The 4 Steps of the Asset Division Process
As you separate from your spouse, you will need to take steps to divide marital debts and assets, including any property, financial assets, and investments you may have acquired throughout the marriage. The asset division process is often complicated and, in some cases, contentious. Not only that, it can be very emotional for e couples who struggle to fully separate their assets.
The asset division process includes four key steps, each of which can help you achieve an equitable division of assets in a divorce.
The first step in the asset division process is the identification stage. During the identification stage, you and your spouse must identify all property owned by either of you, including property that may not be counted as a marital asset. Make sure you take into consideration:
- Real estate
- High-value items, such as furniture or collectibles
- Financial assets, including investments
- Retirement accounts
- The contents of your bank accounts
- Other assets, like intellectual property and cryptocurrency
In addition, take a look at any marital debt, including the mortgage, vehicle loans, and credit card loans. Loans that you brought into the marriage are generally not considered marital debt.
The identification stage makes sure that you do not miss any critical assets as you arrange for the distribution of those assets during your divorce.
Once you have identified all the assets held by either you or your spouse, you will need to classify those assets.
Some of the property you own, particularly property that was gained during the marriage (with few exceptions), is considered a marital asset. Legally speaking, it does not matter whose name is on the asset or account; it belongs to both of you and will need to be assigned to one partner or the other or divided equitably. . You also need to take into account any debt acquired during your marriage and whether that debt is marital or separate.
Other pieces of property are not necessarily considered marital assets. These include assets:
- Protected by a prenuptial agreement
- Specifically gifted to one partner (for example, an inheritance that specifically named one partner, not both)
- That belonged to one partner prior to the marriage
Non-marital assets belong to the partner they have always belonged to and will not have to be assigned during the divorce.
If any of your assets have both marital and separate components, the marital portion is what will be divided.
If your marital assets grow or decline in value after you separate but before you divide them, you may have property known as “divisible” property, which will also need to be identified and classified.
Your attorney can help ensure that you properly classify all assets so that you can create an equitable division as part of the divorce, particularly if you and your former spouse cannot agree on the appropriate ownership of those assets.
In order to fairly divide your assets during your divorce, a value must be attached to each asset you own. In some cases, this may be a relatively simple process, especially if you and your former spouse are in agreement about the value of those items. On the other hand, in the case of significant assets or a considerable disconnect between your idea of the value of specific assets and your partner’s, you may need to bring in a professional to determine the value. For example, you may need to:
- Have your home appraised. Keep in mind that the home’s value may have changed substantially since you brought the property.
- Get an approximate value for any vehicles.
- Have valuable assets appraised to get a reasonable idea of their actual value. Valuable assets may include jewelry, artwork, and other potentially expensive possessions.
A complete valuation of all marital assets can make it much easier to divide your assets and ensure that you can reach an equitable division. Remember that the value of your assets is not what you want it to be or what you would pay to replace them. Value in North Carolina is based upon market value–what would someone pay to purchase your used assets.
The distribution part of the asset division process can turn contentious if both parties want the same assets, such as the house or a retirement account. In general, however, the goal of a divorce is an equitable division of assets.
Note that “equitable” does not necessarily mean equal, and both spouses may have different ideas of what makes a division equitable.
For example, in many divorces, both spouses will keep their vehicles, even if one vehicle clearly has a higher value than the other. In others, each spouse may keep the contents and benefits of their own retirement accounts, even if their accounts are not entirely equal. In both of those cases, there may be another asset that is used to offset the unequal values or the parties may agree not to “true up” the values. On the other hand, in cases where one spouse has clearly out-earned the other and has greater potential to earn future retirement, you may come to a different resolution regarding those accounts.
All marital assets and debt must be distributed, with each asset assigned to a specific individual. The individual who does not take ownership of a specific marital asset may need to sign over that asset to the other spouse, especially when it comes to accounts or expensive property. It is a very rare case that spouses continue to jointly own an asset after divorce.
A North Carolina Family Law Attorney Can Help
Asset division can be a complicated part of the divorce process. Properly dividing assets, however, is often essential to your divorce and your life after divorce. Thankfully, family law attorneys have lots of experience handling cases with many different varied assets and situations, and they can help you find the best resolution for your specific circumstances. Contact us to learn more about how to manage the asset division process during your divorce, including how to ensure equitable asset distribution.