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How Changes in the Stock Market May Affect Your Divorce

stock market fluctuations play a role in Raleigh divorce settlements

When your divorce involves separating assets that are connected to the stock market, you need to know important information about the assets and “the market” because it can affect the amount you get in your divorce settlement. A declining stock market can not only impact your divorce settlement agreement but also your longer-term financial picture.

How Assets are Divided in North Carolina

States have two options for dividing property: community property division or equitable distribution. Because North Carolina is an equitable division state, N.C. judges divide assets according to the equitable distribution method, which means that the court divides your property in a way that is fair to each spouse.

The court begins the process by presuming that it is equitable to split the marital and divisible property equally. However, there may be circumstances where an equal distribution would be unfair. Ultimately, the result must be a just division even if it is unbalanced.

Assets Invested in the Stock Market

Retirement accounts that have been accumulated during a marriage are included in equitable distribution during a divorce. Retirement assets such as 401(k)s, IRAs, 403(b)s and other retirement accounts are usually invested in the stock market. There are other assets that may be part of your marital estate that are invested in the stock market as well, such as investment accounts, trust accounts, and employer stock options. 

Any assets that are invested in the stock market are subject to their value going up and down because the stock market fluctuates continuously. This means the value of an investment today more than likely won’t be the same 30 days from now. Since these accounts are split during a divorce, this market fluctuation will affect what you will get when the divorce is final.

What to Know About Stock Market Assets

As you educate yourself about your marital assets with an experienced property division divorce lawyer, it is important to learn the following about each asset because the answer to each question affects what you may get in the settlement:

  • What type of asset is it?
  • How is the value of the asset determined?
  • What type of account is it held in?
  • Do you need the cost basis of the asset and, if so, what is it?
  • How volatile is the asset?
  • How liquid is the asset?
  • What is the cost and what are the tax consequences of liquidating the asset?
  • How is the asset titled?
  • What documentation is required to change how the asset is titled?

When the Assets are Split

There is no way to time the market because you never know when it will be up or when it will be down. The court measures the value of the asset as of the date of dissolution. This seems simple but it becomes complicated as the assets change over time and can affect the equal distribution of marital property. 

Assets are actually divided at the entry of judgment, not the time of the dissolution agreement, and there is a delay between the time of the dissolution agreement and the entry of judgment. So, the date of the entry of judgment determines the value of the asset that gets split. If the stock market has brought the value of an asset down, this delay can cause a distribution to become unequal. If this happens, the court can reallocate the assets on a motion to amend the judgment. For assets that fluctuate, it’s important to keep the court updated as to values and to minimize the time between receiving evidence and judgment.

Schedule a Consultation Today for Marital Property Division Advice and Guidance

As you can see, dividing assets invested in the stock market is quite involved. To get the best settlement possible and be sure all the complexities are taken into consideration, it is important to work with experts who are knowledgeable in this area. Our attorneys have the experience to help you. Call us at (919) 301-8843 for a consultation. We are here to serve you.

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