What Constitutes the Marital Estate?

Basic Definition

The "marital estate" is defined as everything a husband and wife own and everything they owe.

In legal and accounting terms, the assets and liabilities of the couple constitute a marital estate. As the following equation shows, the estate is what is left over after subtracting what is owed from what is owned: 

            +  Assets (everything owned)

            –   Liabilities (everything owed)

            =  Net Marital Estate 

This formula is used by all courts when determining marital estates—whether it is indicated as an accounting equation, written out in text, or presented in numerical format.

Begin with Complete Disclosure

Both parties in a divorce must begin with a full disclosure of all their liabilities and assets when preparing a marital estate summary. Disclosure may come about by mutual agreement, legal discovery procedure or a divorce manager mandate. The form of disclosure is not critical; what is important is the completeness of disclosure. Two major reasons exist for this:

1. Credibility and trust are crucial when the parties are attempting to come to agreement on the marital estate and reach a negotiated settlement. The chances for achieving a peaceful agreement are severely minimized by the discovery of undisclosed assets during the divorce process. Additionally, the judge may exhibit little sympathy for any party that attempts to hide marital assets.
2. In some areas, a failure to completely disclose is penalized. For instance, a hidden asset may be granted in its entirety to the damaged spouse if it is discovered subsequent to the divorce.

Assign Preliminary Values

Once disclosure has been made, the liabilities and assets should be assigned preliminary values. If initial values were given to the liabilities and assets during the disclosure process, those figures may be utilized as a starting point when preparing the marital estate summary.