Dividing Assets: What to Do in a Divorce
Dividing Assets: What to Do in a Divorce
In a divorce, what was once called "ours" splits into "his" and "hers." While you can easily agree not to live together, what will happen to the things you've worked so hard to acquire? Dividing the marital assets can be one of the most difficult tasks faced by divorcing couples. But, if you and your soon-to-be ex can agree on dividing some of the most commonly contested assets, you may enable the divorce go a little more smoothly.
All is fair but not equal in love and divorce
Dividing a home, vehicles, securities, valuable collectibles, retirement benefits, and household items are where couples run into difficulty. Before a divorce is granted, all assets must be divided in a way that is satisfactory to both parties.
Since state laws vary, it's vital to understand your state's exact laws on assets in a divorce. For example, in community property states, spouses retain ownership of anything owned before marriage including an inheritance. While all states have adopted regulations that apply to the fair distribution of marital property, remember: fair distribution may not always be equal.
Make a List, Check It Twice
The first course of action in a pending divorce is to make a complete list of all assets. The simplest option is for spouses to make a list together that is honest and fair. Items that must be listed should include the home or any joint property (land, a vacation home, lake cabin, etc), all vehicles, bank accounts (including full balances), securities (stocks, bonds, money market accounts, CD's), valuable collectibles (a restored classic vehicle, antique collections, coin collections), household items (furniture and appliances), and retirement plans. Joint-owned items might also include boats or other recreational vehicles.
If Possible, Play Nice
If spouses can make a list in an amicable way, they can prevent the expensive and slow process in which a court determines distribution of assets. Spouses often communicate via their individual attorneys to negotiate an agreement. If spouses can come to agreement together or with the assistance of attorneys, a property division agreement can be signed and a simple divorce granted.
Disputes over distribution of property can arise when spouses are not in agreement. In this case, a third party needs to be brought in to come to an agreement. Divorce mediators can be hired or divorce attorneys can handle the task. To determine what property is involved, attorneys can question the spouses, request documents (such as deeds), and take depositions from others to determine ownership, or make a request for a formal disclosure. Formal disclosures, while complete, take time and can slow a divorce.
Ninety percent of divorces granted in the United States today are settled without a trial through the use of property division agreements. Some couples may require some negotiation to reach a final agreement but if possible, this is the most efficient and inexpensive route to settling assets. Several key points must be considered when resolving distribution of property issues.
How to Divide a House and a Car
Determining which spouse will retain the family home is often a major issue. If children are involved, judges will often grant the home to the parent with primary custody of the children but it is not a guarantee that the home will go to the spouse who has primary physical custody.
Vehicles are another area of dispute in many divorce proceedings. Contrary to common belief, vehicles and other property are not necessarily granted to the spouse who holds sole title. Even a vehicle owned by one spouse alone may still be community or marital property. The first rule of thumb in determining vehicle distribution is to know the value of the vehicle. This can be found in automotive industry Blue Books or by visiting several reputable used car dealers. Leased vehicles may have little value.
Household items as well as valuable collectibles should be split in agreement between the spouses. Although the debate over who may receive a piece of antique furniture may seem volatile to the parties involved, it's best for the interests of both spouses to determine division without outside intervention.
The Hardest Splits - Retirement Benefits and Family Businesses
Retirement benefits are another source of contention in many divorces. Many working spouses believe that the ownership of retirement benefits and plans belong to the individual, but this is not always the case. Retirement benefits may be considered marital property and the other spouse may be entitled to some portion of payment or value. If a retirement plan is involved, it's best to ask an attorney to include a QDRO (Qualified Domestic Relations Order) document which will help determine whom receives what from the plan.
Perhaps the most complicated property division issues stem from family owned businesses. The value of the business, both at present and for future profit, must be considered. Most small businesses that are owned jointly by two spouses can be divided without dispute. Options include a buy out agreement in which one spouse buys out the portion owned by the other spouse. One spouse receives the business while the other receives financial compensation. Payments from a co-owned business can be made over a specified period to insure that both spouses gain from any financial success. Also possible are separation clauses, in which various facets of the business are given to each spouse. Some spouses may be able to remain business partners after a divorce but this is not common.
Dividing the assets in a way that suits both spouses makes for the optimum divorce. Agreements over property divisions can speed the divorce process and keep communication lines open; a vital necessity for couples with shared custody of minor children. The key to amicable division of assets lies in cooperation and willingness to be fair. Specific information within each state should be gained from a practicing attorney to protect all parties.
Although your marital property will not survive a divorce intact, it won't be destroyed either. The better you can work with your ex-to-be, the more you both can retain.
If you’re going through an uncontested divorce, LegalZoom can help you. We can help you prepare the complicated court paperwork you need for your uncontested divorce. Start by answering questions about your divorce, we will check your answers for consistency, then assemble and mail you the final documents along with detailed instructions for how to complete your divorce.