Johann Sebastian Bach produced The Brandenburg Concertos in 1721 as a way to get a job. He never heard them in his lifetime, and his prospective employer the Margrave of Brandenburg apparently never even looked at the scores. Yet, in our day, the six Brandenburg Concertos1 are some of the most popular classical music in the world. They also happen to bear the same name as one of the most popular methods of property settlement in a divorce, the Brandenburg Formula.
Brandenburg v. Brandenburg
The two Brandenburgs (the couple, not the concertos) divorced in Kentucky and in 1981 needed the Kentucky courts to find an equitable way to divide their marital property. Property is really one of three things:
- Separate property — Brought to the marriage but definitely owned by only one spouse
- Marital property — Acquired during the marriage and jointly owned by both spouses
- Hybrid property — Property (including real estate, investments, retirement funds or collectibles like antiques or artwork) that was either purchased or maintained with a blend of separate and marital funds
While married — presumably happily if only for a while — you two may never have given much thought to the sources of money for paying down a mortgage or saving for retirement. Yet when you do need to reverse the Twister game that your marriage has become, finding out who paid for what with whose money becomes a real challenge, with real financial consequences.
The Brandenburg Formula came from one particular divorce dispute in Kentucky, but has been seized upon since 1981 as a convenient formula for the courts to use in determining how to divide up hybrid property, whether real estate or retirement funds. It is a useful method in some cases, but not necessarily ideal for every situation.
The Hybrid Property Headache
Say you inherited $75,000 from a relative — we’ll call him Uncle Zeke — before you met your wife. Say you used all $75,000 from good ol’ Uncle Zeke, during your marriage, to pay down the mortgage on the $250,000 house you two bought together.
The $75,000 is your separate property, but you intermingled it with marital property (your jointly purchased home) to pay down the $250,000 mortgage. That makes the house a hybrid property. Not “hybrid” like a zorse (zebra/horse), zony (zebra/pony), or zebrass (zebra/donkey). In this case the hybrid is a little bit separate property, a little bit marital property. You paid a chunk yourself; you and your then-wife paid a chunk too.
Enter The Brandenburg Formula
The Brandenburg Formula looks at and compares two money amounts, turning the two into a fraction:
- The total amount of separate funding contributed to the marital asset (in our case of paying down the mortgage, it would consider the amount of inherited money one of you put up) becomes the numerator
- The total amount of marital contributions for the same marital asset (in our case, how much you and your spouse paid toward the mortgage during your marriage from income gained during the marriage) becomes the denominator
You used $75,000 from Uncle Zeke the wealthy zebrass breeder (you knew we were not going to let the word “zebrass” go untouched, right?). You and your wife paid down another $50,000. So together, separate property and marital property reduced the mortgage by $125,000, leaving $125,000 in equity.
The court has to split that equity between you two. A 50-50 split would give you each $62,500, but that ignores your Uncle Zeke’s zebrass money. Using your separate $75,000, you took on 40 percent of the paid mortgage by yourself, with the two of you combining marital income to tackle the other 60 percent of what you have paid. So, of the $125,000 in equity when you sell the house, you will get an initial cut of 40 percent: $50,000 (40 percent of $125,000), plus a 50 percent cut of the remaining $75,000, for a total of $87,500 to you and $37,500 to your ex-wife.
Beautiful Music? Not So Fast.
In some Virginia marriages of only a few years’ duration, finding the necessary paperwork may be a simple matter so you can prove to the court’s satisfaction that you spent separate property funds to maintain a marital property.
For longer marriages, time and lost financial records may greatly affect accurate measurement of how much you invested and how much your combined marital funds invested in a hybrid property.
While you two may have made beautiful music together at one time, the sweetest sound you could hear now may be a Virginia judge awarding you a proportionally higher share of marital property, because of your separate contribution.
Alternatives to the Brandenburg Formula
With a call to your family law attorney, you may discover that other property division strategies can be considered, such as the Keeling Method. Your attorney may advise you not to simply accept the Brandenburg Formula as a go-to method. After all, courts are free to consider other ways to value hybrid property.
Please contact The Firm For Men online, or telephone our offices at 757-383-9184, to learn more about the nuances of property settlement agreements in Virginia divorce. Let us help you understand — and make the most of — the Brandenburg Formula.