Jon and Anne have been married for 5 years and are now in the process of getting a divorce. They bought their family home together with joint funds 3 years ago. Jon bought a truck 2 years ago with his own money. Anne still owns a summer cabin she bought a year before she met Jon.
1. If Jon and Anne are trying to divide up their family assets, what information is needed? Select all that apply
a) How much the family home is worth today
b) How much the truck is worth today
c) Who used the truck the most
d) What is the increase in price of the summer cabin since they were married
e) What is the increase in price of the summer cabin since it was bought
ANSWER: A, B, D
2. Consider the current values of the assets below what assets are Jon entitled to?
a) 100% of truck
b) 50% of the family home
c) 50% of the truck
d) 50% on the increase in value of cabin
e) 100% of the cabin
ANSWER: B, C, D
Jon’s total entitlement would be...
3. What assets are Anne entitled to?
a) 50% of the family home
b) 50% of the truck
c) 50% on the increase in value of cabin
d) 100% of original value of cabin
e) All of the above
Anne’s total entitlement would be
Anne’s cabin would be considered “excluded property.” Therefore Jon would only be entitled to half the increase in value of the cabin. The cabin has increased in value by $50,000. Anne’s share for the cabin would be $425,000 while Jon’s share would be $25, 000.
Jon and Anne’s apartment would be considered a family asset as would the truck. Jon and Anne would be entitled to 50% of the home and the truck which amounts to $308, 000 each.
4. Anne is still paying back student loans she took out 7 years ago. She owes $22, 000 on them. Jon received his credit card bill the day before he and Anne decided to split. The amount owing on his personal credit card was $10,000. How are they to split the debts?
a) a) Anne pays all of student loan
b) b) The student loan is split evenly
c) c) The student loan is split but Anne pays more
d) d) The credit card debt is split evenly
e) e) The person who doesn’t pay for the student loan pays for the credit card.
ANSWER: A, D
$70,000 + $50,000 = $120,000 total income
According to the law, Jon’s credit card debt would be family debt, since it was incurred while they were together. Anne’s student loan, which she incurred before the relationship began, would not be a shared debt. Therefore, Jon and Anne would be responsible for $5000 each of the credit card debt but only Anne is responsible for her student loan.