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Division of Assets in Divorce: How to Protect Your Financial Future

In a Connecticut divorce, the division and distribution of assets is a complex process that is unique to your set of circumstances. Here is what you need to know to protect your financial future. 

 

How are assets divided in a Connecticut divorce? 

In Connecticut, all assets are subject to division and distribution to one or both spouses in a manner that the court deems fair and reasonable, based on all the facts and circumstances of the case. The court may consider and distribute all assets, including those titled jointly to the spouses, assets in either spouse’s name, and assets owned jointly by a spouse and someone else. Assets can include real estate, investment assets, retirement accounts, artwork and collectibles, intellectual property, ownership interests in business entities, cars, boats, and other property. If there is an enforceable prenuptial agreement in place, this may impact the distribution of assets.

 

What information is needed for the court to divide assets? 

The court will need a complete picture of the total assets available for distribution. You will be required to provide many documents, including: 

  • Past 3 years of federal and state income tax returns, including personal returns and returns filed on behalf of any partnership or closely held corporation of which a spouse is a partner or shareholder
  • Past 3 years of IRS forms W-2, K-1, and 1099
  • Last pay stub from the previous year, and all pay stubs or other evidence of income from the current year
  • Past 24 months of statements for all accounts maintained with any financial institution, including banks, brokers and financial managers
  • Most recent statement for every retirement account, including Keogh, IRA, profit-sharing, deferred compensation and pension plans
  • Most recent statement for any life insurance policies  
  • Health insurance policy summary detailing coverage, cost, spousal benefits and COBRA costs following dissolution 
  • Appraisals of certain assets that you own, either by yourself, with your spouse or another party

 

What about the marital home? 

Many married couples own a home together, which is often their most valuable asset. In some divorces, neither party wants to stay in the home after the marriage ends. In those cases, the home can be sold, with the home’s value determined by the sale price and the proceeds distributed fairly among the spouses. However, if you (or the other spouse) want to keep the home, the court will first need to determine if you could afford to maintain it on your own. This will require an analysis of your income, including any support you would receive from the other spouse after the divorce, and the total costs of maintaining the home, including the mortgage, utilities, real estate taxes, and other expenses. If neither party can afford to keep the home on their own, it may need to be sold, with the proceeds divided to allow for the establishment of two separate residences. If both parties want the home and could afford to maintain it on their own, the court will look at a variety of factors to determine who gets the home and how the other party will be compensated for his or her share. 

If one party keeps the home, its value will need to be established, whether through agreement by the spouses, tax assessment, online resources, or a real estate appraisal. If you and your spouse have a mortgage on the home, whoever is awarded the home will be obligated to remove the other spouse as a debtor on the mortgage within a reasonable amount of time. This is often done by refinancing the mortgage. If the home is worth $1 million, and the mortgage totals $200,000, that leaves $800,000 in total equity for division and distribution. 

 

What if one party brought valuable assets into the marriage?

In some cases, one party brings substantial assets into the marriage. For instance, you or your spouse may have inherited or purchased real estate, financial investments, or other assets prior to getting married. If an asset was not acquired or created during the marriage, and therefore the marriage did not contribute to it coming into existence, the court may reasonably deem that the person who brought the asset into the marriage has a greater right to it. But the court will consider not only who was responsible for the acquisition of the asset, but also the maintenance of it. For instance, if one spouse inherited a stock portfolio, but the other spouse has managed the asset and helped it grow, this will be factored into the court’s decision. Be sure to arm your attorney with any factual information about your actions to maintain or grow an asset, so that you will receive the appropriate credit for your contributions to that particular asset. 

In addition, the court will consider the totality of the circumstances, as well as factors such as the length of the marriage, in making any determination regarding premarital assets. For instance, if one party brought an inheritance of $100,000 into the marriage, but contributed very little in terms of acquiring assets or taking care of the children over many years of marriage, the fact that the party brought $100,000 into the marriage may not sway the judge to allow that spouse to keep half of what the two people created plus the $100,000. 

 

What if my spouse or I are a part-owner of a closely held business? 

In some marriages, one of the spouses owns a closely held business with someone else. Say, for instance, that a business has been in your family for three generations, and you are currently an owner, along with your parents and siblings. Typically, that business will have corporate documents that prevent a spouse or other third party from becoming an owner. Similarly, if your spouse owns a business with a non-family partner, the business’s corporate documents will likely preclude a change in ownership by virtue of divorce. A judge therefore would not be able to order that an ownership portion in that business go to the non-owner spouse. However, the value of the ownership interest will need to be determined, and the court will consider it in determining the fair distribution of assets. As a business ownership interest can be valuable, it is crucial that all facts be assessed to determine its fair value.  

In order to protect your interests, it is important that you discuss your objectives and your circumstances with an attorney who is experienced with family law in Connecticut. The family law attorneys at Ruel Ruel Burns Feldman & Britt serve as trusted advisors and represent clients in divorces and appeals in Connecticut. If you are considering a divorce or seeking a modification or appeal of your divorce orders, contact our family law attorneys at 860-206-9096 or online.