Dividing assets during a divorce can be a daunting task. For the process to go smoothly, both parties should create an accurate inventory of their marital assets. This inventory should include all properties acquired during marriage—including any significant investments, real estate holdings, and personal belongings.
Making a thorough assessment and establishing the value of each asset is critical. Without this comprehensive record, asset division can become unnecessarily complicated, leading to further conflict between spouses.
Here is a broad overview of what marital assets are and how to properly catalog them when going through a divorce.
What Are Marital Assets?
In general, marital assets refer to any property that either spouse acquired during the marriage. This can include anything such as real estate, vehicles, joint bank accounts, investment accounts, retirement accounts, or collectibles.
In a divorce, both spouses typically have equal ownership of marital assets. This is why they must be fairly divided between them. Asset division can be a complex process, and it often requires negotiation and compromise between the parties involved.
What Are Separate Assets?
In a marriage, separate assets refer to the individual property of each spouse. There are a few qualifications that make an asset separate.
Separate assets may be acquired before the marriage. They also come as gifts from people outside the marriage. A spouse may also claim sole ownership of inheritance or personal injury.
These assets belong to only one person, so they are not up for division in a divorce.
What Are Co-Mingled Assets?
Separate assets can become marital property when they become co-mingled.
Here are a few ways this can happen:
Commingling in Bank Accounts
If one spouse deposits their separate funds into a joint bank account, those funds can become commingled with marital funds. This can make it difficult to distinguish between separate and marital assets.
Using Separate Funds to Purchase Marital Property
If one spouse uses their separate funds to purchase something that benefits the marriage (such as a family home), the property may be considered marital.
If spouses change the titles of their separate properties to include both their names, it then becomes difficult to determine who owns what portion of that property.
Contributions to Separate Property During the Marriage
If one spouse makes significant contributions to the other spouse's separate property during the marriage (such as paying for renovations or improvements), they may be able to claim partial ownership of that asset.
How Do You Differentiate Your Marital Assets from Your Separate Assets?
It’s easy to say that you should create an inventory of your marital assets, but how do you actually accomplish this task?
Here are some tips:
Start With a Checklist
Begin by creating a checklist of all the assets within the marriage. Include bank accounts, investments, real estate, vehicles, and personal property. This will help ensure that you don't forget anything.
Collect all relevant documentation for each asset, such as bank statements, real estate deeds, and vehicle titles. This will help you determine the value of each asset, and it can help you determine whether it is co-mingled or separate.
Determine the Value of Each Asset
Use the documentation you've gathered to determine the value of each asset. You may need to hire an appraiser for certain items, such as jewelry or artwork.
Determine Whether Each Asset Is Separate or Marital Property
It may take some time, but try to remember where, when, and how each asset was acquired. If, for instance, your home theater was a gift from your parents, then you can safely assume it is separate. Whenever possible, try to work together to decipher all assets’ origins.
Consider Professional Help
If you have many assets or complex financial holdings, consider hiring a financial planner or accountant to help create your inventory. They can also help you value your assets and identify any tax implications.
Remember to keep your inventory up-to-date, especially if you or your spouse make any major purchases or sales before the divorce ends.
Russell S. Hershkowitz, L.L.C. is here to help make sure your assets are divided fairly in a divorce. We can work with both spouses, or we can help protect just one spouse from a bad situation. Consultations are free, so call us today at (407) 753-4111 or contact us online.