People who achieve a degree of financial success often need to diversify their holdings. Instead of simply relying on checking and savings accounts, they may want to invest in treasury bonds, stocks or even certificates of deposit. Others invest in real estate, digital resources and sometimes even physical resources like gold.
If couples use marital income to acquire investments, then they have to address those investments when they divorce. It can be relatively difficult to reach a fair and reasonable arrangement for resources that represent a substantial amount of money, as is often the case with investment holdings.
How do spouses address their investment during property division proceedings?
Through careful valuation
The first step toward dividing marital investments involves establishing what they are worth. The valuation process often begins with the spouses agreeing on a valuation date. Frequently, the date when they filed for divorce or started living separately serves as that valuation date. The spouses or the legal professionals assisting them can then estimate the fair market value of their investments.
Given that values fluctuate, agreeing on a specific date for valuation purposes is important. Stocks, businesses and real property holdings can be worth substantially different values from month to month. When spouses have set a valuation date and agreed on the value of their investments, then they can start strategizing for a way to divide them.
Through negotiations or litigation
Once spouses have created a comprehensive list of their shared resources and determined what those assets are worth, the next stage in the property division process involves negotiations. Spouses can sometimes achieve an uncontested divorce filing if they reach an amicable settlement.
Each spouse likely has a different primary focus during property division proceedings. One may feel strongly about retaining retirement funds, while the other may want to retain as much home equity as they can. If the spouses can reach an agreement, they can proceed with an uncontested divorce where they provide the courts with their own property division settlement.
If they do not agree, then a judge takes over the process. After reviewing an inventory of assets and debts, a judge can decide what is a reasonable and fair way to allocate marital assets and financial responsibilities.
Recognizing that investments might complicate the property division process can help people prepare for the challenges of a high-asset divorce. Regardless of whose name is on the ownership or account paperwork for an asset, both spouses may have an interest in it if they acquired it during the marriage or using marital income.