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What happens to stocks during a West Virginia divorce?

On Behalf of | Dec 22, 2023 | Divorce

The more resources married couples share, the more they have to disagree about during a divorce. Some couples in West Virginia have marital agreements clearly outlining how they intend to divide their property if they divorce, but most couples must settle those disagreements during the divorce process.

If the matter goes to court, a West Virginia family law judge will apply the state’s equitable distribution statute to marital assets and debts. Spouses who dislike the uncertainty that comes with litigation always have the option of settling with one another outside of court. To do so, they must agree to specific property division terms.

Certain assets tend to become hurdles when negotiating property division settlements. For example, stocks are long-term financial investments in most cases and can be very challenging to properly address during a divorce. How can couples handle stocks during a divorce?

Establish what is marital and what is separate

The first stage in the property division process is the creation of a thorough inventory of marital resources. Each spouse may have owned certain assets prior to marriage. Stocks owned independently before marriage are usually separate property in the event of a divorce. In some cases, portfolios may be partially marital property and partially separate property. Other times, all the stocks owned by the spouses are stocks they acquired during the marriage. In that case, they will all be subject to division during the divorce proceeding.

Establish a fair market value

Determining what the stock should be worth for the purpose of property division can be more challenging than people initially anticipate. The current trading value of the stock may not be an accurate reflection of its true value. Perhaps the company just made an underwhelming quarterly financial disclosure and stock prices dropped as a result. Maybe the couple invested in stocks that only recently had their IPO and could potentially surge in value in the next few years.

It can be difficult for people to agree on an appropriate value for the stocks. People may also have an emotional attachment to certain investments that could make them anxious about the idea of letting their spouse retain those stocks or selling them on the current market.

Spouses can potentially divide the stocks or liquidate them to share the proceeds. Occasionally, the value of the stock owned by the spouses can play a role in offsetting other assets, like an ownership interest in a business or home equity. Spouses do not necessarily have to directly divide their stock holdings or liquidate them to properly integrate them into property division negotiations.

Understanding how to approach complex assets, like stock, may benefit those preparing for high-asset divorces in West Virginia. Seeking legal guidance is a good way to start.