What To Expect In The Asset Distribution Process

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What To Expect In The Asset Distribution Process

6 February 2015
 Categories: , Blog

Family law is one of the most complex areas of law because of the contentious nature of some of its topics including asset distribution and child custody. Very often people think that child custody presents the toughest challenges but forget that asset distribution fights can be even uglier, especially if real estate and/or financial assets are involved. The purpose of this article is to present the challenges that you should expect to face when it comes to asset distribution.

Financial value isn't always key

Money is a well-known source of contention especially between two individuals who have decided to part ways. However, it's not always the main factor on which the distribution of assets is based.

For example, the other party may decide to disregard financial value and focus more on financial security. Although these two concepts are typically used interchangeably in every day life, they in fact carry certain nuances that distinguish them. By claiming the assets that provide financial security, your ex wants to guarantee that both their short-term and long-term needs will be met financially wise. This thus forces you to take into account additional factors such as:

  • Tax implications
  • Asset liquidity

For example, if the assets aren't in an IRA or some other tax-sheltered account, you and the other party will have to agree on the calculation of the taxes associated with the capital gains generated that both of you will pay to the IRS. Also, if the assets are illiquid, someone might have to bear the cost of turning them into cash.

Communion property vs. equitable distribution

When you go see your family lawyer about asset distribution, the first thing they will want to know is the state where you and your ex-spouse used to live. This is because under family law, there are two types of states when it comes to asset distribution:

  • Equitable distribution
  • Communion property

In equitable distribution states, courts divide assets based on fairness. This means that you or your ex-spouse will receive more than 50% of all marital property. Fairness criteria typically include:

  • The annual income of each party
  • The duration of the marital union
  • The financial status of each party after the legal separation
  • The assets that each party had before getting married

In communion property states, each party receives half of all marital property. These states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

Given the complexity of asset distribution, you're strongly recommended to work with a family lawyer as they'll guide you through what to expect in the legal process. Talk to people like Law Office Of Ernest A Buche Jr for more information.