Creative Ways to Divide Assets
There are a number of ways to divide assets in a divorce. If the parties are in mediation, there are even more creative opportunities to achieve an equitable distribution of assets and unwind the marital estate. For a marital estate a combination of the following approaches may be appropriate for different kinds of properties that are being considered.
These approaches include:
1. In-kind Division: Each party takes one-half of fungible assets such as bank accounts, stock in a corporation
2. Trade-off Division: Either with or without regards to the value of the assets,
the parties could agree who will take certain items and then an equalizing payment would be paid if the values are not equal
3. Piece-of-cake Division: This method refers to how to divide a piece of cake between two people. To avoid an unequal split, that is, someone getting the “bigger half”, the approach is that one person will cut the cake and the other person gets to choose which piece she or he wants. To translate this to a divorce scenario, one party would make up two lists of the property that have equal values, and the other party chooses which list of items he or she prefers. This is appropriate for division of personal property such as household items, not financial assets.
4. One Values, the Other Chooses: This approach involves one party placing a value on each individual item and the other party chooses those items he or she desires but the total must be equal to one-half the value that has been assigned. Again, an equalization payment can be applied. Variations on this approach would be to list furniture and furnishings room-by-room.
5. You Take It or I Will Take It: In this approach, one party places a value on an asset that he/she is willing to let the other party receive; otherwise, if the other party does not want it, the original party who placed the value will be able to receive the asset at that same value
6. Appraisal and Alternate Selection: Removing the valuation from the parties, a third party, an appraiser, is chosen to appraise each of the items. The parties then alternate in choosing items that have been appraised. A flip of a coin determines the first person to make a selection.
7. Sale: This is an easy way to divide a marital asset. By placing it on the market, the valuation will be determined by the market and proceeds are then divided equally. This also incorporates the valuation assigned by non-profits for donated items.
8. Sealed Bid: With this process, each party submits a sealed bid for individual property items that are in dispute. The bids are opened simultaneously, and the party who bids the highest amount will be awarded the item and may be required to make an equalizing payment to the other party if the totals are unequal. While it may seem unconventional, this approach may also be used for a closely held business, real estate, and the family home.
9. Arbitration: Another third party can be brought in to make the decision for the couple for any property in dispute. The arbitrator’s decision is final and not subject to appeal. This removes any control either of the parties have over the price and over whom is ultimately awarded the property.
10. Real Property: The real property may be listed for sale with a broker stipulated to by the parties at the listing price recommended by the broker. Typically, two or three brokers are identified by one party and presented to the other, and the other party selects the broker. Ultimately, the sale price is determined by the market and the list price would be continually reduced to sell the property.
This article does NOT constitute tax or legal advice and is for general information purposes ONLY. Prior to making any decisions, seek legal counsel from a licensed attorney and CPA.
