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Handled assets with deferred distribution in a complex divorce

On Behalf of | Jul 9, 2024 | Property Division |

Diversifying marital holdings is usually a smart decision. Spouses who have too much of their marital wealth in one type of investment are vulnerable to economic fluctuations. Proper diversification often means holding a variety of different resources, including stocks.

Those investments can then become a stumbling block as spouses prepare for divorce. For example, the stock portfolio spouses acquired may include certain restricted stocks that they cannot yet sell or that require a very specific process to liquidate. Other times, stocks may include holdings that are not yet valuable but that spouses expect to produce a return in the future. These holdings can be very difficult to address in a Texas divorce.

Valuation date is a key consideration

One of the most important considerations in a high-asset divorce is the date that applies for asset valuation. Stocks fluctuate in price significantly from one day and week to the next. Factors outside of people’s control, such as supply chain issues, can temporarily depress or increase the value of a stock. Spouses preparing to divide a portfolio of investment holdings have to set a date for valuation purposes. The value of their stock on that date is what matters for the purposes of property division.

Non-liquid assets still play a role

Just because someone cannot currently sell certain stock does not mean they can exclude it from the marital estate. After establishing the value of the stock on a certain date, the spouses can negotiate to offset the holdings that they cannot divide or liquidate with other marital resources. This process can be very difficult, especially if the valuation date occurs before the stock actually grows into its likely value. Those with complex marital holdings often have a very difficult asset division process ahead of them as they prepare for divorce. They could become frustrated or resentful if the stock they allow their spouse to keep eventually surges in value, for example.

Determining how to handle complex assets in a fair manner often requires an in-depth review of marital resources and property division rules. Those with stocks that they cannot liquidate or that represent future sources of income may need to address their concerns with their attorney and strategize to ensure they achieve a fair outcome when they divorce.