During a divorce, one of the most contentious issues is determining how property will be distributed between former partners. If you live in an equal distribution state, the law will typically stipulate that all property is divided equally. There are many exceptions to this rule, however, including in cases where a prenuptial agreement was signed before the marriage.
In marriages where one or both spouses have a lot of property, the distribution process tends to become complicated. Indeed, the court has to determine how much property is actually involved, and how much each spouse will get. Furthermore, property that is jointly owned may also be complicated to equally distribute.
When approaching a high asset divorce, a court will implement the following steps.
1. Audit of all property owned
The first step will be to carry out an audit of all marital and non-marital property. The court will assess all property from businesses owned (including assets, shares, investment accounts, and annuities). Real estate will also be considered, including the primary marital residence, other secondary homes such as vacation homes, and rental properties. Personal assets such as cars and boats are also part of the audit of marital assets. In some cases, retirement accounts will be included in the assessment.
The court will then separate marital and non-marital assets according to state laws. Some personal assets such as your car may not be included in the marital asset pool, but homes and investment accounts may be included.
2. Valuation of the property
Once all marital property has been audited, the next step is to properly value the assets. Jointly owned assets (such as joint ownership in a business) may be tricky to value because of the interest of both stakeholders. That is why a family/divorce lawyer will play an important role in such cases. Proper valuation will also determine how much you may have to pay/receive in alimony and child support.
The valuation process for all assets will take into consideration fair market value, appreciation, and any sales of property that were made during the actual marriage.
3. Determining equal distribution
After proper valuation of all assets, the court will determine how property should be distributed. This may simply be done equally, where each partner gets half of all marital assets. However, exceptions apply when children and prenuptial agreements are involved. A significant income difference between the spouses will also affect how the property is distributed.
For example, the parent who maintains custody of children may be entitled to receive a slightly higher share or to receive child support payments. If the income difference is high, the higher earning spouse may also need to pay alimony to their former partner. Each situation is unique, and the court will make the final decision.
For more information, get in contact with your local divorce lawyers.