Equitable Distribution Requires Full Disclosure

In order to equitably divide all property, the property must first be identified and analyzed. The stress of divorce causes even the financially sophisticated to overlook or fail to consider all assets in formulating an approach to asset division.  Whether you are busy with a demanding career or your work in the home limits your awareness of family resources, it is vital to list and address all available resources. A thoughtful and creative division of assets can ensure your family’s financial well being in the years that follow your divorce. 

Assets to Consider

• Marital Home
• Cash (on hand)
• Cash (in banks or credit unions
• Stocks/Bonds
• Notes (money owed to you in writing)
• Money owed to you (not evidenced by a note)
• Real estate: vacation homes, time shares etc.
• Business interests
• Automobiles
• Boats
• Recreational vehicles
• Retirement plans (Profit Sharing, Pension, IRA, 401(k)s, etc.)
• Furniture & furnishings in home
• Sporting and entertainment (T.V., stereo, etc.) equipment

 Frequently Undisclosed or Overlooked Assets  

• Rewards programs (frequent flyer accounts, loyalty rewards, credit card usage discounts, preferred shopper points).
• Security deposits (e.g. rentals, car leases, utility companies)
• Memberships (health and country clubs)
• Accrued employment non-salary compensation (vacation time, sick days)
• Employer benefits (phone or car use)
• Intellectual property (patents, residuals, copyrights, royalties)
• Taxes (refunds, carry-forwards [charitable contributions, capital losses, etc.] tax prepayment)
• Marketable government licenses (radio licenses, rafting/river licenses, commercial fishing quotas)
• Personalty – antiques, jewelry, art, collections, exotic pets
• Season passes and tickets (sports teams seats, theater or music season passes, etc.)
• Prepaid premiums or installments (insurance, rent, leases, subscriptions) 
• Burial plots
• Life insurance ( death benefits or cash surrender value)
• Contingency claims (lawsuits such as personal injury or worker’s comp claims if lost wages, contract disputes)
• Leases(mineral or timber rights, aircraft)
• Cash equivalents (precious metals such as gold and silver)
• Options to purchase property
• Earned but unpaid commissions
• Accounts receivable
• Referral fees (e.g., for personal injury lawyers): when divorcing a lawyer, take a look at the books to see who your spouse usually refers cases to and then subpoena records from that attorney and depose them.

If necessary, private investigators and forensic accountants can trace assets. Bank statements, credit card records, and observation of lifestyle choices (frequent travel, lavish purchases), show spending patterns by which to detect and track the source of unreported income. Once such assets are located, they can be included in a division of asset plan.

Characterization of Marital Property or Debt

After assets have been identified, they must be classified to determine whether they will be awarded to one spouse as separate property or divided.  In any given divorce, one spouse may find it advantageous to argue that a particular asset is separate property and should not be subject to equitable division. Under Oregon law, there are situations in which property or debt may deemed to be separate and not part of the marital estate. The more intertwined the financial circumstances of a couple, the harder it is to disentangle them. It becomes more likely the court will order an equal distribution even in a short-term relationship or in cases in which one spouse claims that the bulk of the property is premarital or individually acquired. The party seeking to separate assets out of the mix must be able to identify for the court the separate contribution as a threshold evidentiary matter. 

Asset Valuation

If an asset has been identified and classified as marital subject to distribution, its proper valuation is the next step. Some assets are more easily valued than others. In a time of fluctuating real estate prices, where a family business is at issue or where there are grossly different claims about the value of an asset, careful analysis of many factors is necessary. Consideration must be given to book value, fair market value, original cost, increases in value, tax implication and replacement value.  Ensuring that each asset is not only properly characterized but accurately valued will be essential to your divorce case. Ensure that you develop a valuation analysis and technique that is both easily understood and can withstand tough challenges in both settlement negotiations and contested court hearings. Whether or not your case can fairly be characterized as a high net worth divorce or is more simply presented, take special care to address all your marital assets.

Business Valuation and Divorce

Business valuations require attention to gross income, operations, growth rates, inclusion of all business assets and/or growth and earnings value of any business.  The impact of any asset division involving a business that is part of the marital estate will affect shareholder, operating or partnership agreements and have variety of tax liabilities to each spouse. Ensure that your attorney considers:

• Interests in S-corporations or closely held corporations
• Interests in limited liability companies and real estate developments
• Partnerships or interests in professional practice groups such as medical, legal and accounting
• Family limited partnerships, trusts and estate documents
• Professional licenses (Doctor, Lawyer, Accountant, Engineer) 

Retirement Accounts

If either you or your spouse has any retirement benefit, it will be necessary to value and divide those benefits at the time of your divorce even though they may not be payable until years after your divorce is finalized. Examples include IRA’s, pensions, Simplified Employee Pension Plans (SEP’s) and 401(k) savings accounts. Ensure that all retirement accounts and benefits are addressed in your divorce.  It is not enough however, simply to include all assets; you must also make sure that the transfers between you and your spouse are accomplished without the assessment of uncessary taxes, penalties or hidden costs. If you are relying on a transfer of money from a retirement account to fund a necessary expense right now, such as a downpayment on a house or money for further education, it is important that this be done correctly to avoid any penalty.  Call me to schedule a consultaton about the financial aspects of your dissolution case.