FAQ's Answered by the Pros
When assets during a divorce are over certain dollar amounts what different strategies apply?
A. Divorce between high earning or high net worth individuals require a special expertise to make sure of an equitable distribution. A graph showing the assets today can change drastically over ten years or more when earnings of investments are compounded. Parties in a high asset divorce are best served to make sure their advisor has financial software that can plot this out over time. Usually, the owner of the main residence and those payments and maintenance costs will lose ground financially over the one receiving the retirement assets that gain every year without associated costs of home ownership. Plotting a mortgage-free residence against a retirement asset gives a clearer picture of the current value of each asset. The net present value of all assets should be divided equitably. Sometimes the net present value differs from assumptions or expectations of worth. Use foresight about finances and how they will change when two households are created out of one.
My Spouse has accounts that I heard about over the years, but won't share the statements. How are these divided in divorce?
A. The legal term is DISCOVERY, and it requires both parties to list ALL assets and liabilities and provide a copy to their respective attorneys. Legal searches by social security number can turn up unlisted accounts too. Make sure you get documentation of every account no matter how old or new, because assets are often moved around if there is an impending divorce. It is illegal to hide assets from your spouse. If one has a winning lottery ticket with a date on it -that must be declared also. Transferring assets that should be accounted in a divorce to a friend, relative or business partner can backfire and create animosity with the court; putting you at risk of losing credibility and assets or negotiating leverage.
My family has a TRUST and I am a beneficiary. Does my spouse get some of this money if we divorce?
A. Family of origin assets that were brought into the marriage will usually be returned to the partner that inherited them. Land, stocks, bonds or other assets owned by one's family of origin are not generally considered marital property. Documentation is critical and the better your records are the easier your family of origin assets will be to keep out of the joint property pile.
I expect a large inheritance when a relative dies. Can I keep this after divorce?
A. Again, family of origin assets are not generally considered marital property, and are usually awarded to the inheriting spouse and not divided. If the couple live in an inherited house from one side it may not be divided according to the usual formula either. Artwork, jewelry, antiques and collectibles from family, along with personal gifts or cash received need to be documented.
We have two homes and are fighting over who gets which after divorce-what's the rule?
A. The entire value of each property is accounted for, along with the costs of maintaining them and the liabilities attached to them. Everything is usually added up and divided into a dollar amount allowance for each partner. Then they may negotiate a buy-out of one property or another or even both based on personal preference. One would be wise to shop around and compare -there may be better values in a new property or location. Do not let sentimentality rule your asset choices -it is only one aspect. If you are prepared to make an emotional choice -know what it will cost you before you sign. Consider the depreciation of assets too. Boats and Motorhomes are tax deductible as second homes, but they devalue much faster than traditional homes and become worthless over time. But, if you can't agree, the court may order the assets sold and the money divided. A good attorney will listen to your desires, while presenting choices that promote clear thinking.
We have a Prenuptial Agreement and are now divorcing. I don't think it is fair -can I fight it?
A. Prenuptial agreements should have clauses allowing for increase in allowances over the period of years of the the marriage. A good one has a timeline showing that if the marriage lasts over some years that there is more sharing of the economic assets. After all, the prenuptial is usually used when one is a high net worth individual and they or the family want to prevent being taken advantage of in the emotional nature of love and marriage. A long term marriage that has been successful should not penalize the spouse that gave up other options and leave them penniless. A harsh agreement may be contested and a more reasonable settlement may be reached, especially if the union lasts ten years or longer.
email questions to scotthumblelaw@gmail.com
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