High asset divorces can be challenging to resolve, especially when one or both spouses owns a series of stocks and bonds. Although stocks and bonds are analyzed like most other property types, the court will need to distinguish between marital property and non-marital property, establish a value to each stock or bond, and then decide how many of each asset should go to each spouse.
Division Of Marital Property In Maryland
Before a person can fully understand how stocks and bonds are divided during a high asset divorce, they must first learn the differences between marital and non-marital property. While there are some exceptions, any property acquired during a marriage is considered marital property. This often includes houses, vehicles, jewelry, bank accounts, retirement plans, IRAs, pensions, stocks and bonds.
Regardless of who paid for the item, all property obtained during a marriage is considered marital property. The main exception to this rule is property that one spouse receives as an inheritance or gift from a third party. Some items may also be excluded from the marital property if there is a valid agreement between spouses.
Non-marital property includes any property that was obtained before the marriage. All non-marital property remains the property of the party who owned it before the marriage and is therefore not part of property division during a divorce. In addition, any property that both parties acquired during a period that the couple lived together before marriage is not considered marital property.
When a marriage is dissolved, each spouse can claim particular items, but they must show proof that the property belongs to him or her alone. Couples may also acquire joint property of certain property that was brought into the marriage by either spouse. In this case, an agreement is usually made to transfer the property to one spouse, usually in exchange for another piece of property.
Maryland is considered an equitable distribution state, meaning the court is not obligated to divide marital property equally between the spouses. Instead, a judge can decide how best to divide property in a fair but not necessarily equal way. If one spouse wants to keep the bulk of the assets in a divorce, that spouse may be ordered to provide the other spouse with a monetary award to make the transaction fair. Sometimes, the division of assets does not appear fair at all, especially when there is a great deal of non-marital property but little marital property.
How Stocks & Bonds May Be Divided In Divorce
Determining whether stocks and bonds are marital or separate property in a divorce is just the first step. Both stock and bond investments have a paper value, including a current value and potential future value based on the earnings and appreciation history.
When determining how best to divide stocks and bonds fairly between spouses, the court will consider several factors. First, a judge will calculate the current value of the stocks and bonds, and in some cases, how much the investment has appreciated over time.
Next, a judge will look at who contributed to the investments and how each spouse’s marital contributions to the investment accounts helped increase their value. Finally, a judge may even look at the tax obligations that may arise from these earnings.
The value of an investment can typically be found by looking at account statements. However, in a high asset divorce, it is usually wise to hire an expert to appraise the account and calculate its actual value. Forensic accountants often use appropriate formulas and guidelines to determine values.
A spouse may also need to call in a forensic accountant if one spouse is attempting to conceal investments. For example, a spouse may attempt to hide stocks and bonds during a divorce to prevent these investments from joining the pool of marital property that is to be fairly divided.
When going through a high asset divorce, both parties must present accurate and factual information regarding all income, assets and investments. If either spouse should fail to disclose assets, it could lead to consequences later on.
Options, Vested And Unvested Stocks And Other Investments
This is where it can truly get complicated. Sometimes a spouse has an option to purchase stock, but it has yet to be purchased. Sometimes, a spouse’s right to purchase is not presented vested. Highly experienced attorneys understand the arguments for and against these assets constituting marital property.
In other words, this process can get complex and require advanced skill and knowledge, as well as the use of expert witnesses to properly assess the marital and non-marital assets, and their values.
Speak With An Experienced Divorce Attorney
Divorce is a major hardship that can be difficult to manage without the guidance and advice of an experienced divorce attorney. Milstein Siegel is a reputable Maryland family law firm specializing in family law and divorce matters.
For more than 30 years, the team of legal attorneys at Milstein Siegel have represented clients in all areas of Maryland while striving to protect their best interests. For more information on how stocks and bonds are divided during a high asset divorce or to speak with a divorce attorney about a case, contact them today.