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How are investments divided in a divorce?

On Behalf of | Sep 18, 2020 | Complex Divorce, Divorce, Property Division

If you and your spouse have an investment portfolio, those investments might be one of your most valuable assets, and that will leave you with questions during property division. Is your investment portfolio going to stay with you after the divorce? How will the court divide those investments? Will the division of your portfolio damage your financial health?

Who owns your investments?

Generally speaking, New Jersey law defines the property you owned before your marriage as yours alone, while the property acquired during your marriage is jointly-owned by you and your spouse. This would be true if you made an investment before your marriage and held it passively in a separate account.

However, because investments usually accrue value over time, there may be some exceptions to this rule. If you earned income from your investment during the marriage or your investment increased in value, for example, the court may determine that this increase in value belongs to both you and your spouse.

Dividing your assets may depend on the type of investment.

If your assets are subject to division, the court will divide those possessions equitably. This means that, while you will not necessarily divide your property in half, you will receive an amount that the court deems fair. This may involve dividing your individual investments, or it may involve liquidating your investments and splitting the proceeds.

As The Motley Fool notes, if your investments take the form of an investment account, you will likely need to close the individual account and begin new accounts for each spouse. You may also need to address fees, taxes and other costs associated with this new account.

While dividing your investments during divorce can be a challenge, it is possible to create a fair solution that protects your financial health.