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Why marital debt matters in high-asset divorces

When most people picture a high-asset divorce, they focus on the division of assets that a couple has acquired. As such, a crucial element often gets overshadowed: marital debt.

Focusing solely on the division of assets can lead to an incomplete picture. Marital debt is often an equally critical element that must be addressed to help ensure a fair and comprehensive settlement.

The significance of marital debt

Marital debt encompasses all liabilities that a couple accumulated in the course of their marital union, regardless of which spouse’s name is on the account. Common debt among married couples can include:

  • Mortgages
  • Credit card debt
  • Personal loans
  • Medical bills
  • Business-related debts

For couples anticipating a high-asset divorce, these debts can be substantial, and failing to properly account for them can result in one spouse shouldering an unfair financial burden post-divorce.

Untangling marital from separate debt

It can make a world of difference to understand the establish a clear distinction between marital and separate debt. As the name suggests, marital debt refers to any loans acquired during the marriage that benefited both spouses. This includes credit card debt accumulated for household expenses or student loans used to finance a degree that improved earning potential. Separate debt, on the other hand, is typically debt acquired before the marriage or after separation and solely in one spouse’s name.

In California, debts accumulated during the marriage should be divided 50/50. However, this division can be adjusted based on agreements between the spouses or specific circumstances that warrant a different split.

Ultimately, a high-asset divorce is about achieving a balanced outcome that considers the entire financial landscape of a marital estate. By acknowledging the importance of marital debt and navigating it with diligence and legal support, both parties can move forward with greater financial clarity and confidence.



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