Divide Your Property Equitably, But Beneficially
A complicated aspect of the divorce process is dividing the marital property, or as it is commonly referred to, equitable distribution.
What Is Marital Property?
Marital property, generally, is most property acquired after the date of marriage and before the date of separation. When most people think of marital property they think of the house, the cars and checking accounts and personal items such as TVs or furniture. But marital property includes much more. Retirement such as 401K, IRAs or Roth IRAs or even pensions. It also may include investments in stocks or bonds, military benefits and even an interest in a business (such as medical practice or small company such as a solely owned LLC). All of these might be part of the marital property.
What About Property I Owned Before The Marriage?
In most circumstances, property owned before the marriage is considered separate. Things like inheritance or gifts are considered separate property even after marriage. However, in cases where there has been appreciation in value, that value might be considered marital.
Passive versus active appreciation. Passive appreciation is when you or your spouse does not actively invest time, resources or work into an investment or asset, but the asset still appreciates in value. For example, let’s say you purchased a home before marriage for $100,000, in fact you owned it for 10 years before you ever met your spouse. You get married and are married for another 10 years before you separate from your spouse. Before you married the house would have been considered separate property. When you marry, the house (still separate property) appreciates in value over the 10 years of marriage and now when you separate is worth $250,000. This is what we call a mixed marital asset. The house appreciates through passive appreciation and although it is a separate asset, both spouses now have a potential expectation in the equity that has matured in the house used in this example.
Active appreciation. If we use the example provided above about the house, we can determine that the house appreciates in value actively if both husband and wife both do substantial improvements to the home like adding a new roof, remodeling the kitchen and substantial landscaping. In this scenario, active participation and appreciation may result in even more value to the asset that may be subject to divisibility.
It is important that you have a knowledgeable attorney who can help you determine the separate from marital asset. Remember, after the divorce is finalized, you cannot go back and ask for more.
What About Debt?
Not surprisingly, debt is also a marital asset, so long as it was acquired after the marriage. Things are not always as they appear. In some cases, your spouse may have accumulated debt prior to marriage and incurred even more afterwards. It’s important to have an attorney help you sort out these issues before you consider taking any settlement offers.
Attorney Joshua Nielsen is ready and able to assist you wherever you are in your divorce and separation process. Our compassionate and experienced team is ready to help.
Contact us today and schedule a consultation.