Property and Asset Division in Divorce: All you need to Know
During a divorce, a family may find it difficult to divide their assets and property. The difficulty is propelled by the existence of expensive property especially when there are such assets as houses, rental property, pension plans, retirement benefits, deferred compensations, brokerage accounts, restricted stock and family businesses. It can really be challenging to decide who is going to get what and why.
When it comes to property and asset division, the dollar value should not be a basis for dividing the assets. It is important to understand what assets are going to be of great benefit for you in both the short-run and long-term periods to maintain your financial security. To get which asset will guarantee you financial security, you will need to understand the asset itself.
You will need to understand the asset’s liquidity, any tax implications, and its cost basis that may come with its sale. It is important for those seeking property and asset division to know that there is a difference between separate and marital property. Different countries have different details concerning these kinds of properties.
Property that was initially owned by one spouse before they got married is regarded as separate from marital property. This is because it was acquired before they entered into a marriage agreement.
Any property inherited by one of the marriage partners from their parents before or after marriage is also a separate property from the marital property. Either the wife or husband can request or demand that that property be put away during the division of family property.
A gift received by either the husband or wife from a third party before or after marriage is also regarded as separate property. Besides, payment received as a result of pain and suffering in an injury that is personal in judgment. However, a separate property can lose its separate status if the owner mixes it with family property. This is because, in some instances, the mingling of the building may make it difficult for a court to determine which property was initially yours or which is family owned.
For example, if you re-title a property after marriage and include your partner as a co-owner, or in another case, if you got an inheritance in terms of money, or you sell an inherited a property, and you deposit the money in a joint family account, then, it could be difficult to know how much belonged to you and how much belongs to the family. It also becomes impossible to know how much you have spent belongs to you or belongs to the family deposits.
All other forms of property acquired as a family or any investments made as a family are regarded as marital property and is, therefore, liable to division among all the members of the family, no matter how the property is titled or who owns it.
All incomes by both spouse and assets acquired during the marriage period are considered to be marital property. In many countries, however, if you have a separate property and it increases in value during the marriage period, the state regard the part of property value increase as marital property. This is not the case in various countries, a difference between active and passive appreciation in property value is drawn is such states.
The difference is important and should be made. An active appreciation is that which is due, in part, to the direct or indirect efforts or contributions of the other spouse. For example, if a husband helps in growing your business through ideas or advice, that means he encouraged clients to your business, raised the kids or did some other chores to make sure you prosper in your business then that is regarded as active appreciation.
The appreciation that is due to outside efforts or forces, such as supply and demand as well as inflation, is called passive appreciation. A good example is a parcel of land that increases in value even if both of you did not make any changes or improvements on it. In case you use the marital income to improve it, then the calculation of it as separate or marital changes to calculating the increase in value.
Another aspect to consider is if you live in a community property state. A community property is regarded regard the two partners as equal owners of all marital property. For this case, therefore, it is a 50-50 split rule is applied.
In simple terms, the family property sharing can be quite a task and engaging. For this case, it is advisable for couples to try and settle the divide at the family level. Involving the court brings a fair and just share of the property but may end up bringing dissatisfaction to one member of the family. In-depth consultation of both parties should be done properly.