Divorce can be a stressful process but if the spouses can negotiate and talk to each other, it can be a bit easier. What can sometimes be called the most stressful part is dividing the property. It is at this point that it is important that the divorcing spouses be willing to negotiate to arrive at a mutually beneficial property settlement agreement. It is sometimes better to put as much effort as possible in negotiating your settlement agreement because what cannot be negotiated will be settled in court. However, due to the stress and emotional toll divorce can have on a person, they sometimes don’t think clearly and overlook some things. The following are a couple of assets that should be thoroughly examined.
Checking and savings accounts, along with cash, stocks, bonds, savings bonds, and mutual funds can all be defined as financial assets. If one of the spouses did not have income from a job or has the lower income, they may have a greater interest in these assets as they may vital to supporting their living expenses.
Pensions: Pensions pose unique issues in divorce settlement agreements because the current value of a pension is somewhat difficult to determine. It is usually best to have a financial professional examine any pensions to determine their actual value.
Annuities: annuities pose unique issues in divorce settlement agreements because the current value of an annuity is somewhat difficult to determine. It is usually best to have a financial professional examine any annuities to determine their actual value.
Accounts With a Stated Value: Accounts that have a stated current value such as bank accounts, stocks and other liquid financial assets are usually fairly easy to determine their current value.
Qualified Retirement Accounts: Qualified retirement accounts should not just be liquidated as a part of a divorce without consulting with an accountant first. Qualified retirement accounts such as 401(k) accounts, IRA, etc. can be divided with a Qualified Domestic Relations Order (ODRO) with no tax penalty. However if they are just liquidated, they will usually be subject to a significant tax penalty.
During the division of property, you are going to need to list any personal possessions you might have so that it can be figured out how they are going to be divided. Personal items often include big items like cars, motor homes, or boats to small but valuable items like jewelry, photos, or furniture. It is also important to keep the value of the assets in mind, sometimes it will cost more to litigate for an asset than the actual asset is worth. It is also advisable for both of the divorcing spouses to keep a copy of joint tax returns, at least up too the past six (6) or more years.
Your marital home and any other houses you may have along with business properties, timeshares, rental properties, vacation properties, and any rental properties can considered real estate. It is important to list any of the mentioned real estate and discuss on how they will be divided. In some cases, one of the spouse offer to pay the other spouse for their half of the real estate. If it is determined that the real estate should be sold, then it needs to be figured out who is going pay the expenses until the property is sold, how will the proceeds be divided, and whether the spouse that is paying the expenses be reimbursed and how.
Typically, the spouse who takes the real estate property will have to pay the mortgage or debt for that property. However, this does not mean that they are solely responsible for that debt if it is considered to be a joint debt, unless the spouse who kept the house refinances the mortgage, both of the spouses are still responsible for it. It is advisable to include that the other spouse must refinance after the divorce, that way the other spouse is cleared from the debt. However, if during the marriage only one of the spouses incurred the debt, then after the divorce, only the spouse that incurred is liable to pay it back, for example, credit card debt.
A limited liability company (LLC), sole proprietorship, partnership, or corporation are examples of a business that is being closely held. When it comes to dividing a business, there are typically three (3) ways to resolve it.
- Co-ownership: In a co-ownership, both of the spouses continue to operate the business after the divorce. This is generally one of the least sought out solutions due to the fact that the spouses will have to see each other and work together after the divorce. In some cases it can be prosperous, but that will happen if the divorced spouses can stay respectful.
- Sell the Business: The upside to this option is that the divorced spouses may profit and use that profit to start their own ventures, they also avoid any financial ties to each other. The downside is that it may take some time to find a buyer for the business.
- Buy Out Your Spouse’s Interest: This is one of the most often decided solutions, one of the spouses keeps the business and pays the other one for their portion of interest in the business. If the buying spouse does not have the financial means to purchase the selling spouse’s share, they can buy using other methods, like with the equity in a home, IRA’s or retirement plans, or other property that is valued the same as the share of the selling spouse.
Sometimes life insurance plans are overlooked in the grand scheme of divorce and are remembered near the end of the divorce process. It is good to look these over and decide to how to divide them when the negotiations are happening. Some life insurance plans have cash value, so it possible to borrow money from them or cash out the plan for what it is currently worth in exchange for the payment upon death. Other plans that have no cash value could still be valuable to the spouse that no longer has insurance.
Obtaining Help in Your Case
If you are facing divorce and would like to explore your options for dividing assets in the context of an uncontested divorce, call us at 770-609-1247 to speak with one of our caring and experienced uncontested divorce attorneys. Contact >