Experience. Diligence. Professionalism.

3 challenges when dividing investments during divorce

On Behalf of | Oct 9, 2023 | Divorce |

Those with sizable resources and competitive incomes often decide to invest the money that they do not need to cover their daily living expenses. Some people invest in real property to either sell it later or rent it to others. Others purchase stock in publicly-traded businesses so that they can receive dividends when a company is profitable.

Investments help people leverage their existing resources to generate more income. They also help protect people against economic downturns in some cases, particularly when individuals carefully diversify their holdings. Unfortunately, investment-related concerns can serve as a source of stress if a couple who purchased them decides to divorce. The following are some of the reasons that dividing investments can be such a challenge during New York divorce proceedings.

Determining if they are marital property

Someone may have already developed a relatively diverse portfolio when they decide to marry. They might continue contributing to the same accounts or improving real estate investments throughout the marriage. Those decisions can lead to confusion about whether those investments are marital property or separate property. Often, they are a combination of both, with the portion contributed before the marriage remaining separate property. Whatever people invest during their marriages is often subject to division in their divorce proceedings.

Establishing a fair market value

Real property tends to fluctuate in value depending on demand and numerous other factors. Other forms of financial investment are also subject to rapid changes depending on market conditions. Spouses may have a hard time agreeing on what their shared investments are actually worth if those investments have seen either a significant increase in value or rapid depreciation in recent months. People may need to bring in experts to determine what investments are worth or may need to try to establish what their future value might be based on current conditions.

Dividing the assets

Unless the couple invested in unimproved vacant land, it can be very challenging to divide their ownership interest in real property. Financial investments, including stock, can also prove very challenging for people to divide during divorce proceedings. They may instead need to account for the value of those resources when splitting other assets because they cannot actually divide the investment itself.

People who are aware of the challenges they will probably face during divorce proceedings in New York may have an easier time negotiating a property division settlement or developing their arguments for family court litigation. Identifying challenges that could arise during a New York divorce may help people more effectively assert themselves and secure more appropriate solutions for property division matters.