Division of Savings, Inheritance, and Intellectual Property in the event of Divorce
You’re thinking about getting divorced (or sitting on the floor looking at the divorce papers you’ve just been served with) and are concerned about how your assets and property will be divided. When it comes to your hard assets such as the marital home as well as any other property that was acquired as a couple this is generally divided 50/50, whereas pre-marital property that you had prior to the marriage is likely considered to be yours. What about your personal savings, any inheritance that you might receive, or intellectual property? What about debt?
Lets take a look at how these items are divided in the event of divorce:
RETIREMENT FUNDS & PENSIONS
These are also considered community property. The money you put into your retirement plan or 401k during the marriage is not exempt from being considered both of yours. On top of this, half of the pension you earned during marriage may be considered your spouses. For example if you are married ten years, and for four of those years you were paying into a pension, your spouse would be entitled to the equivalent of two years’ worth of your pension.
Property that is more difficult to divide such as a shared business or investments may require professional accountants or appraisers to be brought in to decide on the value.
INHERITANCE & GIFTS
These are always considered separate property, if you received an inheritance or a gift during the marriage it is your property, it does not get divided between you.
If you are attempting to handle your divorce privately or without a lawyer do not make the mistake of signing away 50% of the inheritance you received while married.
As an exception to this rule, any gifts exchanged between you and your spouse during the marriage may be considered community property and be expected to be divided equally between you both. For example necklaces and other jewelry, while you wife may see them as being her alone, if they were given to her by you during the marriage it may fall under community property with you now being entitled to 50% of their value.
INTELLECTUAL PROPERTY
Intellectual Property that is created during the marriage is considered community property. For example if you designed an app, website, or wrote a novel during your marriage it is considered to be equally yours and your spouse’s property.
In general: copyrights, trademarks, and patents would be divided equally between the two of you. If you want to maintain full ownership you are expected to pay her 50% of what the two of you agree is the value of the item. Make sure this division is clear, and keep hold of the contract.
A novel written during marriage may be considered valueless but once published it could be worth quite a bit. Ensure that you have a record that any intellectual property you created during the marriage is officially yours post-divorce to avoid your spouse coming after you years later for a percentage of the earnings.
DIVISION OF DEBT
Any debt accumulated during the marriage is also considered to be community property and is to be divided evenly among you. There are some exceptions to this such as student loan debt which will stay with whoever attended school or training using the money unless it can be proved that the other person somehow benefited from it – such as a large portion of the loan being used to pay rent for both of you.
In some situations where one person was the sole bread-winner of the couple and has been paying off the others debt for the last few years they may end up being required to take on a portion of that remaining debt. This is a situation where helping your spouse deal with debt while married can sadly come back to haunt you with you now being expected to continue paying off that debt even though you are no longer married.
