Posted By Posted by Kelly Tobaygo on Sep 19, 2012 7:10am PDT || Sep 19, 2012
There are many reasons why people might separate without getting a legal divorce, knowing that eventually the divorce is inevitable. What most people don’t contemplate, or might not even be aware of, is the important of a valid separation agreement. When a married couple separates, they often do so financially as well as emotionally. They maintain two separate households, separate bank accounts, and essentially two entirely separate lives. Years later, one party may decide to petition for a dissolution of marriage, a legal divorce. The logical conclusion is that any of the assets (new home, new vehicle, 401K account, IRA, stocks, etc.) obtained after the separation would be for the benefit of the party who obtained the asset.
Unfortunately, the law isn’t always as logical as we would like. Currently, the law provides that, absent extraordinary circumstances, all assets obtained up until the date of filing of the petition for dissolution of marriage are considered “marital assets” and will be distributed equally between the spouses. Clearly, the party who reaps the benefit from this division will be thrilled with this news, while the person who thinks he or she has assets that their spouse cannot touch will be shocked and upset.
There is a remedy for the situation when a married couple separates without executing a valid separation agreement. The court has the authority to look at each asset’s value on the date the court determines to be the “date of separation” and use that value when splitting the asset, but it cannot preclude any of these assets from being designated marital assets. This process can lead to endless hours of litigation and will most likely require the assistance of a forensic accountant, both of which can be costly.
Leaving this issue up to the court can end with both parties to the divorce proceeding walking away unhappy and will undoubtedly cost both parties more in attorney’s and expert’s fees. In order to avoid this, and to protect any assets you main obtain after the separation, as soon as you decide to separate from your spouse, execute a valid separation agreement. An experienced family law attorney should be able to assist you in this process and ensure that it will be upheld in the future should either party decide to file for divorce.