When spouses with a high net-worth initiate the divorce process in Missouri, complex issues arise as to how each spouse will maintain the lifestyle they've achieved and how to divide the marital property they've accrued within a marriage. Missouri utilizes the equitable distribution system in courts to resolve these issues.
If you are planning to go through a high asset divorce and cannot reach an agreement with your spouse on your own terms in regard to asset division, retaining a family law attorney is crucial. The legal team at The Joshua Wilson Law Firm can help ensure your financial security and lifestyle are protected.
One aspect of achieving a favorable outcome is understanding how Missouri divides marital property. Knowing what approach the state takes to distribute property, the types of property to be divided, and the factors taken into account when doing so will help you understand what information you will need to provide to your lawyer.
Missouri Equitable Distribution Overview
Missouri courts use an equitable distribution system to allocate property and debt obligations in the division of marital property. Equitable distribution is not to be construed as “equal” division. Each spouse does not receive an ironclad fifty-fifty split of all marital property. Rather, equitable distribution is a division of property based on fairness.
There are several types of assets that a court must consider in its distribution. These types of assets include real property, personal property, financial assets, and, if applicable, business ownership.
Real property, also referred to as real estate, can include land and property permanently attached to it. Ownership of real property includes natural resources on or underneath the land. Typically, these assets consist of homes, large acres of land, and farms.
If both parties in a divorce want a clean break, selling real property is a good idea. The main issue that comes with selling is how the proceeds will be divided. How much each party contributed to the property is a common way to determine how to divide the proceeds.
If both parties want to retain possession of the real property, resolution becomes more tricky. If decided in court, the ownership will be granted to one party at the cost of other assets that he or she wished to retain. Basically, the spouse who receives the house will have to sacrifice other assets in order for the distribution to be considered fair.
High-Value Personal Property
Personal property is defined as any physical asset that can be owned and that is not fixed to real property. This could include home furnishings, jewelry, clothing, cars, pets, tools, and appliances that are of high value.
Many married couples share financial assets. As one can imagine, the fight over these assets can get pretty dirty, leaving many spouses upset with the outcome. Most of the accounts opened and sustained by married couples are considered marital property. Missouri law addresses specific financial assets and their eligibility for division separately.
Retirement and Pensions
Missouri law designates pensions and retirement benefits as marital property accrued during the marriage. The court has wide discretion as to how this property will be split. Other financial plans that will be considered are 401k accounts, 403(b) accounts, IRAs, and a Simplified Employee Pension plan.
Qualified Domestic Relation Order (QDRO)
A qualified domestic relation order is a decree that dictates the amount or percentage of a retirement plan to be distributed to each spouse. It is drafted as part of a divorce settlement. The allocation of these funds is divided using shared interests, separate interests, or joint qualified annuity.
Public School Retirement System (PSRS) -- an Exception
The only financial asset that may be considered an exception and labeled as non-marital property is a retirement plan through the Public School Retirement System (PSRS). Public school teachers in Missouri automatically access the PSRS when they gain employment within the state. This benefit plan requires teachers to allocate a percentage of their salary to a fund that later provides them with lifetime pension payments. So, if you're a public school teacher in Missouri, the good news is that this asset will not be touched or even taken into consideration during a proceeding.
An ownership interest in a business is one of the most difficult types of assets for a court to distribute. Although it is just like any other asset in a marriage and must be divided, the way it is divided, however, is differentiated slightly. In Missouri, there are three main methods the court will use to divide a business.
1. One spouse receives the business in its entirety while the other receives financial compensation.
In this agreement, the spouse who is more involved in the business is awarded the business, and the other spouse receives compensation based on its valuation. For example, one spouse is a dentist and owns a dental practice. 100% of the business goes to the dentist because (1) the practice is his or her livelihood, and (2) the other spouse is not qualified to run it. As compensation to the other spouse, the court awards marital assets of comparable value to the other spouse.
2. The business is sold and the proceeds are divided.
Typically, this method is chosen if there isn't an agreement about who should be awarded the business and neither spouse cares about ownership. As you can imagine, this predicament is not as common as the one indicated above. However, it's an easier solution for spouses.
3. The business will continue to be jointly owned by both spouses.
In order for a judge to make this order, there must be compelling evidence. This evidence should indicate that (1) both spouses want the business, (2) they play a pivotal role in running the business successfully, and (3) they have the capacity to remain civil as future business partners.
Missouri Family Law Attorney
After reading this overview, one thing should be clear: the process of distributing property between former spouses is incredibly complicated in high asset divorces. For this reason, it is important you hire an adequate, experienced, and skilled attorney to help either negotiate an appropriate resolution or to take your case to court to protect your interests. Divorce attorney Joshua Wilson is more than capable of taking your case and achieving a favorable outcome. Contact The Joshua Wilson Law Firm today at (816) 331-9968 for a consultation.