Marital vs. Non-marital Assets and Debts, Value and Division
The first step in dividing property is for each party to make a complete disclosure of all assets and debts.
Next the parties need to determine whether property is a marital asset or a non-marital asset. Generally, non-marital assets remain the property of the original owner if the asset has not been commingled with marital assets or transferred into joint ownership.
Once the property is determined to be a marital or non-marital asset, each asset must be assigned a value. If the parties agree on the value of their assets, this will greatly reduce the cost and length of the discovery process. The parties may choose to seek the assistance of a professional appraiser to determine property values. An actuary is often used to determine pension and retirement fund values. Experts are generally used in determining the value of business interests and ownership.
After all assets are assigned a value, the property must be equitably divided between the parties. At the same time, the parties must determine how their debt will be divided.
The parties must determine if one spouse will remain in the home after the divorce or if the parties will sell the property. If a party remains in the marital residence during the divorce and/or remains in the residence until it is sold, the parties must determine who will pay for its upkeep and related monthly expenses.
The courts can enter a Qualified Domestic Relations Order to allow the division of certain retirement accounts so the parties are often able to avoid penalties and taxation. Even so, there can be significant tax consequences for any division of property and even though these consequences can be outlined by your family law attorney, it is this office’s advice to seek the professional opinion of your accountant or tax professional.
The parties should attempt to divide all personal property in an equitable and respectful fashion.
If the parties can not agree on the value of or the division of assets and debts, the court will determine the values and divide the property at trial.
Unfortunately, there are times when one spouse will misspend the parties’ assets after the parties have separated but prior to the entry of the Judgment for Dissolution of Marriage. The misuse of funds is called dissipation and if you believe your spouse is using marital assets to pay for non-marital or nonessential expenses (gambling, extravagant trips or purchases, gifts for girlfriend/boyfriend), it is important to discuss the situation with your attorney so your interests are fully represented.