B is paying Party A’s separate credit card debt.
Let us further suppose that we want the assets to be divided 50/50, after accounting for Party B’s assumption of Party A’s credit card debt.
Handling this case is fairly straightforward in the software.
Let’s assume the debt amount is $10,000.
First, when you enter the debt, specify that it is the Party A’s separate debt, but then override the payment percent to indicate that Party B is paying it, as shown below. (This image is from the “more info” screen for a debt.)
To keep things simple for our illustration, assume that there is only one other asset, an Investment, which has a value of $20,000.
Now go to the Property Division screen (on the Analysis tab).
Stay with the default that you want the marital property to be divided 50/50.
Allocate all the assets between the parties. It does not matter how the assets are divided, as long as you go through all the assets and allocate them between the parties.
Once all assets are allocated between the parties, the equalization amount will show how far the parties are from 50/50, based on the allocation of all assets.
Let’s allocate our $20,000 Investment asset 50% to each party (which we know is not where we should end up) and see what happens.
Note that in this case, the program will show that we need to give Party B $10,000 more of marital equity to reach a 50/50 split.
Let’s do that. Since Party B had $10,000 in our initial allocation, when we give them $10,000 more, they will end up with $20,000. By coincidence (sort of), this is the full value of the asset. But the important thing is that it is $10,000 additional — that is, the value of the debt.
Now we are at 50/50. Party B has $20,000 more of the marital equity than the Party A does.
As we think about it, that makes sense, for the following reason:
After the Party B pays Party A’s debt, Party B will have $10,000 left of the $20,000 of investment assets.
Party A, having been relieved of the obligation to pay the separate debt, is in a situation as if they had received $10,000 from marital funds and used it to pay the debt, ending up with $0.
So after the dust settles, the parties will be in the same situation as if Party B did not pay Party A’s debt, the parties divided the assets 50/50, and Party A paid their separate debt with the proceeds.
And that is what you want.
In summary, just specify on the data entry screen that the debt is a separate debt of Party A, and that Party B will pay it. Then reach a 50/50 division in the Property Division worksheet as you normally would.
Party B will end up with marital property equal to 2x the amount of the debt on top of property otherwise divided by 50%.