Should Assets be Liquidated in a Maryland/DC Divorce?

Assets represented by a house and cash

In both Maryland and the District of Columbia, when a couple divorces, the divorce court is tasked with dividing the marital assets in an “equitable” manner. “Equitable” is not the same as “equal,” so there are some circumstances where one spouse might receive slightly more in marital assets than the other. Because assets must be divided, often the issue arises about whether physical assets should be liquidated to facilitate the division. In simple terms, money can be divided but many physical assets cannot such as real property, vehicles, business ownership interests and other assets like family heirlooms, jewelry, furniture and other luxury items.

Sometimes assets must be liquidated – sold – because there are no other viable choices. But, other times, deciding whether or not to liquidate given assets depends on several factors including:

  • Whether full value can be achieved in the time frame of the divorce proceedings
  • Whether a given asset can actually be sold
  • Tax implications
  • Future costs of maintenance and upkeep
  • Whether different sets of assets can be “traded” to achieve an equitable distribution
  • Wishes of the couple – liquidation might be best if neither spouse wants an asset but also if both spouses vigorously insist upon being awarded a given asset
  • Whether any sort of sharing arrangement can be agreed to with respect to the asset
  • And more

Generally, unless there are no other options, selling assets should be avoided if the assets will only fetch a “fire-sale price” or will have particularly high and adverse tax consequences. In theory, a divorce should seek to maximize and protect the available wealth of the couple. This is in the best interests of both spouses. This problem is among the many reasons that it is advisable to retain qualified and experienced Maryland/DC divorce attorneys to provide legal advice, counsel and services.

How to avoid unnecessary and counterproductive asset liquidation

The key to avoiding unnecessary and counterproductive asset liquidations in a Maryland/DC divorce is to find mechanisms for removing undue emotion. Divorces are often very emotional and, often, spouses try and use the process to “punish” the other. Forcing the other spouse to sell a cherished asset is one method of “punishment.” Maybe that is needed. But each spouse should recognize that excessive efforts to punish the other will generally merely result in the impoverishment of the couple.

Thus, if excessively negative emotions can be limited, then, as listed above, there are several options. First, assets can be given generalized market values and “traded” by the couple to achieve an equitable division. For example, if the couple owns two vehicles, but one has a market value of $20,000 more than the other, then it can be agreed that each will keep their vehicle and one spouse will “get” another asset – or set of assets – deemed to be worth $20,000. In this manner, none of these assets will need to be liquidated.

Sharing arrangements can also be used for some types of assets like vacation homes and boats. This may not be desired, but is an option that can be explored. With assets like retirement accounts, the better option may be to have both spouses listed as payee beneficiaries when the account begins to pay out.

Maryland and D.C. Divorce and Family Law Attorneys

For more information, contact the seasoned and experienced Maryland and D.C. divorce, family law and estate planning attorneys at The Law Offices of Thomas Stahl. We have the experience and expertise you need. Schedule a consultation today or call us at (410) 696-4326 or (202) 964-7280.

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