Divorces are not easy for either side. As your life splits, it can be challenging to determine how to divide your assets. A judge will try their best to split everything 50-50, but sometimes the reasoning behind their decisions does not seem clear.
For couples that do not have a prenuptial agreement, dividing your assets takes time, money, and a lot of effort. It is important to protect what is yours, but also try to be as civil as possible.
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Key Divorce Terms You Need To Know
There are two definitions that are important to know for divorce, and they are equitable distribution and marital property. They are important to understand why certain decisions are made.
Marital property is property acquired during the marriage. Depending on the state you live in, there are different laws that determine the distribution of this property in a divorce. Equitable distribution is a theory that guides how to divide property and assets in a divorce amicably. They take into consideration how long the marriage was, the needs of each spouse, and the financial contributions each spouse made.
Below are some common topics we think you should be aware of, and hopefully, it will make your divorce go a bit smoother.
Talk To a Professional
There is definite complexity to dividing two lives fairly, and sometimes that cannot be done amicably between you and your spouse. Attorneys that specialize in divorce mediation can work with you through the complexities of divorce. In addition to the wealth of financial help they can give, they are also equipped to help you with contested and uncontested divorces.
Prenuptial Agreements
While these must be set up before marriage, if you have one, the process of divorce can be much easier. A prenup is a contract between spouses that determines how finances and assets will be divided. In general, they are designed to be fair for both parties. Take the time to see if you have one set up already, and look over how your assets will be separated. This will help you determine some future life decisions based on how your marriage is split.
Dividing the Bigger Items
Separating larger items like homes and vehicles is usually one of the biggest points of contention in divorce. In most cases with children, a judge will be more likely to grant the house to whichever spouse maintains custody of the children. However, you should always take into consideration what this means for you.
For example, if you were not the primary breadwinner in the relationship, then bearing the mortgage payments for the home may prove challenging and leave you in a worse position. Take a good look at your situation and determine if it makes more sense to sell the house and divide the earnings with your ex-spouse.
As for vehicles, they are not always granted to the spouse that owns the title. While it depends on the situation, cars can also be considered marital property. The best course of action is to determine the value of the vehicles first and keep in mind that leased cars carry little value.
Debt
Like houses and cars, debt is also split between the two parties. Debts are shared with your partner during the marriage, so naturally, it must be decided who carries these debts. In the best-case scenarios, we recommend paying off these debts ahead of time to save both parties the stress. In situations where both parties cannot come to an agreement or pay off the debt before divorce, a judge will determine the best course of action for dividing it. In most cases, it is split as evenly as possible, but depending on how other assets are separated, the judge may allocate more debt to one spouse over the other.
Joint Accounts
While banks are equipped and experienced in handling the byproducts of divorce, we recommend you close any joint account you have with your spouse. Continuing to use them will affect your credit score.
If you are on speaking terms and can work together, scheduling a time with your bank to freeze the account, close it, and evenly distribute the funds between the two of you is best. This is the recommended way to deal with bank accounts since, legally, the bank is not allowed to remove your spouse from an account. Be sure also to keep track of any direct deposits or auto-pays that the account handles to avoid issues with missing payments and potential problems with your credit score.
With equitable distribution, the court will separate the joint account 50-50.
Retirement Accounts
Retirement benefits earned from work may seem like they belong to the individual, but they can be considered marital property. Due to this, the benefits may need to be shared with the spouse.
For the best results, we recommend leaving it to a professional or to the courts to decide. An attorney will draft a qualified domestic relations order (QDRO) which can give you or your spouse the right to receive a portion of the benefit plan.
At the end of the day, we all know divorce is not a fun process. We hope these tips help you through your separation and guide you toward as equal of a divorce as possible. While we know all separations are not always easy, we recommend being open and honest for as long as you can. Being fair and civil during the process will make it as smooth as possible.
About the Author
Veronica Baxter is a writer, blogger, and legal assistant operating out of the greater Philadelphia area.