One of the issues that must be addressed in a divorce is the division of marital assets and accrued debts. Alabama’s divorce law stipulates the equitable distribution of marital property. In some instances, divorcing couples can agree on how they will split their assets on their own. But, the agreement they make must still be signed by a witnessing party such as a divorce attorney Alabama before it can be deemed valid. But, often, divorcing couples fail to reach an agreement and end up in court. The division of marital assets in a divorce includes the following steps:
Determining Marital and Separate Property
In Alabama, any property acquired after marriage is marital, no matter how it was bought and who bought it. The court will split the property in a way that is deemed equitable for both parties.
But, this division does not include business assets acquired before or after the marriage ended. These assets are considered separate property, so they should be subject to division. Also, separate property includes inheritance or gifts a spouse receives before the marriage unless it is integrated into the marital property during the marriage. If the assets have been used to benefit both parties while they are still married, the court can consider them as marital property. For instance, a business that one party started before marriage might increase in value when they married their spouse. This business asset’s capital growth can be considered marital property. But, the increase in the asset’s value that happened following formal separation is separate property.
Retirement accounts are also separate property unless the couple has been married for over ten years. In this case, a part of the IRA account may be awarded to the other spouse.
Assigning Value to Property
Before the court divides marital business assets, it will require an evaluation of the value of the property. This process is meant to improve the equitable assignment process. Often, an actuary or financial expert is hired to perform this task.
The sole proprietary owner of a business gets any separately owned asset. For assets both parties co-own, a judge might propose one party to reimburse the other. In this case, the compensated party loses their right to the asset. This allows one party to get the asset while the other gets compensation with their share’s monetary equivalent. In corporations, the judge may decide to equally divide different branches of the business. But, spouses can prefer to remain business partners.