Often when parties get divorced, the value of any property is split down the middle; each party gets about 50% of the assets and debts from the marriage. This can get more complicated, however, when assets were owned by one party prior to the marriage and maintained through the marriage. How do you place a value on the item prior to the marriage, and account for any changes to the non-marital portion when it comes time for divorce?
For accounts such as 401(k), financial experts are able to help trace what happened during the marriage to the share of the account that existed prior to the marriage. The expert basically tracks the ups-and-downs in the market and attributes the changes to the portion on the date of marriage to the individual who held that account prior to the marriage.
In real property, such as land or a home, the tracing looks at the value of the home at the time of the marriage. It is generally easier to see how much the home’s equity (the value minus any mortgage or other encumbrances at that time) is valued at, and attribute it to the party who owned the home. If the parties owned one home during the marriage, the value of the home at the time of the divorce is viewed and the party who owned the home prior to the marriage receives a percentage of the equity. This process is more complicated if more than one home was owned during the marriage, or if the home was refinanced.