CHAPTER 5: Property Division


What Is Your Marital Estate?

After you and your spouse have developed a parenting plan for your children [see Ch. 2] and figured out your budgets [see Ch. 3], you’ll want to turn your attention to the division of your marital estate. Your marital estate is defined as everything you and your spouse own (your assets) and everything you and our spouse owe (your liabilities).

Marriages are economic partnerships and emotional partnerships. Like any other partnership, the parties are considered to have equal status in spite of the duties they may have performed during the marriage. Both parties are equally responsible for the debts of the partnership and both parties have equal rights to the assets of the partnership. Consequently, division of the marital estate usually begins under the assumption that the marital estate will be divided equally. Spouses sometimes agree to an unequal division for various reasons, for example to adjust for dis- parities in earning capacity, avoid alimony, or take care of a spouse with special needs.

Four Steps to a Successful Property Settlement

As part of your initial goal-setting [see Ch. 1], you probably have already thought about what assets you would like to keep. However, it’s best not to begin the negotiations with your spouse prematurely. There is a logical process that you should follow to make sure all assets and liabilities are accounted for, you are negotiating from a fully informed position, and conflict is minimized.

Step 1: Each spouse fully discloses all assets and liabilities to the other.

Step 2: The spouses determine which assets and liabilities belong in the marital estate to be divided and which do not.

Step 3: The spouses agree on a value for each asset and liability in the marital estate.

Step 4: The spouses divide the assets and liabilities in the marital estate.

Step 1: Disclose All Assets and Liabilities

Before you and your spouse can divide your marital estate, you must first figure out what it consists of.

The first step is for each of you to fully to disclose to the other all of your assets and liabilities regardless of in which spouse’s name they are held. There are two key reasons why full disclosure by each of you is necessary.

  • The court may impose a penalty on you if you don’t, even if the failure is an oversight and not intentional. You could even be compelled to turn the concealed asset over to the other spouse if it subsequently comes to light. Total disclosure protects you and prevents one of you from later claiming that the other left something out of the marital estate.
  • A negotiated settlement requires a minimum level of trust between you and your spouse. The discovery of hidden assets during the course of a divorce will minimize the chances of a peaceful resolution. A judge who learns that she is listening to a couple argue about a cookie jar or a pair of table lamps because one spouse tried to hide assets will have very little sympathy for that person.

Anything that has worth of any kind should be included in the disclosure of assets. Assets can be items that have physical substance (tangible assets), do not have physical substance (intangible assets), or have only sentimental value. The goal is to disclose any asset owned or controlled by either of you regardless of its source, value, or expected disposition.

Step 2: Decide What’s in and What’s out

You and your spouse can agree that certain items should be kept out of the marital estate and given to one of you (or to your children). Typically, the law provides that property and debts that you acquired before you got married and property that you received as a gift or inheritance during your marriage are not part of the marital estate.

For example, you and your spouse could agree that china passed down to you from your grandmother is to be kept out of the marital estate and given to you. You could also agree that student loans incurred by your spouse before you married are solely your spouse’s responsibility.

These items do not need to be valued, since they are outside the marital estate and will not be divided.

Other reasons to exclude items from the marital estate and thus the formal valuation process include:

  • The items have de minimus value when compared to the totality of the marital estate. The idea is to ferret out of the mass of personal property those items that can have a material effect on the value of the marital estate. Depending on the extent of your assets, you and your spouse could set an arbitrary figure, say $500 or $1,000 and simply agree to exclude all items obviously worth less than that amount. Then divvy those items up on your own or let one spouse take them. Alternatively, these types of items can be grouped together into categories, i.e., kitchen equipment, and a value assigned to the entire category.
  • You and your spouse agree to offsetting distributions. You may agree to this solution for hard to value items used principally by one of you. For example, each could take his or her respective sporting equipment, or items used in a hobby.
  • The items, though purchased by you, actually belong to and are used by your children, such as a child’s car, for example.


Step 3: Value the Assets and Liabilities

After preliminary exclusions of the marital estate have been made, the values of the remaining assets and liabilities are determined.

It’s usually a good idea to wait to start dividing things until reasonable values for all assets and liabilities have been determined. Beginning negotiations without facts means that you and your spouse will be negotiating from emotions. While emotion is always present and most certainly a factor, the decisions that have to be made must be based on financial facts.

Step 4: Divide the Assets and Debts

Everything that was accumulated during your marriage, including retirement benefits [see §§5:40-5:49 below], is subject to division. As previously mentioned, these divisions are most often equal.

There are two major methods that court’s use to divide marital estates. Community property states more or less require the equal division of marital estates. Other states require the equitable division of marital estates. These states indicate that whatever is determined to be fair in the circumstances is how the marital estate should be divided and the division need not be equal.


You can use these forms to ensure that you make a full disclosure or all assets and liabilities.
See Ch 3 for a form for disclosing your income.

Statement of Assets

The date of valuation is unless otherwise specified.

Cash or Cash Equivalents:

Real Property:
(Provide address, type, and description, current fair market value, amounts of mortgages, loans, or liens)

Other Assets:

Statement of Debts/Liabilities




Not Everything Disclosed Must Be Divided

Not all assets and liabilities that are disclosed need to be included in the marital estate to be valued and divided.
Example: A wife received a ring from her mother on her twenty-first birthday. The ring is a family heirloom, and the wife intends to give it to her daughter on her twenty-first birthday. The husband and wife married when the wife was twenty-four years old, and during the marriage the husband had nothing to do with the ring. The ring is not marital property. It is the wife’s separate property and should not be shared with the husband. The ring was received before the marriage, it was gifted to the wife exclusively, and it was kept separate from the assets of the husband and the couple’s combined assets.

Three Determining Factors

Whether an asset or liability is part of the marital estate depends on:

  • When it was acquired.
  • Where it came from.
  • How the couple treated it.

Marital property includes all property that either of you acquired after your marriage, other than by gift to one of you or an inheritance. It includes your earnings and your spouse’s earnings and any property you purchased with earnings regardless of how title to the property is held.

Non-marital or separate property includes:

  • Property you owned before your marriage.
  • Property given as a gift or inheritance to you and not also to your spouse either before or during your marriage.
  • Income earned from separate property, such as interest or rent, regardless of when earned.
  • Property purchased with separate property regardless of when purchased.

These are the legal rules that courts generally use to determine what belongs in the marital estate when the parties are unable to make their own agreement.

Assets Acquired During Marriage

Assets earned during the marriage are produced by the economic unit of the couple. Assets earned by the couple are divisible no matter whose name they happen to be in or whether or not they have been kept separate.
Example: Shortly after her marriage Jen opened an individual retirement account. The account was in her name only and her husband, Joe, never had anything to do with the account. At the time of the divorce, the account had a value of $10,000. The asset is marital and subject to division because of the timing of the creation of the asset: during the marriage. For more on retirement accounts, see §§5:40-5:43 below.


Although assets amassed before marriage are assumed to be non-marital, they may become marital if they are “commingled” or mixed up with marital assets to such an extent that they cannot be separated.
Example: Jane brought a $10,000 savings account into her marriage. Technically, this is premarital property, and that status is an argument for exclusion from the marital estate. However, the savings account was used as a part of the down payment on the house Jane and her husband John purchased together. The $10,000 has been “commingled,” and there is no way to separate one dollar from another in the equity of the house.

Consequently, the $10,000 is part of the marital estate and is subject to division.

In this case, the asset existed before the marriage, came from the wife, and was expended to purchase a joint asset. The first two factors indicate that the asset could be excluded from the marital estate. How- ever the last changed the nature of the funds and made them part of the marital estate.

Gifts and Inheritances

Gifts and inheritances can be analyzed similarly. When you received the item does not play a crucial role in determining its status. Whether the asset was received before the marriage or during the marriage or after the date of separation is less important than the source of the asset and what you did with it. The source of a gift or inheritance is not the efforts of the economic unit of the couple.
A gift or inheritance to one spouse would tend to indicate that the asset is not marital. A gift or inheritance made to both the husband and wife is typically marital. A gift from one spouse to the other is also marital. A gift or inheritance that is put into an account solely in the recipient’s name may indicate that the recipient intended to keep the asset separate from the marital estate. If however, the recipient purchased an asset, such as a vehicle, with the gift and put the title to the vehicle in both spouses’ names, the intent may have been to treat the asset as marital.
Example: During her marriage Jeanne’s aunt gave her $10,000. Jeanne purchased a savings bond with the amount and never commingled the asset with the assets of the marriage. The timing indicates that the money is a marital asset in that it was received during the marriage. However, the source of the asset is not the marriage; it is the aunt. Consequently, the asset is not due to the efforts of the couple, which makes it excludable from the marital sate. And finally, Jeanne kept the money separate from the assets of the marriage. The evidence suggests that the funds should be kept separate from the marital estate and not divided.

You Don’t Have to Follow the Rules

Outside of a court of law, whether an asset is part of the marital estate or not can be a matter of negotiation. Referring to the Example in §5:12 above, if the husband and wife agreed, the wife could be given credit for the $10,000 she contributed toward ownership of the house. That is, if the house were going to be sold, she would receive $10,000 more of the net proceeds than the husband.


Three Determining Factors

Here are three general rules for deciding whether or not a debt should be included in the marital estate:

  • Debts incurred to supply necessities should be included in marital estate.
  • Debts to provide luxuries that are incurred before you and our spouse separate should be included in the marital estate.
  • Debts to provide luxuries that are incurred after you and your spouse separate should not be included in marital estate.

These rules make sense from an economic viewpoint. In marriage there is a single economic unit, the married couple. The assumption is that this single entity is making economic decisions that have the approval of both spouses. Consequently, debt incurred before you separate is assumed to be the result of a combined economic decision and therefore appropriately included in the marital estate.

Your separation creates two economic entities instead of one. It can no longer be assumed that you both approve of debt incurred by either of you after separation. However, separation of a married couple, more often than not, creates an economic disparity between the parties. That is, one spouse will usually have more resources than the other. The spouse without resources may have to incur debt in order to live. From an economic standpoint, the resources may exist to support both parties; but there is an economic imbalance between the parties that creates the debt. It follows then that the debts incurred for the support of either party after separation should be the responsibility of both parties.

The same is not true of luxuries. Debt incurred for goods and services that are not necessary to live are considered luxuries. Whether or not these items are included in the marital estate is a matter of timing. If the debt was incurred before separation, an assumption is made that the debt had the approval of both parties and the debt is included in the marital estate. If the debt was incurred after the date of separation, an assumption is made that the there was not a mutual agreement to incur the debt and the debt is excluded from the marital estate.

Bear in mind that a judge may or may not follow these rules. Courts can differ even from county to county within the same state. However, these rules are based on sound economic principles, logic, and fairness, which is what you and your spouse should be aiming for in your divorce settlement.


After the general rules are applied, exceptions to the rules may come into play to make the division of debt fairer.

  • Jake incurred a Visa bill of $4,000 for a ring he purchased for his girlfriend before the couple separated. The decision to incur the debt was certainly not a mutual decision by the couple even if the amount was incurred before the separation. The most equitable result is to exclude the debt from the marital estate.
  • After the separation, Jason took his entire family, including his wife, to Disneyland incurring significant credit card debt. Since the amount was a luxury and incurred by one party the rule would indicate that the amount should be excluded from the marital estate. However, the couple decided that the luxury had been incurred for the benefit of the entire family and it was included the debts of the marital estate.



The Valuation Process

Fair Market Value

The standard of value applied for all assets in the marital estate is “fair market value,” which is how much the asset would bring if it were sold. Fair market value is usually considered to be the price a hypothetical willing buyer would pay a willing seller. The correct standard of value is not what you paid for the item or how much it would cost to purchase the item now.

How Complicated Will It Be?

The complexity of the valuation process depends on what kinds of assets and liabilities you have and how well you and your spouse get along. If your marital estate consists only of a couple of vehicles and joint credit card debt, valuation will be simple. The value of the vehicles can be obtained from the Internet and values of the debts from your most current credit card statements. On the other hand, if you own a business or multiple rental properties and have a contentious relationship, the valuation process may require extensive work including the hiring of experts.

The Four Levels of Evidence

You can think of the valuation process as a progression through a series of levels from the least expensive, but least credible, to the most expensive, but most credible.

The levels are:

  • The spouses’ opinions. Each spouse offers an opinion of what he or she thinks an asset is worth.
  • Market analysis. A person, such as a realtor, dealer, or broker, who is knowledgeable about the market for the asset offers a quote as to its value.
  • Appraisal. A professional appraiser is paid to assess the value of the asset.
  • Sale. The most reliable determination of value of an asset for marital estate division purposes is its sale on the open market. If you sell a marital asset, the sales price minus the costs of sale is included in the marital estate.

If you are headed to trial, the higher the level of evidence, the more likely the court will accept the value presented. However, in settlement negotiations or mediation, the only level of evidence necessary is the level that satisfies you and your spouse. For example, if you agree on a value for your home, then that value is used. If you don’t agree, then a higher level of evidence is required.

Your mediator or attorney may advise you to advance up the credibility scale when either or both of you do not have sufficient knowledge to offer your own opinion on value. You do not want to decide based on inadequate information because you could end up with an inequitable division. How much effort and expense you want to devote to valuing an asset depends on its relative worth. For example, you don’t want to devote much effort to valuing corkscrews and garlic presses and similar items that are worth a few cents to a few dollars. You could lump them together with all of the other kitchen gadgets and assign them a collective value of a few hundred dollars or agree to leave them out of the marital
estate all together.

Valuing Tangible Assets

Your Home

The home you and your spouse shared could be the most difficult asset to address.

You are likely to have at least four issues to contend with:

  • Your home is probably your most valuable asset, making its dis- position central to a property settlement.
  • Houses are difficult to value. Property appraisal is anything but an exact science. Two appraisers can come up with significantly different values for the same home. In fact, the only sure way to determine the value of a house is to sell it.
  • You and your spouse probably have a significant emotional attach- ment to your home. Your home is a place of comfort and security, and an object of pride and status. In addition to money, one or both of you may have invested “sweat equity” to bring the home to its present condition.
  • Your house creates substantial economic burdens. It costs money to insure and maintain. If your family has relied on two incomes, it may difficult for one of you to buy out the other’s equity and then pay the mortgage, taxes, insurance, and maintenance.

Three questions must be answered in the disposition of the house:

  1. Do either you or your spouse want the house? 2) Can either of you afford it? 3) Can you agree on a value?
    Answering these questions in order will lead to three possible solutions to the house: 1) The house will be sold and the proceeds divided.
  2. You will agree on a value for the house, perhaps after getting an appraisal or competing appraisals, and include it in the marital estate for division. 3) You will not be able to agree on a value and the house issue must be referred to the court for a decision.


Automobiles and Other Vehicles

The valuation of automobiles is usually much simpler than valuing larger assets such as houses or businesses. You and your spouse can simply agree on a value. However, you may not have sufficient knowledge to do so. In that case, probably the best alternative is to take advantage of automobile valuation services such as National Automobile Dealers Association (N.A.D.A.) Guide or Kelly Blue Book. Both of these ser- vices as well as others are available on-line and are very easy to use. You and your spouse can obtain values from at least two services and then average them.

The values obtained from the various guides do not consider significant body damage or mechanical problems. To adjust the value for the condition of the vehicle, you can have a body repair shop or a mechanic estimate the cost of bringing the vehicle up to a fair or reasonable (not perfect) condition. Then use these estimates to reduce the value of the vehicle.

If you or your spouse is dissatisfied with the value obtained from one of the services, the next step may be contacting a dealer for a value quote. The dealer should understand that you want to know the vehicle’s fair market value. Otherwise the dealer may quote you what he or she will pay or allow as a trade-in for the vehicle. This value will be below fair market value, so the dealer can make a profit on the transaction.

If you and your spouse still disagree on the value, you can move to a paid appraisal. Paying someone to appraise a vehicle when free and credible valuation sources are available is a questionable use of resources.

However, an appraisal may be the only way (other than a sale) of deter- mine the fair market value of custom or very high-end vehicles.

Recreational vehicles, such as campers, boats, all terrain vehicles, motor- cycles, and snowmobiles can be valued in the same was as automobiles. That is, value can be determined by agreement. If you and your spouse cannot agree on a value, you can turn to valuation services on the Internet.

Many recreational vehicles have very large markets, and values can be readily assessed. The value of recreational vehicles can be significantly affected by damage or mechanical problems. As with automobiles, the cost of returning the equipment to reasonable condition is deducted before the amount is entered into the marital estate. Finally, you can ask a dealer for a quote or hire an appraiser.

Household Furnishings

Household furnishings include furniture, decorations, linens, and kitchen gadgets. These items retain very little of their original value. Because you need them to make a home, their value is not represented by their fair market value. For example, if you have a drawer full of kitchen gadgets such as spatulas, peelers, and tongs, the fair market value of the entire drawer may not exceed ten dollars if they were sold at a yard sale. However, the cost to replace the items may exceed a hundred dollars. This difference is at the heart of the conflict over these types of assets.

Valuation of household goods follows the same steps as other types of assets with an additional caveat. That is, you can agree on values for all of the household goods; you can research the values by referring to second hand stores or Internet sites, and you can actually have all of the household goods appraised by an independent authority. All of these steps are time consuming, arduous, and an actual appraisal can be expensive and out of proportion to the value of the items being appraised.

A far better solution to the problem is to divide the household goods by utility. For example, one person takes the linens from the master bedroom and the other person takes them from the guest bedroom. One person takes the every-day dishes, and the other can take the dishes that are used on special occasions. This offset process avoids the necessity of valuing each and every asset and can be an extremely efficient method of resolving the problem.

Bear in mind that judges do not want to hear arguments on who should get the living room table lamps and take a very dim view of those who advance these arguments.

Antiques, Art, and Collectibles

Stamps, coins, precious metals, ceramics, jewelry, and art, as well as a host of others are included in this category. Collections can be a point of contention because they can be extremely valuable or virtually worthless. Many variables are involved including the condition of the components and their current popularity.

A significant problem in reaching agreement on the value of a collection is confusion between cost and market value. Keep in mind that the value of a collection in the marital estate is what it could be sold for, not what it cost. Some collections that cost hundreds or thousands of dollars to amass may have little or no value on the open market. Not every investment succeeds. People can lose money collecting even when their intentions are the best and markets appear strong at the time of purchase.

Hobbies, Tools, Equipment, Sporting Goods

As in collecting, the problem in valuation of hobby items, tools, equipment, and sporting goods often is the confusion of purchase price with fair market value. Typically, hobbies are relatively expensive to get into, but the items purchased to conduct the activity do not retain their value.

Rather than attempt a formal valuation, one solution may be for you and your spouse to offset your hobbies. For example, you take your photographic supplies and equipment and your spouse takes his or her paints, brushes, and canvases. Then these items are excluded from the marital estate. However, this approach may not work because of highly disparate values of the activities or the presence of extremely expensive tools or equipment.

The handling of tools for marital estate valuation purposes depends on their value. Big ticket items may have readily identifiable markets and significant resale value. For example, cabinet-quality table saws can sell for thousands of dollars and retain a significant portion of their value. However, smaller tools such as small electrics or hand tools generally do not have a significant residual value.


A dog with marketable skills (e.g. hunting or tracking) or genetic lines favorable for breeding may have a market value. This value can be determined by the processes employed to value any other asset. That is, the parties can agree on a value, trade magazines or Internet markets can be used to determine a value, or as a last resort, an individual knowledgeable in the field can be engaged to assess the value of an animal.

However, in the vast majority of cases, the fair market value of pets is zero, although their emotional value may be enormous.

Two possible solutions for pets are:

Let the pet go with the person to whom it is most closely bonded. Pets usually bond more with one individual in a family than equally to all family members. That member is usually the one who feeds the pet.

Allowing the pet to go with the person to whom it is bonded will be less traumatic to the pet.

Allow the pet to go with the children. Pets can be instrumental in easing the transition for children from living in one household to living in two for the children. If the pet is allowed to accompany the children when they change residences, they will have a familiar constant in both households.

Valuing a Business

Methods of Valuing a Business

If you or your spouse owns a business, it will have to be valued. The valuation techniques applied to businesses can be similar to those applied to other assets. That is, if you and your spouse are knowledgeable, you can agree on a value. You can also refer to trade publications or Internet sites to determine values that are equitable. And finally, you can hire experts to determine the business’s value. Of course, you could sell the business, but business owners rarely do so.

Most people are not knowledgeable about what affects the value of a business and, consequently, cannot fairly assess the value of their operation. Generally available information on businesses or professional practices may generate only “rules of thumb” that can yield suspect results when applied to the business in question. This makes use of a qualified business valuator the safest course of action in most cases. However, it may be possible to avoid a formal evaluation by a business valuator if you have a small business that is actually the equivalent of holding a job.

Valuing a Small Businesses

All businesses have a minimum value. The minimum value of businesses is usually the fair market value of its assets less its liabilities. This is essentially whatever the assets of the business could be sold for minus everything that the business owes to anyone. The worth of a large pro- portion of small businesses is this minimum amount.

The majority of small businesses are the equivalent of holding a job. That is, the owner earns an income similar to what he or she would be paid as someone else’s employee. The only difference in these situations is that the business owner possesses the assets and incurs the liabilities necessary to run the business. Normally, a business owner has to make more money than he or she would earn in an equivalent employment situation in order for the business to be worth more than the minimum value.
Example: A tile setter owns his tools and his truck and has no debts. He makes $32,000 per year, and if he was working for somebody else, he would also be making $32,000 per year. The value of the business is the fair market value of the tools and the truck. It is unlikely that anyone would pay more than that value. Any prospective purchaser would simply purchase similar equipment and compete or go to work for someone else.

Deciding Whether You Need an Expert

If you and your spouse own a small business, the following steps can help you determine whether it is worth its minimum value or whether you need a business valuator to value it.

  1. Determine the minimum value of the business. First, value all of the business’s assets. The fair market values of the assets of the business are determined like any other asset in the marital estate. That is, you and your spouse can agree on a value, seek publicly available information, or hire an appraiser. Second, calculate the business’s total liabilities. Third, subtract the value of the liabilities form the assets. The difference is the minimum value of the business.
  2. Determine the business’s income. You will need this figure both to value the business, and also for the determination of child support and alimony. If you and your spouse are both knowledgeable about the operation, you may be able to agree on the income. If one of you isn’t knowledgeable, but understands business record keeping and accounting, he or she may be able to learn enough from reviewing company records to agree on income. Otherwise, you’ll need to hire a financial expert.
  3. Compare the earnings of the business owner to equivalent salaried positions. Average earnings for various types of jobs and professions are readily available. One source is the U.S. Department of Labor. The U.S. Department of Labor, Bureau of Labor Statistics ( The BLS compiles these types of averages on a state-specific basis. A business that provides income for its owner that is similar to what the owner could earn as an employee probably has only minimum value. A business that provides a greater income than a comparable salaried position might have a higher value to a prospective purchaser. Hiring a business valuator for such a business is a good idea.

Valuing Financial Assets

Checking Accounts

The balance in checking accounts normally fluctuates with income from wages or other sources flowing in, and the payment of expenses or transfers to savings flowing out. The balance in a checking account often changes daily. The dynamic nature makes establishing a value over the months (sometimes years) required to get a divorce a challenge.

However, the average balance in checking accounts is often very small. Amounts are deposited, and, similar amounts are expended. Consequently, continually recomputing the balance is not cost effective.

There are several possible solutions:

  • You and your spouse can establish a valuation date and balance the check book as of that date. You can then agree that this value will be used for valuation and division purposes in spite of changes to the value of the account that may occur after that date.
  • You can use the average daily balance for a recent month as the value of the account.
  • You could agree to leave checking accounts out of the marital estate due to their small balance, or because each spouse opened a separate account after the separation.


Savings Accounts

Savings accounts are normally not as dynamic as checking accounts; but the amounts involved may be significantly larger. Current statements from financial institutions are normally used to value them.

Determining where the funds came from and whether or not they are marital may be a problem. However, there is a strong possibility that saving accounts will not survive the divorce.

Divorce creates two separate economic entities (the ex-husband and the ex-wife) from one (the married couple). Creation of these separate economic entities requires resources. For example, two residences have to be purchased, and the household effects necessary to live have to be duplicated. In addition, the divorce process itself costs money. Often these expenses exhaust saving account balances.

When they do survive, savings accounts can be used to balance a marital estate division. The account is readily divisible and not subject to penalty when it is withdrawn. In other words, after you tentatively divide your non-cash assets and liabilities, cash in a savings account can be distributed between you to equalize the division.

Cash and Cash Equivalents

The valuation of cash is not a problem. It is the standard by which all other assets in a marital estate are made equivalent to for valuation and division purposes. The problem with cash is that it is highly mobile, easy to hide, and can be difficult to trace.

A cash equivalent is a financial instrument or holding with a financial institution that can be easily converted into cash. Examples of financial instruments are cashier’s checks, bearer bonds, and government treasury securities. The valuation of securities or bonds usually poses no significant problem other than the fact that some of these instruments may be accumulating interest. Valuations can be obtained from any financial institution that regularly deals in this type of asset.

Investment Accounts

Specialty firms such as J.P. Morgan, Piper Jaffray, and Morgan Stanley invest funds on behalf of individuals. The firms assume responsibility for the invested funds (although not their performance). The accounts are valued by referring to the account statements.

These investments may or may not be cash equivalents. It may be possible to convert them quickly and easily into cash. Or they may require time to liquidate or incur losses when cashed in.

Other Investments

Some investments may not be handled by investment companies or be equivalent to cash. These investments require special handling. For example, one spouse may be a partner in a partnership that holds an apartment building as an investment. The partner may not be able to sell the investment to get cash to divide with the other spouse.

If the asset cannot be sold, then it has to be valued, and that value placed in the marital estate to be offset against other assets. This type of investment normally has to be valued by an expert.

Other examples include investments in stocks and bonds held outside of an investment company. If these investments are publicly traded, then reference to common trade journals such as the Wall Street Journal can be used for valuation. If the amounts are not publicly traded, the advice of an expert will be needed.



Any debt that either you or your spouse owes to anyone should be disclosed. It does not matter who incurred the debt or whose name is on it. If a debt was incurred by either spouse, the initial assumption is that it is part of the marital estate (a debt of both parties) and must be disclosed. If you do not disclose a debt that you have incurred, you will be solely responsible for it. Failure to disclose a debt means your spouse will not share in it and you will not get credit in the marital estate division for having assumed the debt.


Usually, there is no question as to the value of a debt, and the valuation process is as simple as referring to statements provided by the entity owed the debt. For example, a home mortgage has a pay-off of a set amount of dollars at any given date. Since the determination and valuation of liabilities is straightforward, and failure to pay liabilities can have adverse financial effects, the normal practice is to list all liabilities regardless of amount. This is in contrast to assets, which may be grouped for valuation, divided between spouses by use to them, or omitted as worth too little to bother with.

Liabilities are more durable than assets. Assets can be lost when converted to cash and spent. Creditors are unlikely to forget that they are owed money and will usually try to collect.

However, debts are sometimes forgiven. Bankruptcy forces the forgiveness of debt. Amounts owed to relatives may be forgiven. Unsecured creditors may settle for less than they are owed. These events can cause an inequitable division of the marital estate.


When your liabilities meet or exceed your assets, and the ability to pay off the liabilities is in significant question, an expert may be needed to assess the need for bankruptcy or to anticipate its consequences. If bankruptcy is the only recourse for a couple, then the timing of the bankruptcy should be carefully considered. Completing the bankruptcy before the divorce will usually provide the best chance of an equitable division of surviving assets and remaining liabilities. This is because the assets that will be protected from creditors in the bankruptcy will be known, and the liabilities that will not be forgiven will also be known. A bankruptcy that occurs after a divorce could create an inequitable division of the marital estate.
Example: As part of a divorce settlement, the husband took all of the unsecured debt, the house, and his pension, leaving the wife with very few assets, but no debt. Immediately after the divorce, the husband declared bankruptcy. The unsecured debt was all forgiven in the bankruptcy. The house and the pension plan were protected from creditors. The husband walked away with the house, his pension plan, and no debt. Had the bankruptcy been declared before the divorce, the wife would probably have secured an interest in the house and the pension plan.

Loans from Relatives

Normally there is very little trouble in valuing a debt or establishing its validity. The creditor sends monthly statements with the amount due and takes steps to ensure that regular and timely payments are made. However, this may not be the case when debts are owed to mothers, fathers, or other relatives. These obligations may in fact be gifts.
Example: A father provides $20,000 for his daughter and her husband to put a down payment on a house. There is no note acknowledging the debt, no interest specified, the couple have not repaid any of the money, and the father has made no attempt to collect the debt. The father may never have intended to collect the debt. Alternatively, he treated it as a gift as long as he was provided due respect, got to see his grandchildren, and the daughter and son-in-law stayed married. In the latter situation, the father may change his position on the debt and assert his right to collect it in the midst of the divorce of his daughter and son-in-law. Naturally, this type of situation will complicate the divorce process.

The following characteristics indicate that an obligation is a true liability and should be included in the marital estate for resolution. The absence of these characteristics indicates that the liability is a gift and should be excluded.

  • An agreement by both parties that the debt is marital.
  • A written document defining the obligation.
  • Fixed terms of repayment.
  • Interest due on the obligation.
  • Regular payments made on the obligation.
  • Involvement of a third party, such as an escrow company, in the management of the debt.
  • Collection attempts by the lender.


Unsecured Liabilities

Amounts you owe to credit card companies, medical providers, merchants, vendors, and utility companies are known as unsecured liabilities. If you don’t pay these debts, your creditors do not have an interest in an asset of yours that they can seize and sell for the money. Unsecured creditors rely on your promise to pay.

If you and your spouse are in financial distress, you may be able to get your unsecured creditors to give you more favorable terms. Unsecured creditors may be willing to deal because collecting an unsecured debt can be expensive. Also, unsecured creditors are behind other creditors in bankruptcy distributions and often get nothing when the debtor goes bankrupt.

These deals can range from reductions in monthly payments, to elimination of interest, to settlement of the entire balance for a significantly discounted amount. Negotiations with unsecured creditors can materially reduce the debt owed by the marital estate. If the deals are made before the marital estate is valued and divided, then neither spouse is put at a financial disadvantage.

However, suppose that one spouse receives a large share of the unsecured debt and also assets to compensate for taking on the debt. If that spouse negotiates significant reductions in the debt, then he or she has received a larger portion of the marital estate than is equitable. The best approach is to recognize the signs of financial distress and make deals with unsecured creditors during the divorce process.

Secured Liabilities

If you and your spouse have a secured liability, the creditor has an interest in an asset that secures the debt. If you don’t pay, the creditor can take the asset and sell it to get the money you owe. For example, if you fall behind on your home mortgage, the bank can foreclose.

Secured debt is tied to a specific asset. In the property division, the asset and the debt on it should be kept together. The person who takes the car should be responsible for paying the car loan.

The reason for this is control. Divorce, to the fullest extent possible, should remove the control that the spouses have over each other. Separating assets from their associated debt allows the person with the debt to control the person with the asset.
Example: An ex-husband is responsible for paying the debt on an ex-wife’s car as part of the divorce settlement. The ex-wife has moved on and has a boyfriend. The ex-husband sees the boyfriend driving the ex-wife’s car and tells the ex-wife that he will stop making payments on the car if he ever sees the boyfriend driving the car again. The ex-husband has been granted inappropriate control over the ex-wife by the terms of the marital estate division.

Spouses often incur joint debt to purchase assets. This creates a problem when one assumes responsibility for an asset and the associated debt as part of the divorce. It may not be possible to remove the spouse who is surrendering the asset from the joint liability. While the courts may be able to divide assets and liabilities, they generally have no jurisdiction over lenders. They simply have no authority to require a lender to remove a person from an obligation. In addition, and, as might be expected, lenders are reluctant to remove anyone from responsibility for debt payment.

In some cases it may be possible for the person who takes the asset to refinance the debt on the asset based on his or her own financial strength. However, divorce is notoriously hard on individual finances, and the opportunity to refinance may not exist. This creates a contingent liability for the person who doesn’t get the asset. He or she can be held liable if the other party does not pay. Sometimes the only solution for this situation is for the parties to simply recognize the existence of the contingent liability. Another possibility is to provide the spouse with the contingent liability additional assets to compensate him or her for the risk associated with the contingency.


Steps in Dividing a Retirement Plan

Retirement plans are marital assets, just like any other property acquired during marriage. Division of a retirement plan can have unique complications. In general, the steps in the division of a retirement plan are:

  • The retirement plan is disclosed by the employee spouse.
  • The plan is valued. Depending on the type of plan, an expert (or competing experts) may have to be hired to value it. If the spouses can’t settle on a value, the court will decide how much the plan is worth.
  • The portion of the plan that is marital property (i.e., that accrued during the marriage) is calculated.
  • The spouses decide how the marital portion of the plan is to be divided between them, typically 50/50. If the spouses can’t agree on how to split the plan, a court will decide each spouse’s share.
  • The employee spouse can “buy out” the other spouse’s share of the plan by giving him or her other marital assets or separate assets. If a “buy out” isn’t possible or desired, the plan benefits are actually divided.
  • A court order, known as a Qualified Domestic Relations Order or QDRO, explaining how the pension benefits are to be divided may need to be sent to the plan administrator to complete the division.

Defined Contribution and Defined Benefits Plans

Savings or accrued benefits for retirement fall into two broad categories: defined contribution plans and defined benefit plans. Defined contribution plans are essentially savings accounts, and defined benefit plans are guarantees made by employers to pay certain sums in the future.

Defined Contribution Plans

A defined contribution plan is a plan into which specific employee contributions are made, often matched by the employer to some extent. A 401K plan is a defined contribution plan. The employee’s benefit is defined by his contributions plus earnings on the contributions. Each employee has a separate, segregated account containing his contributions, the employer’s contributions, and earnings on them. Actuarial calculations are unnecessary to value a defined contribution plan, as the account value is readily determinable.

The major benefit of a defined contribution retirement account is that income taxes do not have to be paid on the earnings that generate the deposits to the accounts. Rather, the employee spouse (the “plan participant”) pays taxes on the funds when the amounts are withdrawn in the future, usually when the participant has retired. The tax rate of a retired person is usually much lower than that of an individual actively engaged in the workforce.

However, if the funds are withdrawn prior to retirement, the income taxes that were put off (deferred) until retirement must be paid immediately. In addition, penalties are assessed by the IRS on these withdrawals if the participant is younger than 59½. The tax consequences and penalties can be significant.

If a defined contribution plan is to be divided on divorce, the penalties and tax consequences can be avoided. The participant instructs the plan to transfer the funds to the other spouse who then rolls them over into a deferred compensation account of his or her own. Each spouse will pay taxes on his or her share of the plan when the amounts are withdrawn.

Defined Benefit Plans

A defined benefit plan guarantees the employee a specific monthly benefit on retirement, based on predetermined formulas and actuarial assumptions. The employee (the “plan participant”) does not have an account, per se, but rather the right to the periodic benefit on retirement. He or she is but one of many who share an indeterminate interest in the whole fund.

Defined benefit pension plans are complicated to value and require the services of an expert. Agreeing on a value for a defined benefit plan can be a challenge if each spouse decides to hire his or her own expert.

Competing experts can come up with widely different values for the same plan depending on different assumptions they make about the value of cost of living increases, expected interest rates, and the participant’s anticipated retirement date.

Determining the Marital Portion of a Defined Contribution or Defined Benefit Plan

The formula for determining the marital portion of a retirement plan is:

Months of Marriage ÷ Months of Employment × Pension Amount = Marital Portion
Example: A couple has been married for 64 months and the husband has been in his current position for eight years or 94 months. His defined contribution pension plan has a value of $26,000. The marital portion of the pension is $17,702 (64 ÷ 94 × 26,000). Assuming that the pension is to be split equally, the wife would receive $8,851.

This formula is used for both defined contribution and defined benefit plans. However, the process for dividing a defined benefit plan is more complex. Unless the participant can buy out the other spouse’s interest, the plan benefits will need to be divided in the future, not the present. See §5:48 below.

Other Retirement Accounts

Stock Ownership Plans (ESOPs)

In some cases, employers provide company stock to employees. If the stock is publicly traded, the valuation can be as simple as determining the market price for the stock as of the valuation date.

If the stock is not publicly traded (i.e., the company is closely held), valuing it can be problematic. Some closely held companies have never had a formal valuation of their stock performed. An expert will probably need to be hired to value the stock.

However, other companies have regularly valued their stock and passed the valuation on to their employees in a description of benefits. These types of valuations are often performed annually and can serve as an appropriate valuation of the marital asset.

If the employee’s total ownership in stock is small relative to the total shares of stock outstanding (e.g., less than 5%), accepting the valuation provided in the benefit statement may be appropriate. However, if the percentage is large (e.g., 50%), the owner of the stock has significant control over the company. This control has value that may exceed the declaration of value for benefit purposes. In these cases, valuation is best delegated to an expert.

Stock Options

Stock options can be difficult to value. A stock option is an offer of stock to employees at a specified price for a specified period of time.
Example: A company states to its employees, “You can purchase up to 100 shares of stock in our company for the price of $100.00 per share. This offer is good for one year from the date of this offer.”

If the market price of the shares of stock is $85.00 per share, the employee would be unwise to participate. The shares are cheaper on the open market. However, if the market price of the shares of stock is $125.00 per share, then participation is a real benefit, and the stock option has value.

Simplistically, the value is $2,500.00 [(100 x $125) – (100 x $100)]. However, the value can be affected by numerous factors including when the options were received or in some cases when they were exercised. Consequently, expert advice on the valuations of stock options should be considered when the amounts are material or the parties highly contentious.

Before seeking the advice of experts in the field of stock option valuations, you may want to consider a reality check. First, is the amount material? If the total possible exercised value of the options is small, it is more cost effective to estimate an amount for inclusion in the marital estate (or even eliminate them from consideration) than go through formal valuation procedures. Second, if the options cannot be exercised, they are of value to no one.
Example: A husband and wife had completed their post-divorce budgets. Money was tight. The husband held stock options that could have a benefit if exercised. The time period for participation ended in about six months. The husband claimed the options had no value, and the wife claimed that they did. The mediator who was assisting the parties in their divorce settlement asked the husband if he was going to exercise the options. He replied that he couldn’t afford to and his budget confirmed as much. The mediator asked the wife the same question. She replied that she couldn’t afford to either and her budget showed that to be true. Since it was obvious that neither party could take advantage of the options, they were excluded from the marital estate.

Deferred Payment Plans

An employer could devise a plan to compensate employees in the future by making a series of fixed payments commencing when they retire. For example, a company could agree to a fixed amount of $10,000 per year for ten years when the employee retires. There are other examples that could fall into this category. Because these plans are unusual, and the provisions may be complex, they may require the opinion of an expert for valuation.

Retirement Plan Division

Defined Contribution Plans

Defined contribution pension plans, as previously indicated, are fairly easy to divide between the parties in a divorce. Care must be taken to avoid unforeseen tax consequences. The division of these types of plans can be as simple as the participant instructing the pension plan administrator or financial institution to transfer funds to a retirement account established by his or her spouse. Some pension plan administrators or institutions may require an order from a court before any division or distributions are made. See §5:59 on Qualified Domestic Relations Orders, below.

Defined Benefit Plans

Defined benefit pension plans do not have funds that can be readily divided since they are promises to pay sums in the future.

One option for dividing the pension plan is for the plan participant to keep the entire plan and trade the other spouse sufficient assets to compensate for his or her interest in the plan. Pension plans can be valuable. Often, the family residence is the only asset with sufficient equity to enable an offset. This is a problem if the spouse who is to receive the residence cannot afford it. It is also a problem if the required payment to the spouse takes all of the current assets (such as cash) from the marital estate or requires the spouse with the pension plan to get a loan to pay the offset.

In some cases, an offset is possible; in others a reasonable payoff of the pension plan is not feasible. Then it will be necessary to divide the pension in the future instead of the present. When pension plans are to be divided in the future, a court order or QDRO will be needed. Several aspects of the plan should be considered in determining the non-participant spouse’s share.

First, the percentage of the plan that will be awarded to the spouse must be determined. Assume that a husband and wife have been married for 20 years and the husband had been accumulating pension benefits for 25 years. The parties have agreed or a court has ordered that they divide the marital portion of the plan equally between them. The formula for the division of pension plan benefits is as follows:

If the participant is still working and accumulating pension benefits, the number of months of employment will increase. This means that in order to preclude the other spouse from receiving benefits that are earned after the termination of the marriage, the percentage of months of marriage to months of employment must change.

Consequently, the court order or QDRO dividing the plan benefits will contain language similar to:

“The wife will receive 50% of the product obtained by multi- plying participant’s accrued benefit at retirement by the ratio of the months of Plan participation during marriage, which is 240 months, over the total number of months of Plan participation.”

This allows the percentage to change as benefits are accrued. In other words the numerator (240 months of marriage) will not change as the denominator (months of employment) goes up making the percentage of the total that the wife will get go down. However, since the total amount of the pension is increasing, the wife will still get her fair share of the plan payments.

Another consideration in the assignment of future benefits is the longevity of the parties. On the average, women outlive men by approximately seven years. This means, for example, that if a pension is to be paid for the life of the husband, the surviving wife will be without pension benefits when the husband dies. As an alternative, the couple can agree (or a court can order) that a survivor benefit be purchased for the wife. This means that the total pension amount will be reduced in order to cover the cost of covering the wife for the rest of her life. The cost of the additional coverage can be born by both parties. In that case the survivor benefit is elected and the parties split the reduced pension amount. In other cases, it is reasoned that the wife is actually buying insurance for herself and that the reduction for the survivor benefit should only be assessed to her. When a survivor benefit is not elected, a question can arise as to what happens to the non-participant’s share if he or she dies before the participant. Since the benefit is dependent on the participant’s life, it continues to be paid after the non-participant dies. If a provision is not made for the payments (e.g., the participant will receive them) they are made to the estate of the non-participant until the participant dies.

There are several advantages to dividing defined benefit pension plans in the future by means of a QDRO. First, the participant does not have to immediately come up with the cash or assets necessary to pay off his or her spouse. Second, speculations concerning the date of retirement become unnecessary. Third, cost of living increases that may be made by the pension plan do not have to be estimated. Any cost of living increases would automatically flow to the beneficiary’s spouse by means of the division formula.

Qualified Domestic Relations Orders (QDROS)

A QDRO is a court order that instructs a pension plan administrator to divide the pension plan benefits to be received between an ex-husband and an ex-wife. A QDRO is normally prepared by the lawyer for the non-participant spouse.

Attorneys employed by the pension plan typically have written model QDRO language that they want to see in any order affecting their pension plan. Consequently, the lawyer writing the QDRO has to perform a balancing act. First, the lawyer must comply with state regulations, satisfy the lawyers of the pension plan administrator, and obtain the approval of the other spouse’s counsel.

Usually the lawyer gets a sample of the plan’s QDRO language, adapts it to state law, and gets the approval of opposing counsel. The lawyer then sends the QDRO to the plan administrator for preapproval before having the order signed by the court. The preapproval process avoids requiring the court to sign orders that do not meet the standards of the plan administrator. The preapproval process may require several amendments of the QDRO before acceptance.

When preapproval is obtained, the composing lawyer will then usu- ally copy opposing counsel noting changes and the reasons behind the changes. After approval of the changes, the document is taken to court for the judge’s signature. QDROS are usually not finalized until after the divorce is completed because plan administrators usually require the date of the divorce decree or even a certified copy.


Laying the Foundations for Agreement

It’s best to begin negotiations by laying the foundations for agreement. The parties may begin by agreeing on the value of an easy to value asset, like a savings account. They then move through the valuation of the rest of the estate. By the time the parties are ready to begin actually dividing the marital estate, they have a foundation of agreeing on the valuation which should help them adopted a problem-solving attitude as opposed to an angry or defensive position.

The groundwork accomplished by building and valuing the marital estate will normally make the couple and their attorneys aware of the issues that they are most concerned about. Since the couple will be distracted by these issues, it is best to handle them first.

The division of marital assets can be negotiated and renegotiated on the road to a fair division, unlike the restrictions that are sometimes enforced by courts due to law or lack of imagination.

The Home

The couple may want to deal with their home early in the process. The home is likely to be the asset of greatest concern to most couples because of the emotions attached to it and the possibility of significant equity. If either or both spouses want to keep the home, they will need to first complete a budget. See Ch. 3. The budget will indicate whether either spouse can afford the home.

Once it has been established that one of spouse can reasonably assume possession of the house, the equity in it is credited to that person’s share of the marital estate. The spouse taking the house will have to provide the other spouse with equivalent assets in compensation for his or her portion of the equity in the house.

In many cases neither party can maintain the marital home. If neither is willing or able to assume possession of the home, then a sale is another option. In this case, the couple can agree to split the proceeds from the sale equally or on some other ratio that both will perceive as equitable.

Items Subject to Logical Division

Once the home has been addressed, division of the marital estate will move onto other assets. A number of the assets (and associated liabilities) of the marital estate will be subject to a logical or natural division. For example, each spouse will take his or her clothing and toiletries and each will take his or her hobbies. The spouse charged with most of the transport of the children to and from school or to activities will take the family van and the other spouse will take the less child- friendly vehicle. A business should, logically, remain in the possession of the person who runs it on a regular basis or who has the best chance of making the business profitable.

Retirement Plans

Retirement plans are initially placed in the column of the individual whose earnings created them. However, these items may have extremely high value relative to the rest of the marital estate, and one spouse’s plan may be worth significantly less than the other’s. Thus, this assignment may ultimately need to be adjusted.

Items of Sentimental Value

The Items of sentimental value should go to the person for whom the articles have emotional value. For example, a scrap book of the children’s formative years may have significant sentimental value to the person who compiled it and little to the other spouse. Family pets can be included in this category and should remain with the party who has formed an emotional bond with the animals.

Remaining Tangible Assets

After the high stress assets have been addressed and the logical asset divisions have been made, the rest of the marital estate can be dealt with. Examples of what might remain would be household effects, financial assets, and unsecured liabilities. As indicated in the section on household furnishings [see §5:22 above], the best way to dispense with these items is to divide them by utility. That is, the parties share the items that are necessary to live so that replacement costs are minimized.

Financial Assets

Financial assets that are equivalent to cash are usually the last assets to be divided in that they are easily transferable between the parties and can be used to equalize the marital estate division, or effect whatever type of division the couple deems to be equitable. The transfer of cash and cash equivalents between the parties normally does not cause problems.

Property Settlement Case Study

John and Jeanne James were committed to working out their property division without going to court. Despite some residual anger over the reason for their breakup (an affair that John swore was over but that Jeanne believed was ongoing), they were well advanced in the grief process and prepared to do the necessary work.

Step 1: As instructed by their attorneys, they completed their initial disclosures. These revealed that they owned a house with a mortgage, three cars with loans against them, and various household items and personal effects. John had a defined benefit plan from service in the Air Force. He had already retired from the service and was currently receiving benefits. In addition, both spouses had their own IRAs and savings accounts. They also had joint credit card debt.

Step 2: After their attorneys explained the concept of marital property to them, they agreed to remove certain items from the marital estate: a gun collection that had been left to John by his grandfather, a car that was purchased for their college age son, some camping and rafting equipment used primarily by their son that they decided to give him, and a diamond pendant that was to be given to their teenage daughter on her college graduation. They also agreed to remove some household items of minimal worth so they wouldn’t have to be valued and to divide them up by utility.

Step 3: They next turned to valuing the remaining assets. They had agreed on a value for their home based on its purchase price, but their attorneys encouraged them to get an appraisal or at least a quote from a realtor. They decided to get a professional appraisal and were glad they did because their home turned out to be worth far more than they expected. They also had John’s defined benefit plan valued by a pension expert and were shocked to discover it was worth so much. They used the Internet to determine a value for their vehicles and then went through the remaining items of personal property, doing appropriate market research to settle on a value. They only asset they had trouble valuing was a small art collection. They checked out the costs of having it appraised and decided they were excessive. They decided to remove it from the marital estate and divide it between them based on which pieces each liked best.

Step 4: Once they had agreed on a value for their assets, they began to negotiate, initially aiming for an equal division. Jeanne wanted the house and John was fine with letting her take it. Jeanne’s budget showed that she could afford the house if she managed her money carefully. So the net value of the house (appraised value minus the mortgage) was put into Jeanne’s column on the property settlement spread sheet.

They considered next John’s Air Force pension. Jeanne wanted half. John thought the entire pension should go to him because his service had earned it. His attorney explained that the entire pension was marital property because the couple was married the whole time John was in the Air Force and a court would likely award Jeanne half. Reluctantly John agreed and half the value of the pension was entered into each party’s column on the spread sheet.

They decided that each would keep the car they drove regularly along with its associated debt. The net value of each party’s car was entered into the proper column.

Next they went through the long list of household items and personal effects, each choosing what he or she wanted. The values were totaled and placed into the spreadsheet.

They agreed to keep their respective saving account balances and divide their credit card debt equally. The net result, shown on the spread- sheet below, brought them to a nearly equal settlement.


John and Jeanne James



Alimony changes the figures. Then Jeanne and her attorney brought up the subject of alimony. Jeanne believed she deserved alimony because John’s income far outstripped hers. John was strongly opposed to paying alimony. Jeanne had a good job and was able to support herself. He had already given her half of his pension and that was enough as far as he was concerned.
Then Jeanne’s attorney pointed out the difference in the value of their IRAs. Jeanne would never be able to put away nearly as much as John for retirement. John did see Jeanne’s point, but still did not want to pay alimony.

John consulted with his attorney for possible solutions. One pos- sibility was offering Jeanne some of the household items and personal effects John had chosen. But John really didn’t want to give any of them up and Jeanne wasn’t eager to take any of them. She wanted cash. Next John offered to give Jeanne the $3,000 balance in his savings account plus $25,000 from his IRA. Jeanne agreed. In the final settlement Jeanne got $31,202 worth of assets more than John, but John did not have to pay Jeanne any alimony.

Jeanne’s attorney wrote up their settlement agreement. After some back and forth with John’s attorney to get the language just right, the parties signed it and submitted it to the court for approval. Jeanne’s attorney also prepared a QDRO for John’s pension plan, John’s attorney approved it, the judge signed it, and Jeanne’s attorney sent it to the plan administrator so that Jeanne could begin receiving monthly checks.