Divorce, Separation of Property, and Unconventional Assets
We did a post a couple of weeks ago about the long-term effects that divorce and its associated separation of property can have on family finances. We got some unique questions in response, and we thought we’d do a short article on some examples of genuinely unconventional assets that can — and should — be taken into account during the separation of property phase of a divorce.
That’s right — any form of rewards points, such as credit card rewards, frequent flyer miles, or literally any form of points that can (or more accurately would typically) be used to pay personal expenses should be split during a divorce. If the rewards come from a business card or other such asset and only one spouse owns any shares of the business, and the rewards have only ever been used for business expenses, they’re clearly not in the ‘martial property’ pile, but most others should.
The complication, of course, being the relevant company’s willingness to transfer, cash out, or otherwise manipulate the points so that they can be split. If the company won’t allow that, the next best option is for the spouses to agree on something they can use the rewards to purchase, and then split that.
According to the state of Michigan and most others, education itself is a form of unconventional asset worth money. And really, that’s only fair. Imagine you marry someone and then devote a significant amount of your income toward keeping the household together while they spend all day at school obtaining a degree. If you divorce shortly after they graduate, they get to reap the benefits of that education for their entire life, and you basically spent those years spending your money allowing them to obtain those benefits.
Splitting the value of an education is a difficult task, and there are no accepted standards in Michigan for doing it. But it’s a point that definitely should be brought up in court if it’s relevant.
Of course the martial home (if there is one) is a part of the separation of property — but what many couples don’t realize is that a home isn’t just a home. It can handily be divided into several unconventional assets — at least a home, the property under it, the mineral rights, the oil and gas rights, and in certain high-value areas, the air rights above the property as well.
As you might have predicted given the advice above, each of these parts should, when they seem relevant, be separately valued as part of the divorce process so that they can be separately handled during division.
These are just a few examples of the extraordinary complexity that assets can take on during the divorce process — a comprehensive ‘playbook’ for dealing with every kind of asset would compare in size to an unabridged dictionary. The takeaway is this: if you or your spouse have assets that take the form of anything other than money, stuff, and simple real estate, consult your lawyer and if necessary a forensic accountant or other expert as well. Don’t miss out on an opportunity because you don’t fully understand the unconventional assets in play!
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