Marital Asset and Debt Division
Identifying the Assets & Debts
Clearly identifying the marital assets and debts is the first task. This may be a relatively simple process if, for example, you and your spouse own a house, two cars and some furnishings. It may be more complex if you have retirement and pension plans, stock options, a business, an investment portfolio and any unusual assets. Before the identification task is complete, all assets and debts must be fully disclosed and a determination made as to whether an asset is “marital” property and, therefore, owned equally by you and your spouse, or whether it is “sole and separate” property and belongs to only one of you. Sometimes this is a straightforward assessment; and there are times when it can involve complex tracing and accounting issues.
Valuing the Assets & Debts
This task, like the first one, may be relatively simple or complex depending on the nature of your assets. Again, if you and your spouse own a house, two cars and some furnishings, the task of valuation is normally not difficult. However, to use the previous example, a valuation may be more challenging if your assets include retirement or pension plans, stock options, a business, an investment portfolio and any unusual assets.
In situations where a valuation is complex, an expert is often hired to place a value on, for example, a residence, a business or a retirement plan. In dispute resolution processes like mediation and collaborative law, or when the attorneys agree to cooperate in the traditional adversary system, one expert is hired by you and your spouse to make the valuation determination. The situation can become problematic, however, when opposing attorneys fail to act cooperatively and hire their own experts. The expense in this situation is not only higher, but if the experts disagree, they can duel with each other regarding the disputed value of an asset. This is one reason why attorneys must use an array of collaborative strategies, including cooperative ones, if you and your spouse are to be well served.
Dividing the Assets & Debts
When Tasks 1 and 2 have been properly completed, the final task – dividing the assets and debts in an equitable way – can sometimes be more easily accomplished. Although there are exceptions, generally you and your spouse are each entitled to half the value of the community-owned assets, and each of you is responsible for half of the community-incurred debts. There are many ways to divide assets and debts, and your attorney must be able to think creatively so that this division supports your particular needs and requirements. Before the property division occurs, you may need assistance with some general life planning so the assets you receive will support your life plan. This is another area where the attorney’s skill in listening and in understanding your underlying interests and needs becomes an invaluable tool.