Assets are divided and distributed in Connecticut divorces based on the state’s equitable distribution law, and the complexity of achieving a successful outcome to protect your financial future increases in proportion with the types and magnitude of assets involved.
“In any divorce, it’s important to have an experienced attorney protect your rights, your property, and your future financial interests, but high net worth divorces require a particular set of skills,” said Rome Clifford Katz & Koerner, LLP Partner Alan Rome.
The Division of Assets
in an Equitable Distribution State
Under the Connecticut statutes governing divorce, the Superior Court holds the authority to assign and distribute assets to spouses in an equitable manner based on the information and documentation presented by each side.
The court considers assets that are jointly owned, individually owned, and owned by one spouse in conjunction with another party in categories that include:
- Income
- Real estate holdings, including the primary residence
- Bank accounts
- Retirement accounts
- Investments
- Art, jewelry, and collectible items
- Business ownership and interests
- Motor vehicles, boats, and recreational vehicles
Who Gets to Keep the Primary Home?
Attorney Alan Rome
What happens to the home a married couple lived in depends on the wishes of each spouse and whether those wishes align.
Most often, one spouse wants to remain in the home or neither wants to remain, but sometimes each spouse wants to be the one who stays in the house, creating a conflict for the court to resolve.
When both spouses agree that the house should be sold, the court will divide the proceeds of the sale equitably between the two spouses.
Things are more complex when one spouse wants to remain in the home. In the simplest sense, the remaining spouse must “buy out” the other spouse’s equity in the home and have his or her name removed from the mortgage if there is one.
In such a case, the court determines if the remaining spouse can afford the buyout and afford to live in and maintain the house going forward, given how the remaining assets in the estate will be divided and considering such issues as alimony and child support.
It’s important to note that the Superior Court has the authority under statute to “pass title to real property to either party or to a third person or may order the sale of such real property, without any act by either spouse … ,” which means that after assessing the wishes of each spouse and all other factors in the divorce, the court can impose what it deems to be the best solution – which may be a sale of the property.
Equitable Distribution Doesn’t Mean Equal & All Property Is in Play
While Connecticut is an equitable distribution state, that doesn’t necessarily mean property and assets are divided equally. (We list factors used in determining equitable property division later in this post.)
Connecticut is also an all-property state. The court does consider distinctions between “marital property” and “premarital property,” but all property and assets owned by both spouses – even those acquired before the marriage – are considered marital property at the outset and subject to equitable distribution.
What Happens to Assets & Investments Predating the Marriage?
Premarital property applies to things a spouse owned or acquired before the marriage, which may include financial assets, inheritances, real estate, and more – but whether these assets remained separate property at the time of the divorce, entirely or partially, is something the court works to determine.
For example, when premarital property increases in value during a marriage, that increased value portion is typically considered marital property – especially if the spouse who did not initially own the asset took actions that maintained and enhanced its value.
On the other hand, an inheritance or valuable gifts received by one spouse during the marriage may be considered marital, depending on the circumstances.
The determination of premarital property versus marital property can get complex, and the court’s final determination depends on the totality of factors that are analyzed (listed below), which provide a picture of each spouse’s contributions to the value and maintenance of the estate during the marriage and how they affect the status of premarital property assets spouses brought to the marriage.
What About a Family Business?
Businesses jointly owned by spouses are marital property, which raises issues like those surrounding the primary home.
Do divorcing spouses want to sell the business and equitably divide the assets as determined by the court, does one spouse want to maintain the business and buy out the other, or do they wish to remain joint owners even after a divorce?
If one spouse owns a business with another party, including his or her family members, many factors come into play.
When a one spouse holds a business interest that pre-dates the marriage, that business interest may be considered marital property potentially subject to equitable distribution.
An increase in value of one spouse’s business ownership or interest that occurs during the marriage is also a factor in determining the equitable distribution of assets – especially if contributions to the marriage of the non-ownership spouse helped increase the value of the business.
Similarly, if one spouse assumed a business ownership interest during the marriage, even if the ownership was exclusive of the other spouse, the value of the business would be an asset that the court would assess in its equitable division and distribution of assets.
The Documents Typically Required in a Divorce
An experienced divorce attorney will need to review your situation before determining what records must be provided, but the core documents spouses must produce typically include these:
- Personal tax returns, both federal and state, going back several years
- Business tax returns for current and past years
- Related Internal Revenue Service forms
- Pay stubs to document income
- Corporate profit-sharing statements
- Bank account statements
- Other financial and investment account statements
- Retirement account and 401K statements
- Life insurance policy benefits and costs
- Health insurance benefits and costs
- Credit card statements
General Factors Considered in Determining Equitable Distribution
According to Connecticut statute, in addition to considering all the evidence presented by each party, the court must also consider these factors in determining the nature, value and distribution of property:
- The length of the marriage
- The causes for an annulment, or fault for the dissolution of the marriage or legal separation
- The age, health, station, occupation, amount and sources of income, earning capacity, vocational skills, education, employability, estate, liabilities and needs of each of the parties and the opportunity of each for future acquisition of capital assets and income
- The court shall also consider the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates.
What an Attorney Experienced in High Net Worth Divorces Does
A high net worth divorce attorney thoroughly investigates all factors considered in determining equitable distribution, and may enlist the services of independent appraisers, accountants and forensic accountants, and those with expertise in determining valuations. Measures that may be taken include:
- Engage independent appraisers or licensed valuation consultants to determine the value of real estate, business entities, financial assets, artwork, jewelry, collectibles
- Engage an accountant to assess each spouse’s financial and non-financial contributions to a marriage, including income, savings, and investments
- Engage a forensic accountant to uncover any hidden assets
- Engage a tax consultant to properly assess the tax implications of the division of assets
- Assess any prenuptial or postnuptial agreements, which may influence the equitable distribution of assets
Attorney Wendy Davies
“We work with licensed professionals to provide independent valuations of complex assets, bring to light assets that may have been concealed, and on issues such as determining which of your assets may be yours exclusively and not subject to equitable distribution in the divorce,” said Attorney Rome, who is assisted by Attorney Wendy Davies on divorce cases.
Attorney Davies is a member of the Hartford County Bar Association, the Connecticut Bar Association Family Law Section, and a certified mediator experienced in collaborative divorce. Email her at wdavies@rckklaw.com.
If you need representation in a divorce of other Family Law matter, contact Attorney Rome by phone at 860-232-3000 or by email at arome@rckklaw.com. Also see our Divorce practice area page for more information.
About RCKK Law
Rome, Clifford Katz & Koerner is a Hartford-based law firm whose attorneys collectively have nearly 100 years of experience in a wide variety of legal areas. Whether you are dealing with a motor vehicle accident, a Workers’ Compensation injury, a Family Law matter, or a business concern, our skilled lawyers will aggressively advocate on your behalf. We represent individuals and businesses in Connecticut and throughout the New England states.