How does the COVID-19 economic climate impact the division of property?
Unfortunately, I do not practice law in your state, so I cannot inform you as to the specific laws of your state. However, I can provide you with some general tips that may help guide you for this sort of issue. The COVID-19 health crisis has had a wide ranging impact in both current and potential divorce filings.
The pandemic has caused the economy to enter a deep recession as unemployment numbers soar, and it is unknown how long this recession may last. Many couples now are in situations, where one or possibly both parties have lost their primary source of employment as a result of furloughs, layoffs, or firings.
However, a party may find that the current economic climate may be an advantageous time to consider filing for divorce. When considering the potential split of marital assets and debts in a current or future divorce, it is important to consult with an experienced family law attorney.
An attorney can guide you and inform you as to the specifics for each state and how each state divides property in a divorce action, as well as what may be classified as separate or marital property. In some states, the division of marital property can be affected by the grounds for divorce that each side alleges.
However, many states have moved towards a no-fault divorce, which means that the division of marital property is not affected by the grounds for divorce even if said grounds ultimately are proven.
For example, in a no-fault divorce state like Tennessee, if a spouse proved that the other spouse committed adultery during the divorce, that act would not bar the guilty spouse from their equitable share of the marital residence.
If we assume that the division of property will not be affected by any fault based grounds, most states attempt to make an equitable division of marital property in a divorce.
This does not necessarily translate to an even fifty-fifty split of marital assets, but courts often times try to come close to that sort of division of property.
When analyzing the current economic climate, it is important to know what property is considered marital property and would be eligible to be divided. A licensed attorney can help guide through that process and advise what property would be considered part of the marital estate.
The biggest example of how the current economic climate may impact the division of assets occurs in the assets with fluctuating values. For example, a party may have a sizable retirement account that is purely marital property. If that retirement account has depreciated significantly as a result of the economy, it may make sense to try to file for divorce now, so that the division of the asset and award of that asset to the other spouse is less than it may have been months ago.
The same principle would apply to other retirement accounts, stocks and bonds, and even the housing market. As we go forward, it is hard to forecast how the economy will react as a result of COVID-19, especially if there is a second wave of infections. However, filing for divorce during this economic downturn could be the difference in saving thousands of dollars if a party shrewdly divides fluctuating assets now rather than waiting for the economy to rebound.
Additionally, when considering how to divide the marital estate, a party may be willing to forego their equitable share in a fluctuating asset for fear of continued depreciation. Therefore, it is possible to capitalize on certain asset division scenarios because of this economic climate. It may be necessary for you to consider speaking to a financial advisor, as well, so that you and your attorney can strategize the best way to handle volatile assets, such as stocks and retirement accounts.
In summary, this economic climate has created a hardship for most families across the nation. However, with an experienced family law attorney, it is possible that some parties can use this economic climate to one’s advantage in crafting settlement proposals and in the division of certain assets.
While no one can predict how the economy will fare in the coming months, an experienced family law attorney could result in a party saving money by getting divorced now in this recession as opposed to divorcing a year prior or waiting. For certain parties that are already considering divorce, it may make sense to contact an experienced family law attorney, who will be able to assist you in determining the most appropriate next steps based on the facts of your case.
Dan Pearce is an Online Editor for Lexicon, focusing on subjects related to the legal services of customers, Cordell & Cordell and Cordell Planning Partners. He has written countless pieces on MensDivorce.com, detailing the plight of men and fathers going through the divorce experience, as well as the issues seniors and their families experience throughout the estate planning journey on ElderCareLaw.com. Mr. Pearce has managed websites and helped create content, such as the Men’s Divorce Newsletter and the YouTube series, “Men’s Divorce Countdown.” He also has been a contributor on both the Men’s Divorce Podcast and ElderTalk with TuckerAllen.
Mr. Pearce assisted in fostering a Cordell Planning Partners practice area specific for Veterans, as they deal with the intricacies of their benefits while planning for the future. He also helped create the Cordell Planning Partners Resource Guide and the Cordell Planning Partners Guide to Alternative Residence Options, specific for seniors with questions regarding their needs and living arrangements.