Sharing Assets During A Divorce
Divorce is never easy; there are high levels of stress and emotion involved, and of course, the question of the division of assets. Each family situation is different, and while two spouses may be able to split assets equally, there are other circumstances that could involve rental properties, stocks, business, and other accounts that could make asset sharing difficult.
An emotional divorce could mean that the two parties are contentious and not amicably communicative. Deciding which spouse should get what is even more difficult when there is constant disagreeing and fighting, and this means that mediating attorneys are all the more necessary during the decision making processes.
The dividing of property during a divorce even for spouses who have not accumulated much during the course of the marriage can be convoluted and difficult to determine. There is also the question of the laws concerning property and assets for each state. A family law attorney specializing in divorces and with experience in assisting either spouse in the sharing assets during a divorce can guide you through the difficult procedure.
There are numerous types of assets that can be debated during the process of a divorce. These can include properties, like rentals and houses, pension plants, companies or businesses, retirement and pension plans, or stock options. Of course, these assets are unique and vary between the couple to couple, and because of this, there is no true one answer to the division of assets.
A crucial aspect to remember is that assets may change value based on the short-term and long-term view. Assets should be considered beyond their current value and the two parties should think about what is better for their financial needs in the bigger picture.
Separate and Marital Property differs state to state, but in general, there are key differences between the two, and when it comes time to share assets, it is important for both spouses to go through the assets and decide between Separate and Marital Property.
Separate Property entails property that was owned by either party before the marriage, an inheritance that was given to either spouse regardless of whether it was received during the time of the marriage, after, or before, and any gifts that were given to either spouse specifically, by a third party.
If a title has been changed to accommodate both spouses during the course of the marriage and it now infers co-ownership, the property then is no longer considered Separate Property. Common instances when this occurs is retitling a vehicle, a house or other property, or if you deposit money into a joint bank account. At this point, what was once Separate Property is now considered Marital Property.
Marital Property can become muddled and confusing, and a practiced attorney can guide you through the sharing of assets. Many clients believe that because certain assets were listed in the other spouse’s name, they are not entitled to it during a divorce. This is not necessarily true, as Martial Property is defined as all other property acquired during a marriage, no matter of which spouse owns it or how it is entitled.
Complexities like active and passive appreciation also play a role in the value of Marital and Separate Property, and this varies from state to state. Separate Property that increases in value during the course of a marriage is considered Marital Property in many cases. States will decide if this increase is because of active or passive appreciation, which will determine if the property in question should be considered Marital or Separate.
Active appreciation is in itself an abstract concept and is relative to contributions and efforts of a spouse, such as emotional support or time spent dedicated to directly or indirectly assisting and helping raise kids, grow the business, or complete chores and household tasks. Active appreciation can be arguably difficult to determine, especially if emotions are running high and the two spouses involved cannot agree.
Passive appreciation can be pinned down with numbers derived from outside forces like supply and demand, an increase of property value, and inflation. For divorcing couples in heavy disagreement, passive appreciation may be easier to consider in dividing and sharing assets.
A common example is a piece of land that increases in value, but things become convoluted if marital income is used for making payments on it. This example is just one of many that can throw the division of assets off track and why it is so necessary to have a third party to help guide both spouses through the assets.
Assets and their division during the divorce process also depend on whether the state is a Community Property State or an Equitable Distribution State. Community Property states just include nine of the fifty states—Arizona, Idaho, California, Nevada, Louisiana, New Mexico, Washington, Texas, and Wisconsin. For Community Property states, Marital Property is divided in an easier setting as both spouses are considered to be equal owners of all Marital Property, a 50/50 split.
If you and your spouse happen to live in the remaining 41 states, then you are subject to Equitable Distribution. In an Equitable Distribution State, the settlement of property and assets do not have to be equal but they should be fair and as the name suggests, equitable.
Multiple variables are weighed in the division of assets like the income or property accumulated and provided by each spouse during the marriage, the length of the marriage, the ages and health of either spouse, the financial situations of each spouse at the termination of the marriage and finalization of the divorce, standard of living during the marriage, and the status of educational level and earning abilities of the spouses, and the custodial parent’s requirements to support any children involved.
Tolerable communication is preferred for a fair decision on sharing the assets between the two parties, but if this is not possible, then it is all the more essential to have a representative attorney present to help ease the process. Many factors contribute to the division of assets and an attorney can assist the parties in going through each one to decipher if the property should be considered Marital or Separate, and the value of each.