Money deposited into a savings account is liquid. It is available to withdraw and use whenever the account holder desires. Having access to liquid capital is beneficial, but savings accounts offer minimal returns.
Many people choose non-liquid investments that offer better returns but require time to convert to cash. They may acquire certificates of deposit that keep money tied up for multiple years. They may acquire resources that require professional support to sell. They may even transfer funds to tax-deferred retirement accounts that they cannot withdraw from without risking penalties. Addressing those non-liquid holdings during divorce can be a challenge.
Dividing these assets may not be an option
When spouses hold long-term investment resources, liquidating those assets to divide them during divorce may not be feasible. In some cases, early withdrawals could lead to significant financial penalties.
As such, spouses preparing for a high-asset divorce may need to come up with creative solutions for addressing their investment holdings. They may need to work with professionals to determine the marital value of those resources and then find ways to divide marital assets and financial obligations to account for the value of non-liquid assets.
One spouse might retain those investments, while the other may receive other property worth a comparable amount. Assuming responsibility for marital debts can also help balance decisions made regarding non-liquid marital investments.
Individuals preparing for property division negotiations often need support with asset valuation and with negotiations. Partnering with an attorney who understands the complexities of a high-asset divorce can help a divorcing spouse work toward a fair property division outcome, even when the couple cannot directly divide all of their shared resources.