Feb 12 Key Financial Considerations In Matrimonial Cases
Matrimonial cases are more commonly referred to as divorce cases. These are the type of cases that involve the separation of two married partners leading to the sharing of their assets and liabilities. In addition to the inherent financial complexities of determining the real value of a couple’s total assets, divorce cases are made even more difficult by the high running emotions that characterize them. Actually, the accumulation and analysis of financial data is seemingly a cakewalk when compared to the across-the-table spousal face-offs. The accountant must be able to process the financial data and to prepare schedules and reports accordingly and in line with both the clients’ goals and objectives to ensure the whole process flows smoothly for the attorneys and clients in an out-of-court settlement. As much as matrimonial cases are considered emotional, they are quite invested in the financials. As such, we have decided to look at the key financial considerations when handling or settling divorce cases.
One of the main financial elements of matrimonial cases is the equitable or fair distribution of assets and liabilities. With the help of an established New Jersey business accounting firm, the clients will be able to resolve some of the following financial issues with regard to the fair sharing of their wealth. The first consideration is the actual owner or titleholder of any asset. This can be the husband or the wife or in other cases joint title holding. The other key consideration under equitable distribution or sharing of assets and resources is the source of funds to acquire any of the assets or to incur any of the liabilities. The accountant must determine whether the funds were sourced jointly by the couple or separately before marriage or as a gift or inheritance to one of the spouses. Next you have to consider the value of the assets or liabilities. Some assets and liabilities, such as bank accounts, 401(k)s, retirement schemes etc are very easy to value. Others like diversified businesses, pension retirement benefits, and sentimental items are quite problematic and you need professional assistance to get through. And finally you need to determine the value of assets and liabilities to be allocated to each party. Some assets and liabilities like joint bank accounts are split down the middle but others are not shared equally. There are considerations like active participation in the running of a business, which results in disproportionate sharing of its value. And to conclude the whole exercise, the accountant must determine the rightful titleholder of the assets or liabilities following the divorce.
The other financial element of divorce cases is alimony or spousal support. Basically, spousal support is determined by the income of both spouses and the prevailing lifestyle during the marriage. Ideally, both parties should maintain the same quality of life even after divorce. However, this is not practically possible in many cases because the previously combined income has to be split after divorce, which makes it inadequate to sustain two separate families as it previously did. Different states have varying alimony laws. In some states, marriages that last less than 20 years require alimony payments of the marriage duration. Anyway, the question of alimony will go hand in hand with the question of equitable distribution. Checks and balances will be implemented in the sharing of assets and liabilities to calculate the right amount of alimony.