When clients face divorce, one of their most pressing questions is, “How will our assets be split?” We hear it all the time and understand the urgency.
Divorce dividing assets is governed by marital property laws and state laws, which determine how property is classified and distributed during divorce proceedings.
Property division is often one of the most financially significant aspects of a divorce, whether it is a home, retirement accounts, business interests, or investment portfolios. Different rules apply depending on the state, so understanding these rules is crucial for making informed decisions throughout the process. So, it is important to understand how assets are divisive in Kansas and Missouri.
How is Property Divided in a Kansas or Missouri Divorce?
Fortunately, Kansas and Missouri follow the same property division model.
Kansas and Missouri follow the equitable distribution model. This means that marital property is divided fairly, but not necessarily equally. The courts will evaluate various factors such as each spouse’s financial condition, earning capacity, contributions to the marriage, age, health, and non-financial contributions. In equitable distribution states, the goal is fairness, not necessarily equality, so achieving equality or a strict 50/50 split is not always required.
The equitable distribution model only focuses on marital property, meaning any assets or debts acquired during the marriage. Property acquired during marriage belongs to both spouses jointly, and the concept of what marriage belongs to the marital estate is central to determining how assets and debts are divided. Separate property, such as inheritances or gifts, is generally excluded from this process.
What is Considered Marital vs. Separate Property?
It is essential to understand the difference between marital assets and separate property when going through the asset division process of a divorce.
Firstly, marital property includes all assets and debts acquired during the marriage. This could entail the family home, retirement accounts earned during the marriage, jointly held bank accounts, business profits, vehicles, and any personal property acquired after the wedding.
On the other hand, separate property includes assets owned before the marriage or acquired by inheritance or gift. Commingled assets can occur when separate funds, such as premarital savings, are mixed with marital assets, making it difficult to distinguish ownership.
However, there is the chance that separate property becomes mixed with marital assets by depositing inherited funds into a joint account. Inherited money and assets held in a premarital account or separate account can lose their separate status if commingled with marital property.
Since marital assets are the only assets considered in property division, it is essential to know which are which. Certain assets may require special attention due to complexities in tracing ownership or valuation.
How Are Retirement Accounts and Investments Divided?
Retirement accounts, such as 401(k)s, IRAs, pensions, and other investment assets, are often divided in a divorce, as much of the time, earnings are made into those accounts during the marriage. Retirement savings accumulated during the marriage are subject to division.
With those earnings being made during the marriage, they are considered marital assets. However, only that portion of the accumulated assets is typically considered marital assets and will go through the division process. The valuation date is important in determining the value of retirement savings for division, as different states may use the date of separation or the date of trial to appraise assets.
Investment portfolios, stock options, and brokerage accounts are also required to go through a valuation process. These assets, including retirement accounts, are often valued based on their fair market value. Even if a retirement account or investment is in one spouse’s name, it may still be considered marital property if contributions were made during the marriage.
With financials in play, it can be essential to go through this process with an experienced family law attorney to ensure choices are legally sound.
What Happens to the Marital Home in a Divorce?
There are many options for how the marital home is split in a divorce, and it all depends on the circumstances of the divorce itself. It could be sold with the proceeds split, one spouse could buy the other spouse out of the other’s interests, or spouses could decide to continue co-owning the property.
When considering how the marital home is dealt with, courts will consider financial feasibility, mortgage obligations, and child custody arrangements. The presence of minor children can also affect the court’s decision regarding who remains in the marital home or how it is divided. Additionally, the property will be evaluated for its equity, debt, and market value before making any decisions.
How is a Business Divided in a Divorce?
With a business involved in a divorce, whether one or both spouses own it, the divorce process becomes far more complex. Determining the fair market value of a business is essential for equitable division, often requiring professional appraisals or specialized valuation methods.
Business interests must be properly valued by financial experts or forensic accountants, and then the courts will take the time to decide whether the business is marital property and determine how it fits in the equitable distribution model.
A business may be spouse-owned before marriage, but can become marital property depending on circumstances such as improvements or joint use. Different assets, including business interests, may be treated differently in property division, especially if a prenuptial agreement specifies certain assets as separate property.
In many divorces, rather than the business being physically divided, one spouse may retain ownership while compensating the other through asset offsets or structured payments. The fair market value of the business is used to determine compensation if one spouse buys out the other. It will all depend on the circumstances of the divorce.
Is Asset Splitting Ever Truly Fair?
We get asked by clients if asset division in divorce is truly fair. We like to say that the legal system aims for equity, not perfection.
Fairness depends on complete financial disclosure, accurate valuation, and effective advocacy. Factors such as a spouse’s income, one spouse’s education, and debts related to a spouse’s education can influence how assets and debts are divided. Separate debt and obligations, like child support, are also considered in achieving a fair settlement.
Collaborative divorce can help spouses reach an agreement on dividing other property and most property without litigation. Everyone’s case is different, but with thorough documentation and strategic negotiation, asset splitting can be equitable for both spouses.
If you have further questions or wish to start your divorce process, contact the team at Fisher Law LLC.