According to the Centers for Disease Prevention and Control (CDC), the current divorce rate nationwide is around 42%. There are 86 divorces every hour in the US and it is estimated that 41% of first marriages will end in divorce.
After divorce or legal separation, spouses often choose to divide their assets, debts, and properties. According to property division lawyer Lisa R. McCall, each state has different property division rules so it’s important to seek the assistance of a property division lawyer to ensure that all the legal requirements are met by a divorcing couple.
But what happens when high-value assets are involved? Let’s look at how you can safeguard your assets and ensure a fair outcome.
Types of Property in Divorce
Property division, particularly during a divorce, typically categorizes property into two types: marital property and separate property. Regardless of title, marital property includes assets earned during marriage. This includes the family house, retirement savings, vehicles, and marriage debts.
On the other hand, separate property typically includes assets owned before the marriage, inheritances, gifts received by one spouse, or any property specifically designated as separate in a prenuptial agreement.
Local laws and regulations can determine the classification of property differently. Community property rules split marital assets evenly, whereas equitable distribution laws focus on a fair allocation that considers various factors. Understanding marital and separate property is critical to comprehending the complex divorce property settlement process.
Factors Influencing Property Division
Understanding the factors that influence property division in divorce is key to ensuring a fair and equitable distribution of assets. During a divorce, several key elements can influence the division of property. The duration of the marriage is the first factor to consider. Generally, a longer marriage increases the likelihood of equal asset distribution.
Financial contributions made by each spouse to the marital estate are another important factor. Courts often consider each spouse's income, earning potential, and financial responsibilities when dividing property.
The marriage's standard of living may also affect wealth distribution. During a property split, one spouse's higher quality of living may be considered. Other considerations, such as each spouse's health, age, and prenuptial agreements, can affect property division.
Community Property vs. Equitable Distribution
To distinguish between community property and equitable distribution, consider the following key distinctions:
In community property states, assets acquired during the marriage are generally considered equally owned by both spouses, regardless of who earned or purchased them. This means that in the event of a divorce, these assets are typically divided evenly between the spouses.
States with equitable distribution principles divide assets based on fairness and justice, which may not be 50/50. Asset distribution, marriage length, each spouse's financial contributions, and future earning potential are all considered.
Understanding your state's property division system is important, as it can significantly impact the outcome of your property division process.
Strategies for Protecting Your Assets
Consider implementing a prenuptial agreement to safeguard your assets before marriage. A prenuptial agreement serves as a legal document that outlines the division of assets in the event of divorce, thereby safeguarding your financial interests.
Talk openly with your partner about protecting your assets. Sharing the purpose of the prenuptial agreement allows both individuals to gain clarity and understanding. It is important to keep your bank accounts and property titles separate for the assets you owned before getting married. This makes it easier to tell apart marital and separate property, simplifying the process of dividing assets.
Consider investing in a trust to protect specific assets, such as family heirlooms or businesses, from being considered marital property. Placing these assets in a trust allows you to maintain control over their distribution in the event of a divorce.
Special Considerations for High Value Assets
Use professional valuation services to appropriately appraise your high-value items. During a divorce or separation, correct assessment is essential for real estate, enterprises, investments, and precious collections. Professional appraisers can examine market trends and asset characteristics impartially, ensuring fair division.
High-value assets often come with complex ownership structures or tax implications that require specialized knowledge. Seeking expert advice can help you understand the implications of retaining or selling particular assets and make informed decisions that align with your financial goals.
Assess the liquidity of your high-value assets. Luxury houses and unique collectibles may be valuable, but their liquidity can vary. Understanding asset liquidity has an impact on property partition negotiations.
Conclusion
Now that you have a better understanding of property division in divorce, keep in mind the importance of protecting all types of property, particularly when dealing with high-value assets. Staying informed and planning thoughtfully can help you handle the property division process with assurance, leading to a fair result for you.
