Why Having More Wealth Doesn’t Make Equitable Distribution Any Easier

This may be a cautionary tale for some, and a reality to others, but the fact is this –prenuptial agreements, while oftentimes successful in ensuring that one party secures estates and assets in the event of a divorce, don’t always work exactly the way we want them to. Most would think that’s bad news, and rightly so – but why? Why should it be hard to simply award what is due to each party in a divorce case? Let’s say one spouse possesses assets worth up to $25MM, and the other spouses essentially has, well, nothing? It would be sensible and definitely equitable for a court to ensure – upon review of a prenuptial agreement – that the spouse with $25MM keeps those assets. That’s not always the case.

Often when it comes to divorce, prenuptial agreements, and equitable distribution of property and assets, it’s not about how much you have, but how it can all be paid out to you. This simply begs the question: how liquid are your assets? They might not be transferable at all, leaving a bit of a mess on your hands. Such cases involving many liquid assets, like cash and securities, often resolve very quickly, much to the chagrin of the holder of such assets, but what about business interests or commercial real estate? How does one translate those assets to actual distribution? That’s a tougher dilemma.

Alimony in such cases often would be paid out over time and not all at once. Consider the concept of a business generating revenue of upwards of $25K, for instance – obviously, the business wouldn’t close anytime soon, and without a doubt, the other spouse would require alimony. The business may be worth this much money – but alimony will take a chunk out of that for purposes of cost of living if filed by the other spouse. This is a type of asset that isn’t terribly liquid at all, and therefore can’t be protected under a prenuptial agreement.

Consider your own assets to determine what should be outlined and what can be outlined? It will make divorce proceedings, prenuptial agreements, and equitable distribution that much easier. As always, consult your qualified attorney for more answers.

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