Two Key Questions
If you are contemplating or have already decided to obtain a divorce, one of the issues you will face is the division of marital property and marital debt. Two questions must be answered regarding any property or debt: Is it marital property? How much is it worth?
# 1 Is It Marital Property?
Classification of property as marital property of the divorcing couple or separate property of one spouse generally depends on when and how the property was acquired. The answers are not always clear or simple. For example, one party might have owned the house before the marriage, but improvements and payments were made using marital funds. The house might be separate, but the community estate might raise various claims for consideration in the division of the property during divorce.
The same may be true for retirement assets, such as pensions, for which some of the pension was earned through employment before the marriage and some was earned through employment during the marriage. Additional pension rights are likely to result from continued employment after the divorce.
# 2 How Much Is It Worth?
This is a valuation issue. The value of some property, such as publicly traded stocks or bonds, is easy to identify. Other assets, such as a professional practice or interest in a partnership or closed corporation, are more difficult to value.
Other property that is difficult to value:
- Retirement assets, such as pensions and 401(k) plans
- Employment benefits, including executive compensation
- Stock options
- Non-qualified retirement and benefit plans
- Insurance policies
- Real estate
- Business interests