Dividing Some Community Assets Can Pose Challenges During Divorce
During the divorce process, community assets (those acquired during the marriage with the exception of inheritances and certain gifts) are supposed to be divided equally. It’s natural for people to focus on the high value assets such as the home, bank accounts, vehicles and other major items. But what about complex assets such as a business or restricted stock? What about unusual assets such as an art collection or antiques? How can you make sure that you get all that you deserve?
A skilled divorce attorney will be the key player in this regard. He or she should conduct a thorough review of the assets and debts of you and your spouse to determine how to proceed. Your attorney may also retain the services of specialists in certain disciplines such as a tax accountant, business valuation professional or appraiser to gain insights into important issues. The fees they charge could prove to be a profitable investment, and well worth the cost.
Here are some considerations regarding unusual assets, retirement assets and complex financial assets:
Some couples devote much time, effort and money into collecting art, antiques and collectibles. These need to be identified and appraised. This in itself is usually a straightforward process, but one that will probably require the expertise of one or more appraisers.
But there are other unusual assets that require special attention during the divorce process:
- Nontanglible assets such as patents, trademarks and copyrights
- Digital assets such as bit coins and websites
- Frequent flyer miles
- Club memberships
An IRA can be easily divided. But employer-based retirement assets such as a defined benefit pension or 401(k) account will require a Qualified Domestic Relations Order (QDRO). This is a court order that tells the plan administrator how to divide those funds. There are many complex considerations that go into creating a QDRO, and it’s essential that the terms and timing of the order are spelled out correctly.
Complex Financial Assets
Dividing a business or professional practice is a weighty subject in its own right and will be the subject of subsequent blog posts. There are some other business-related assets that can be problematic, such as stock options granted in lieu of monetary compensation, restricted stock and deferred compensation of any type. It may be possible to negotiate a fair settlement that divides these assets, or litigation. may be required.