Dividing Marital Assets During a Divorce
While few people enter into marriage considering that it could end, couples get divorced every day. And that process can be overwhelming, especially when emotions are running high, custody is being determined, and assets are being divided.
When dividing assets, it is important to have a clear understanding of which assets are marital, and which are non-marital. Marital assets are property (real estate, possessions, and bank accounts) that is acquired by the couple together, or either person individually, at any time during the marriage. For example, houses, artwork, vehicles, etc. purchased during a marriage are marital property. An asset may be in one person’s name, but if it was purchased during the marriage, it is still marital property. Retirement accounts in individual names are also subject to division but only the portion acquired during the marriage will be divided.
Non-marital assets do not have to be divided. Examples of non-marital assets include items given as gifts or inherited from a third party, such as family heirlooms and money from a relative’s estate. If you believe some of your assets are non-marital, it helps to have documentation that includes the specifics of when the assets were obtained, how they were acquired, and other details. Keep in mind if these assets increased in value during the marriage, the increase may be subject to division. Engagement rings are considered non-marital property because they are typically gifts given prior to the marriage.
Assets can switch from non-marital to marital during a marriage as well. For example, if a wife owns a home prior to marriage, and she adds her husband to the deed when refinancing, the property is now jointly owned. In addition, depositing an inheritance into a joint bank account may make it marital property.
Debts are also considered when dividing property in a divorce. If an asset is subject to a loan, such as a house or a vehicle, the debt will be subtracting from the value and the net equity will be the amount divided between the parties. Individual debts, such as credit cards and personal loans may also be divided if they were used to benefit the marriage.
There are unique rules that determine the division of gifts, stocks, inheritances, retirement accounts, family businesses, and other property, so it is important to work with an attorney well before a judge attempts to divide the assets.Check out other articles by Lepley, Engelman, Yaw & Wilk