Equitable Distribution of Assets and Debts
The presumption is that all assets and debts accumulated during the marriage are split equally. If one party desires an unequal split of marital assets and/or debts, it is that party’s burden of proving the fairness of the unequal split.
Premarital assets and debts
If an asset was acquired by a party prior to the date of marriage, the court generally has no jurisdiction to even consider a distribution, and therefore, the assets remains with that party. In what many feel is an unfair application of this rule of law, an engagement ring is a considered a premarital asset of the wife, and any debt thereon is considered a premarital debt of the husband.
Commingled premarital assets become a gift
A premarital asset can become a gift to the marriage if that asset is commingled with marital property. An obvious example is where one spouse puts the other on the deed to the marital home. What if the husband starts depositing his paycheck into the wife’s bank account? The entire bank account, regardless of size, could become a marital asset.
Marital Home Equity
Home equity is generally split 50/50 like everything else. If the parties cannot come to an agreement on the home’s value, they should be creative and agree on a neutral party’s appraisal. Usually, one party keeps the home and “buys out” the other party. This can be done by getting a second mortgage or trading equal value in another asset like a retirement account.
What if the husband owned a house before the marriage, and the wife never was placed on the deed? She could be out of luck for anything other than half of the monetary contribution by the parties during the marriage. This is a very ugly situation that frequently occurs.
Automobiles
Automobiles are really like any other asset (e.g. boats, jet skis, investment property) in that the equity in the cars will be split equally. As a practical matter, the husband has his car and the wife has hers. If there is more equity in one car than another, the parties trade equity in other property to achieve equal distribution.
Retirement
Retirement accounts are assets subject to equitable distribution. Typically, each party is entitled to half of the net growth during the marriage of all retirement accounts. In order to achieve equitable distribution, the court can enter a Qualified Domestic Relations Order which allows the transfer of funds from one retirement account to another without a tax penalty. If possible, the parties often trade equity in a retirement account with other assets like home equity to simplify matters. You’ll find that many lawyers don’t prepare QDROs.
Marital Debts
Like the assets, marital debts are presumed to be divided equally. The parties simply take the difference between the balance of all debts on the date of separation and date of marriage. A party seeking unequal division must prove how that would be fair. Speaking of debts, if one spouse can prove that the other spouse expended marital assets or incurred debt in the furtherance of an affair, the injured spouse will be awarded half the value of the wasted asset and will not be liable for the debt incurred.
Premarital assets and debts
If an asset was acquired by a party prior to the date of marriage, the court generally has no jurisdiction to even consider a distribution, and therefore, the assets remains with that party. In what many feel is an unfair application of this rule of law, an engagement ring is a considered a premarital asset of the wife, and any debt thereon is considered a premarital debt of the husband.
Commingled premarital assets become a gift
A premarital asset can become a gift to the marriage if that asset is commingled with marital property. An obvious example is where one spouse puts the other on the deed to the marital home. What if the husband starts depositing his paycheck into the wife’s bank account? The entire bank account, regardless of size, could become a marital asset.
Marital Home Equity
Home equity is generally split 50/50 like everything else. If the parties cannot come to an agreement on the home’s value, they should be creative and agree on a neutral party’s appraisal. Usually, one party keeps the home and “buys out” the other party. This can be done by getting a second mortgage or trading equal value in another asset like a retirement account.
What if the husband owned a house before the marriage, and the wife never was placed on the deed? She could be out of luck for anything other than half of the monetary contribution by the parties during the marriage. This is a very ugly situation that frequently occurs.
Automobiles
Automobiles are really like any other asset (e.g. boats, jet skis, investment property) in that the equity in the cars will be split equally. As a practical matter, the husband has his car and the wife has hers. If there is more equity in one car than another, the parties trade equity in other property to achieve equal distribution.
Retirement
Retirement accounts are assets subject to equitable distribution. Typically, each party is entitled to half of the net growth during the marriage of all retirement accounts. In order to achieve equitable distribution, the court can enter a Qualified Domestic Relations Order which allows the transfer of funds from one retirement account to another without a tax penalty. If possible, the parties often trade equity in a retirement account with other assets like home equity to simplify matters. You’ll find that many lawyers don’t prepare QDROs.
Marital Debts
Like the assets, marital debts are presumed to be divided equally. The parties simply take the difference between the balance of all debts on the date of separation and date of marriage. A party seeking unequal division must prove how that would be fair. Speaking of debts, if one spouse can prove that the other spouse expended marital assets or incurred debt in the furtherance of an affair, the injured spouse will be awarded half the value of the wasted asset and will not be liable for the debt incurred.