Gene and Gerri are in the middle of a contentious divorce case. Gerri knows Gene bought valuable stocks using money from their joint bank accounts during their marriage. The portfolio is in Gene’s name. Gerri wants to know if she can ask the Court to transfer some stocks to her as part of the divorce settlement.
In Massachusetts, stocks and bonds are expressly part of the marital estate, making them eligible for division. Massachusetts Probate and Family Courts use equitable distribution for dividing marital property. “Equitable” means fair, not equal. The Court applies a sixteen-factor test to determine fair division. This test applies to all real, personal, tangible, and intangible property.
The Court may assign separate ownership of stocks and bonds if the marriage ends quickly. This applies especially when the other spouse made little contribution to the stockholder spouse’s acquisition and growth.
In some cases, the Court may order stock division after considering factors like contributions, marriage length, and needs. It will weigh each party’s actions in acquiring, investing, and increasing the portfolio’s value. If one party significantly outperformed the other in this regard, the Court will consider this fact heavily.
Stocks are typically valued during a divorce. If the stock trades on a share market, the court can easily determine its value. If the stock is not trading publicly, however, its valuation might be more difficult. A key example is stock held in a closely held corporation: one which is typically small, with few shareholders and no readily available market for its shares. Valuing stocks in a closely held corporation might require the use of an expert, such as an actuary.
If you have questions about stock and bonds or their valuation in your case, schedule a free consultation with our office. Call 978-225-9030 during regular business hours or complete a contact form here, and we will get back to you at our earliest opportunity.