Thursday, June 14, 2018
Second Divorce- How do we divide our stuff?
One of the most difficult issues in a second divorce is how do you divide your property? You had a 401k and a house before you married, sold your house and bought a new one with the love of your life, now she wants a divorce!!!!
Georgia divides property under a theory of "Equitable Division". You may have heard of states like California which uses a different concept called: "Community Property". Unless there is a prenuptial agreement in California whatever assets are present at the divorce are divided 50/50 regardless of behavior during the marriage.
In Georgia we have a two (2) step process. The first is to determine whether any property was owned before marriage or inherited. That property is your "Separate" property which you get to keep. The remaining property is "Marital" property which is divided "Equitably". Equitable usually means 50/50 but the Court can consider the behavior of the parties when dividing.
The Court looks to the "Source of Funds" to determine what property is marital and want property is separate. For example, if before your marriage you had $100,000.00 in a 401k, then contributed $100,000.00 during the marriage, which has increased to $300,000.00, the Court should divide the property as follows: The first $100,000.00 is your separate property as you owned it before marriage. The second $100,000.00 is marital property as it was earned during the marriage. But what about the increase in value of $100,000.00? Because 1/2 of the money is separate and 1/2 the money is marital, the increase in value should also be split evenly between marital and separate. In other words, you would be awarded not only $100,000.00 as your separate property but also $50,000.00 as 1/2 of the increase in value. So you would receive $150,000.00 as your separate property and divide fairly the remaining $150,000.00. Under this scenario you should get $225,000.00 as your award and your wife should get $75,000.00.
These issues are very fact specific and require good documentation. Often we retain accountants to do the math to make sure our clients get their fair share.