Marital property laws vary from state to state. They define the marital estate (community property or marital property) as any asset acquired during the marriage whether that asset is held in the name of either party or both. This specifically includes real estate, car, pensions, 401K plans, business interests, stocks, bond, stock options, dogs, cats, chairs, collectibles and bank accounts etc . . . Property that does not have to be divided in divorce is called "non-marital property." Non-marital assets are generally defined as anything acquired by a spouse by gift, devise or bequest. Everything else starts as if it is presumed a marital asset. That means the person claiming that they should have a greater interest has the burden of proving why they deserver a grater share than half.

Valuing the Marital Estate

In most cases, the marital estate is divided equally unless there is written and binding pre-nuptial agreement to the contrary. To divide the marital estate, it is first necessary to determine the equity of the assets. The equity is determined by arriving at a fair market value (how much would a buyer be willing to pay) and subtracting out any secured encumbrances. For example the equity in a home could be determined by taking an appraised value and subtracting out the secured mortgage, second mortgage, secured lines or credit, home equity loans and outstanding property taxes.

Valuing assets may require the aid of an appraiser. To reduce costs, it is often most effective for the parties to jointly choose an appraiser and divide that expense. Appraisers are available to value real estate, vehicles, business interests, collectibles and other assets. There are also a number of resources listed at the right to help you value cars, boats and motorcycles.

Dividing the Marital Estate

Once you have determined the relative values and encumbrances of the assets, they can be divided by creating a spreadsheet. The equity of any asset awarded to a party is offset by the payment of any debt obligation by the party to ideally arrive at an equal property division.. In this fashion, it is not necessary to divide each asset equally. It is only necessary that each party receives a substantially equal share of the marital estate. Ideally, the division of assets and debts will result in totals that are equal. When that does not occur, such as in the chart below, one spouse may be required to make a cash payment to equalize the division of assets. Often this is accomplished with the party awarded the homestead refinancing the mortgage in an amount sufficient to retire the other spouse's interest. In the example below, wife could refinance to pay the husband the sum of $6,500 (one half of the difference between the values awarded to the wife and the husband.)

Chart A

Not All Assets Are Created Equal.

It is important to recognize in dividing property that not all property is created equal. You must always consider the tax effect of the asset award. For example, one stock account with a value of $15,000 may not be equal to another stock account with the value of $15,000. If the first account started out with a value of $5,000, when the account is liquidated (the stock is sold) the owner would be required to pay taxes on the increase in value. In this example, the gain is $10,000. This is called a capital gains tax. By contrast, if the stock in the second account was purchased for $20,000 and the value dropped to $15,000, upon liquidation, the owner could write off a $5,000 loss on taxes. As a result, there is a greater benefit to receiving the account that performed poorly since the recipient would not only receive the value of the stock but a tax write off as well.

Maury D. Beaulier an attorney licensed in the State of Minnesota and concentrates his practice in family law and divorcewith a concentration on father's rights issues.  Over the past 17 years, Mr. Beaulier has become a sought after speaker on National News and media programs related to family law and divorce issues.  You may contact Mr. Beaulier directly by calling his office at 612-240-8005 or by email at maury@beaulier.com.  
Visit his website at http://www.divorceprofessionals.com