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-   -   How do you calculate this? (http://www.ottawadivorce.com/forum/f3/how-do-you-calculate-21107/)

mathatter89 06-10-2017 04:24 PM

How do you calculate this?
 
Scenario:

EXAMPLE, only.
Bought a $250,000 boat before getting married.
$125,000 of that was debt.
Going into the marriage, $125,000 to be paid off for this boat.

After separation, does this boat count? In this case by the end of marriage the boat is fully paid off. If the idea is that you keep what you brought into the marriage, then I guess both the value of this boat (as an asset) and debt of this boat doesn't count?

E.g. You keep what you brought in, so basically this boat doesn't count at all, right?

Janus 06-10-2017 06:54 PM

I'm not 100% certain at all. The way I see it there are three things here:


1) An asset: the current value of the boat

2) A debt: the $125,000 debt you brought into the marriage

3) An asset: The boat you brought into the marriage

The first two hurt your equalization, the last one helps. One can certainly argue that #1 and #3 cancel each other out, but I'm not totally convinced that #2 gets cancelled. After all, you brought a debt into the marriage, and now the debt is gone.

As I said, I'm not sure.

Rioe 06-10-2017 07:19 PM

Quote:

Originally Posted by mathatter89 (Post 221419)
Scenario:

EXAMPLE, only.
Bought a $250,000 boat before getting married.
$125,000 of that was debt.
Going into the marriage, $125,000 to be paid off for this boat.

After separation, does this boat count? In this case by the end of marriage the boat is fully paid off. If the idea is that you keep what you brought into the marriage, then I guess both the value of this boat (as an asset) and debt of this boat doesn't count?

E.g. You keep what you brought in, so basically this boat doesn't count at all, right?

Pretend the boat was the ONLY thing you owned and the ONLY debt you had at both marriage and separation date.

So as of the date of marriage, you had a net worth of $125k.

What is the value of the boat at date of separation? How much of the debt is left?

Let's pretend the debt is down to $25k and the boat has depreciated down to $200k value.

So now your net worth is $175k. You have had a net worth increase over the course of the marriage of $50k.

That is how much the boat counts. But it's in your name, so you get to keep ownership of it. That net worth increase goes on your side of the equalization.

If your ex's net worth hasn't also increased by $50k over the duration of the marriage, some money is going to have to change hands to account for the difference.

Let's pretend your ex had no boat, and thus her net worth at date of marriage and date of separation was zero both times. So her increase in net worth is zero.

You owe her $25k to make those net worth increases equal. Her net worth is now $25k and yours is $150k.

Right now, the boat is in your name. So you need to come up with $25k cash to pay her. You would have to take out a loan. Your net worth is now $150k and hers is $25k, as required.

But! What if you hate the boat and she loves it and wants it. She would have to take out a loan for $175k to own the boat because that's its value minus what you owe her. You would pay off your remaining boat loan, and have $150k cash left as your net worth. She would have a debt of $175k and a boat worth $200k, for her net worth of $25k, as required.

Or maybe nobody wants the boat, or neither of you can get the required loan. You sell the boat, get the $200k, give $25k to your ex, pay off your loan and have $150k left. As required.

The boat counts, but only the activity during the marriage. Add up all your 'boats' and equalization is finished.

Marital homes work differently. Did you live on the 'boat?'


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