The Process of Dividing Marital Property
Determining how to split your shared assets in a divorce can be tricky. Our possessions hold emotional value as well as market value. If you and your spouse can’t find agreement on how to divide property in a divorce, you could end up draining your funds by fighting for every major possession in court. The most challenging asset to divide is usually the home, but that doesn’t mean you won’t face other quandaries. Who should get the RV? Is the jet ski worth selling? What about that piece of artwork you love? Let’s look at how to divide property in a divorce.
The first step in dividing property during a divorce is to determine which major items are part of your shared marital estate. Big assets that you brought into the marriage are likely to be yours and not considered marital property. Items purchased while you were married, with a few special exceptions, are usually considered marital property and both spouses have a claim to its value.
There are exceptions to this rule. For example, let’s say that your spouse owned an RV before you were married. Does that mean you have no claim to this high-worth asset? Not necessarily. If your spouse spent money to replace the RV’s engine and buy new tires for it while you were married, then your spouse used shared marital funds. That may give you a claim against the RV.
Market Value versus Emotional Value
Once you’ve determined which assets are shared marital assets, it’s time to begin negotiating on how to split them. At the end of the day, you are negotiating value, not specific assets. If you and your spouse were robots, it wouldn’t matter which assets were in your pile and which were in your spouse’s pile. At the end of the day as long as the division of value was fair you could both walk away satisfied. Of course, you aren’t robots, which means that you likely have an emotional connection to certain assets.
For example, you might wish to keep a piece of artwork you purchased on that amazing trip to New Zealand. Likewise, your spouse may want to keep their collection of guitars.
As you begin negotiating assets, make sure you have a clear understanding of the value of each item so that when your spouse requests an item, you can negotiate for an item of similar value. When we talk about an item’s value, what we mean is market value. That is the value you could receive if you sold that item today.
Market value is NOT the amount you paid for the item. For example, you may have paid $30,000 for your car three years ago, but if you were to sell it today, you’d only get $18,000. The market value of the car is $18,000.
Don’t Be Blinded by Emotions
You wouldn’t be human if you didn’t have an emotional connection to your possessions, but that connection can also work against you. Maybe that piece of art you love would only sell for $200, but your spouse says they’ll let you have it if they can keep their guitar collection, worth $8,200. While the emotional value of these two possessions might be similar, the market value is not. Don’t let your emotions be used against you.
Sell or Keep?
The easiest way to divide property during a divorce is to liquidate assets and divide the cash. However, not every item is easy to liquidate quickly, and many times the emotional value of an item far outweighs what it can bring on the open market. You may think that piece of artwork is priceless, but since it will only snag $200 on Facebook Marketplace, it probably isn’t worth selling.
It is unlikely that you and your spouse will be able to perfectly divide your possessions in your divorce so that you both end up with the same amount of value at the end. This means one of you may end up “buying out” the other spouse in order to keep a big asset. Let’s say that your spouse dearly wants to keep the RV, which you purchased together during your marriage. The RV’s market value is $18,000. Assuming you’ve decided to split your assets evenly, that means your equity in the RV is $9,000.
In order for your spouse to keep the RV, they’ll need to find a way to provide you with $9,000. That might mean letting you keep $9,000 worth of assets or giving away $9,000 worth of equity in your home when you sell it. It could also mean that your spouse gives you $9,000 in cash out of their savings account or from their retirement account. There are many ways that you and your spouse can negotiate the division of property in a divorce. For many couples, this ends up as spouses keeping certain items, selling others, and making payouts to even up the division.
We strongly suggest that you consult with a divorce attorney before negotiating the division of your marital estate with your spouse. A divorce attorney can help you determine a full accounting of your assets, value those assets, and devise a negotiation strategy. Dividing your possessions in divorce is just one aspect of the divorce process. Make sure you are prepared for this major life change by attending a Second Saturday Divorce Workshop in your area.