Marital Property Division in Gray Divorce

What Counts as Property?

In Missouri, courts dividing a marital estate look at two types of property: marital and separate. Separate property consists of assets a spouse obtained prior to the marriage or during the marriage that carried the intent to remain separate, such as a gift. Marital property is all non-separate assets either spouse acquired during the marriage. This includes every purchase each spouse made separately or together and all income earned during the marriage (not including gains on separate assets). The court presumes that all property obtained during the marriage was and is marital property subject to division.

How Does a Court Divide Property?

Every divorce involves an equitable distribution of marital assets and marital debt. Equitable does not mean equal, but fair. Courts do try to start from a position of equality, but various factors might result in something different than 50-50 splits. Courts will look to each spouse’s age, health, and employment status; current and future income streams; current assets; the contribution made to the income stream during the marriage as well as to the support and maintenance of the household; other financial obligations; and any acts of marital misconduct. 

When looking at a marital estate, each spouse will want most of the “stuff” in the estate. Only one spouse can walk away with a tangible asset as its owner, but that does not mean the other spouse loses the claim to a share of that asset. If one spouse wants the marital residence with equity of $200,000, the other spouse has a claim for half that equity, or $100,000. The spouse with the house can pay with cash or trade other assets to reach an equitable distribution. Once spouses start prioritizing and valuing all the assets, the reality of opportunity cost comes into play. How much is it worth to keep the marital residence? Is it worth trading more than half of the share in a retirement fund? As the recipient spouse with sole responsibility, is it worth the cost of maintaining? Can the recipient spouse actually afford the residence – not just the mortgage, which will need to be refinanced (and could result in quite a financial hit with higher interest rates), but also the property taxes, insurance, and upkeep costs? Is the house really worth the true value of the asset?

Sentimentality often takes sway in asset division. For individuals over 50, this type of thinking can be particularly dangerous. A house with a mortgage is not very liquid. If a health emergency arises and a spouse needs funds and loses the ability to work, how will that spouse maintain the house and pay the costs of medical care? It is easier to take a loan against retirement funds than a house – and losing a house could be disastrous if the spouse becomes ill. In another scenario, a spouse may want the house to pass on to children, who may live with them if that spouse needs assistance or care. Spouses must consider these factors before any asset division. What are the priorities looking to the future? What are the financial realities? What life issues could impact having liquid versus non-liquid assets?

To help answer these questions, a spouse should consult with a financial advisor to plot out likely income streams and the cost of accepting different asset divisions. The financial advisor can put in stark reality the choice of one division versus another. The financial advisor can also include actuarial projections of the likelihood of health impairment or other earnings loss or fixed cost increases.

Assets also reflect lifestyle choices. If a spouse’s earning capacity or spousal support cannot sustain their desired lifestyle, they will have to weigh the cost of various lifestyles. If one spouse owns a business, that spouse needs to consider how to factor in the other spouse’s interest in that business, particularly if that business will be winding down soon. If one spouse must pay spousal support, retirement timing could extend much further. In this case, the spouse may want to exchange spousal support for a more significant share in the equity of other assets. The lesser-earning spouse should consider the pros and cons of taking more retirement funds and how to invest them, given the need to access them sooner rather than later. Balancing assets and lifestyle requires confronting all these preferences and the standard of living that spouse desires with the ability to actually afford those preferences.

Every asset division will be unique because no two spouses have identical situations, incomes, earning capacities, and lifestyle preferences. The failure to consider your unique circumstances in a gray divorce asset division could prove life-threatening. It is important to remember that, in Missouri, asset division is a final judgment not subject to modification. Meaning if you make a mistake, you cannot go back and fix it. That is precisely why choosing wisely is sometimes a life-or-death decision.

Contact Our St. Louis County & St. Charles County Gray Divorce Attorneys

If you are over age 50 and are thinking about divorce, you probably have questions about how marital property is divided. Call The Marks Law Firm, L.L.C. today at 314-993-6300 to discuss your questions and get the answers you need about the divorce process.

At The Marks Law Firm, L.L.C., our lawyers can also help you address many of the practical concerns associated with your gray divorce. Additionally, we provide guidance with drafting prenuptial agreements for individuals over 50 who are looking to get married again. Contact us today to schedule an initial divorce consultation. Our Creve Coeur divorce over 50 attorneys look forward to hearing from you.