Family Law lawyer

How to find equity in the equitable distribution of a marital estate.

Equitable means “fair”, not “equal”, and finding fairness in property division in a divorce is often not as complicated as one may think.

Some attorney’s fear the numbers and want to involve a CPA on every case with significant assets and debts.  I will generally only use a CPA when my case involves either a business valuation for forensics.  Sometime I may also use a CPA for a present value calculation, but that is about it.  

In most cases we can easily assemble a list of assets and debts and begin to offset them against each other to find the desired “equity” in the apportioned property.  This can be done with a pencil and paper, an Excel spreadsheet that you have set up with all the appropriate formulas, or a software program like Settlyd.  

Generally I find the longer the marriage, the larger the estate, the more likely we will reach a 50-50 division regardless of fault.  Fault may play a small part by compensating a party not at fault for legal fees, and perhaps other financial loss that may have been caused by the fault.  It is important to get a clear, reasonable number for the alleged cost of any fault in order to accurately find “equity”.  

Settlyd provides an easy to use spreadsheet that is populated from a central database of all client financial information.  Regardless of what technology is being used, it is important to make sure that assets and debts are apportioned in like kind.  For example, 401s need to be offset against other retirement accounts as they have tax implications.  Real property can be offset with cash accounts, as both are tax free exchanges in a divorce matter.  

One person can pay out half the equity in the marital residence to their spouse with cash in a savings or investment account, but if they do it by way of a 401k transfer, it will result in less money than the face value because money in a 401k is taxable income upon withdraw.

Regardless of whether the estate is $7,000 or $7,000,000, it is generally going to be all addition and subtraction (with the exception of forensics and business valuations).  Just keep apples to apples and use some good software like Settlyd and you are all set!

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