Most couples in America have a fair amount of debts and assets. Debts can include home mortgages, loans for cars, credit card debt, student loan debt, etc. Assets can include savings, stocks, properties, belongings, IRAs and other investments. A couple who decides to proceed with a divorce may not know how to divide marital assets and debts. Here’s a brief guide on how this works.
Assets must be divided based on Separate and Marital Property, which will differ according to the state of residence. In general, separate property includes property that was owned by either spouse prior to marriage, inheritances or gifts received before the marriage, or lawsuit payments received by either party. All other property acquired during your marriage is considered marital property and will be divided equally.
Marital property is all income and assets acquired by either spouse during your marriage. This includes pensions, 401ks, retirement plans, stock options, bonuses, commissions, club memberships, brokerage accounts, bank accounts, real estate, cars, boats and more. The appreciation of any of these properties during the time you were married is also included.
Assets shouldn’t just be divided by their current value. It’s important to understand which assets are valuable in the short-term and which have long-term financial security.
Debts are just as important as assets, since they can factor heavily into a couple’s or individual’s net worth. The court will divide your debts equally as long as the debts were accrued during the time you were married. It is common for a court to award each spouse a percentage of debt that is relative to the amount of assets each party receives.
In the event a former spouse can’t pay a debt, creditors will pursue the party to whom that debt was originally assigned, rather than both parties. You can petition the court to enforce the divorce agreement and ensure that you are not held responsible for those debts.
Should you need assistance in family law matters, don’t hesitate to reach out. Contact Laura Spencer Coleman, Attorney at Law, to set up an appointment with this caring, dedicated firm.