How the Stock Market Can Affect Your Settlement Agreement

Changes in your stocks can influence the arrangement of your settlement agreement. The key to protecting your share of these assets is to pay attention to which stocks change and the timing of changes in valuation and also to make sure the agreement is clear and worded carefully.

New York is an equitable division state, meaning that if your name is on an asset, you are considered the owner. Your spouse, however, also has a claim to an equitable portion of those assts when you split. Equitable distribution does not necessarily mean equal division of property. The emphasis of this law is on a fair distribution, and the court will take into consideration who invested time and money into each asset.

Equitable distribution certainly plays a role when it comes to settling stocks. The “basis” for division is the original amount that you paid for each stock, because this shows clearly who invested and how much. When making the settlement agreement, you and your spouse cannot simply divide the stocks because each stock may have increased or decreased by a different value amount.

The changing valuation of stocks is the reason why wording of these settlements is so important. Putting only dollar amounts, as opposed to percentages, will be unclear if there are any increases or decreases in value. The valuation date for volatile stocks should be done as close as possible to the date when the divorce was finalized. Keep in mind that if you and your spouse are going to court and there is a long period of time between litigation and the divorce finalization, the court has the ability to adjust the settlement to reflect changes in stock value.

Source: Forbes