Fair Isn’t Always Equal… And Other Things to Know About Wealth and Divorce
One of the first questions divorcing clients ask is related to what will happen to their money. We advise them that Georgia law requires judges to issue “equitable” rulings when dividing assets from a marriage.
“Equitable” means “fair” – which isn’t always equal. But most judges at least start the discussion by contemplating a 50-50 split, so we counsel clients to get their heads around that concept.
Judges have wide discretion on how to break up a marital estate, which is why we always try to help clients settle the issues outside of court. Doing so gives you the most influence on the final result, reducing the amount of time, stress and money you spend on your case. However, if your ex-spouse is being too aggressive, you may have no choice but to let the judge decide.
Let’s look at what factors a judge considers when dividing a marital estate and determining child support and alimony payments.
What’s Mine and What’s Ours?
It’s important to know which assets are subject to being divided at the end of a marriage.
Separate assets, which remain yours, can be bank and investment accounts, real estate and business entities you owned when you entered the marriage. It also includes personal gifts, including inheritances, received during the marriage.
But this can be complicated because funds from those separate assets you used to purchase joint property is considered part of the marital estate subject to division. That would include, for example, the $100,000 inheritance that your late aunt left you that ended up as the down payment on a home you jointly bought with your spouse.
Note that the spouse claiming certain assets should be separate from the marital estate carries the burden of proof, so keep or find records showing when you received those funds and what you did with them.
Marital assets are everything else, including joint investments and salaries, bonuses and anything else earned during the marriage regardless of title.
The case where you paid the $100,000 down payment for the jointly titled home you shared with your spouse illustrates how much discretion judges have. While the home is marital property subject to equitable division, some judges would say the value of the house should be split equally (50/50) down the middle, while another judge might give you credit, and thus an unequal division of marital property, for your paying that part of the costs from your inheritance.
Another question that judges will answer differently is how any behavior – adultery, cruelty or outspending of assets due to a gambling or substance addiction, for example, – by either spouse affects the division of assets. That conduct may not affect one judge’s calculations, while another may consider how this behavior affected the couple’s joint wealth.
What about the kids (and our current standard of living)?
Note that even if a judge finds that a large portion of your wealth is separate from the marital assets, those separate funds may be considered when a judge decides child support and alimony obligations.
Georgia law provides a formula by which each spouse’s income, cost of health insurance and other factors produce a required amount of child support one parent should pay the other each month. Interestingly, the formula used is maxed out when the parents make a combined income of $30,000.00 a month, but again, a judge has discretion to deviate from the child support amount if the evidence supports such a finding. There are no restrictions on what the parent receiving the money can do with it.
Typically, a judge will consider necessities for children and, in cases of wealthy parents, the lifestyle to which they and the children are accustomed.
While child support is required, alimony is not. Alimony is determined by looking at a number of factors, starting with how much the spouse who makes less money needs and the other spouse’s ability to pay.
Judges usually consider the length of a marriage, along with the spouse’s roles in the family, lifestyle when married, their education, previous work experience, and their ability to get a job if they aren’t working outside of the house already.
These days, it is very common for both spouses to work outside of the home, so alimony awards aren’t as common or significant as they once were when one spouse didn’t have an outside job. Again, judges have wide discretion and often are sympathetic for a spouse who has primary custody over the couple’s children.
Contact BCNTR Law today.