The division of assets during a divorce could be quite difficult said an attorney from Holtz Law, especially if the couple has significant assets such as houses, pension/retirement plans, stock options, professional practices, and licenses. In fact, deciding who should get what isn’t an easy task even if the couple is ready to negotiate the division of assets. This article provides information on the process of dividing assets during a divorce.
The first thing is to know the difference between Separate and Marital properties. Separate property includes any property that was owned by each spouse before marriage. It also includes an inheritance received by each spouse – either before or after marriage as well as a gift received by the husband or wife from a third-party. A separate property can lose its original status in case it is commingled with a marital property. For example, if you add your spouse as a co-owner of your separately owned condo, such a property will be considered a marital property after that. On the other hand, all the property acquired by the partners during the marriage fall under marital properties. It doesn’t matter who owns the property or how the property is titled.
Marital property may include all the assets acquired by either partner after the marriage. Such properties may include pension and retirement schemes, stock options, country club memberships, life insurance, brokerage accounts, bank accounts, mutual funds, professional practices & licenses, vehicles, and tax refunds. The laws related to separate and marital properties may differ depending on the state you reside. In fact, in some states, if your separately owned property increases in value during the marriage, the increase is regarded as a marital property.
Once you have an idea of separate property and marital property, you should know if you reside in an Equitable Distribution State or a Community Property State. In case you reside in a Community Property State, the courts will consider both partners of all marital property. A 50-50 split is the rule in such states. On the other hand, if you reside in an Equitable Distribution State, the settlements should be fair and equitable. But the settlement doesn’t need to be equal similar to a Community Property State.
The best thing is to hire a good divorce financial planner to sort out the property division issue. Make sure you work with a skilled and experienced divorce financial planner when dividing your assets during a divorce.