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Assets In Divorce Acquired In Differing States, How to Divide?
Jan L. Warner & Jan Collins

Question: My wife and I moved around quite a bit with my job during our 28-plus-year marriage. When our relationship stalled and we both hired lawyers, I was surprised to learn that our split would be more difficult because some of our assets were acquired in community property states and others in equitable division states. In addition, we each inherited property, some of which was used to support the marriage. This means, according to my lawyer, an expensive sorting process. Why is where we acquired the assets important, and is there a way to shortcut the legal process so we can move on with our lives?

Answer: As an example of what happens to many splitting couples in todayís mobile society, you and your wife are finding out that since the law of each state is different, you must rely on experienced lawyers and other experts (such as CPAís and appraisers) to help you reach an agreement that fairly divides your assets -- or present your cases to a judge who will make the decision for you.

In an over-simplistic nutshell, "marital property" and "community property" consist of assets acquired during the marriage that can be divided, while "separate property" -- such as inheritance, gifts from family members, etc -- was not acquired by marital efforts and cannot be divided unless it is transmuted, i.e., changed, into marital property.

Generally, "community property" and "marital property" include all assets acquired and all income earned by each spouse during a marriage. Without a valid agreement to the contrary, "the net community estate" (community assets less joint debts) will be divided equally between the spouses, while marital assets acquired in equitable division states need not be divided 50-50. Instead, their division is based on criteria that differ from state to state. Generally speaking in equitable division states, the longer the marriage, the more equal the division.

Sometimes, spouses disagree about whether an asset is community, marital, or separate, and whether the value of a community or marital asset is appropriate. Since the categorization and valuation of various assets can be problematical, if you and your wife canít agree, the courts will listen to the evidence and make an independent determination. Often, itís necessary for each side to trace the acquisition of assets in order to prove whether they are subject to division or not. Asset tracing can become very complicated, and generally requires the assistance of experts.

Despite all the differences, before there can be a division, each marital and community asset and debt must be identified, characterized, and valued. Without going through this painstaking process, you or your wife might get shorted when your assets and debts are ultimately divided.

Bottom Line: Proving that an asset is non-marital will shrink the pot of property to be divided. Proving that an asset is community property could conceivably help your wife receive a greater percentage of the assets. Because quality work takes time, we suggest that you provide your lawyer with as much information as you can -- and be patient.

SoloFact: One spouse may receive more than an equal share if the other has engaged in "waste" of assets acquired during a marriage.

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