One of the main jobs of the judge in a divorce is to divide the martial estate. The marital estate is a container of everything you and your spouse own together in – your assets. The assets of the marital estate are distinguished from each party’s separate estate – which are generally composed of the things a spouse had before they were married (or things they inherited).
The judge is charged with dividing the marital estate “equitably” – which means “fairly.” It does not necessarily mean “equally.” The easiest way to short-change your share of assets from the marital estate is by failing to include them all. Here are some commonly overlooked assets in divorce:
1. Your spouse’s retirement benefits
A retirement fund or benefit is often a married couple’s largest asset in divorce. Retirement benefits generally come in two kinds, defined benefit and defined contribution. A defined benefit is like a pension, where the amount of money or other benefit you receive is based on the years of service and income during that period.
The defined contribution retirement is solely based on how much money has been put away for retirement, and how much interest it has accumulated, like a 401k for example. Both are subject to division upon divorce and should not be overlooked.
In 2017, the Alabama law changed so that you no longer need to be married 10 years or more to claim a portion of your spouse’s retirement. However, only that part of the asset that accumulated during the marriage is to be divided. Furthermore, you cannot get more than 50% of your spouse’s divisible retirement. Therefore, the longer you are married, the more valuable your interest is in the spouse’s retirement in a divorce.
2. Your spouse’s business
Your spouse’s business might be an asset the marital estate. If it was created or purchased during the marriage, the whole thing might be part of the marital estate. However, just because it was started or purchased before the marriage doesn’t mean it’s necessarily excluded from the marital estate.
If the income or the business in general was regularly used to benefit the marriage, it may have either transformed into a martial asset has become an asset that can be divided if there are not sufficient other marital assets to be divided. Either way be sure not to overlook a spouse’s business as a potential divorce asset.
3. Private loan proceeds
If you spouse is lending money to friends or family, the repayment of those funds may be a marital asset in the divorce. Private loans are commonly made to friends and family to help them buy a first house or start a business. Sometimes those “loans” are never repaid, but instead forgiven over time. However, if there have been loans made to friends or family, the right to repayment could be a marital asset, so don’t overlook private loans.
4. Your spouse’s interest in a trust
Does your spouse have a trust? Do the terms of the trust preclude it from being divided in a divorce? You still might be able to get some of the income of the trust because the income might be a marital asset.
Even if you are not a beneficiary of a trust of which your spouse is a beneficiary, you still may benefit from it in divorce. Like a spouse’s separate business, if distributions from the trust were regularly used to benefit the marriage, i.e., went to marital expenses then you may be able to claim a portion of future distributions… but only if distributions to the spouse continue to occur. Don’t overlook the importance of trust assets in divorce.
5. Part of your spouse’s separate estate
Don’t overlook the value of your spouse’s separate estate. If the divorce lacks assets to divide, it may look to the non-marital assets. In some circumstances, you can get part of your spouse’s separate estate.
If a court cannot equitably divide the assets by splitting up only the marital assets, the judge has authority to look to the spouse’s non-marital assets to make up the difference. The exception is that the court cannot divide up a spouse’s inheritance or gift unless it was regularly used for the benefit of the marriage.
What to do about the assets:
- Collect statements of bank accounts, mortgage statements, tax return and the like – if you can go back 5 years;
- If there are financial statements for a business collect them;
- Make a list of any properties you own, including their value;
- Contact Browne House Law or other lawyers to help you through the process and protect your interests.