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Is it possible for us to just draw a line straight down the middle of our home and belongings and call it good? If only distributing the family assets, belongings, liabilities, and properties in a divorce were as simple as a sitcom premise. As you continue to work through the emotional rollercoaster of a divorce, it can be a negotiation logistical nightmare. It leaves each person wondering if an amicable division of the life and belongings you have built together is still possible? To help you with this process, there are 6 questions to ask when dividing property in a divorce.
Documentation and Research
Getting down to the nitty-gritty, there is a lot of documentation and research you both have to do. You need to know everything from listing your property at market value in accordance with what was current at the time of the original filing for divorce, in addition to what is owed on it.
As an example, let’s say you bought a Tesla Model S that you purchased for $85,000 (It’s my dream car! Please bear with me.) In this scenario, you both bought the car two years ago and it may only be worth $50,000 today after mileage and usage. If you still owe a balance of $11,000, who gets the car? This is a conversation on only one item in a household, looking to find two final destinations. It is far from a simple process.
When the gloves are off and the boxes are open, you need to discuss which items are marital property and non-marital property. If you owned the item before the marriage, it is considered non-marital property and therefore is yours to keep. If compromising is easy with your former spouse, you could negotiate to relinquish these items to each other. Gifts and symbols of affection you gave each other are technically not considered marital property. That engagement ring or the set of golf clubs are not considered marital property either.
The gauntlet of discussing your monetary assets is never an easy one, so we will dive into this sensitive topic a bit more in-depth. First, open up the books and discuss the financials of the equity in your house, bank accounts, life insurance, retirement accounts, stocks, and other miscellaneous joint assets.
Second, consider your retirement accounts by going off their current value as if you were retiring today. Third, examine any existing loans and debts you may have shared at the time of your filing. For example car loans (like that Tesla Model S discussed earlier), your mortgage(s), credit card balances, and other debts.
Where to Start
Here is a solid checklist of six questions to ask when beginning the marital property division process:
- What are the items that you really want?
- What items are you hopeful of being able to keep?
- Which belongings do you personally not care about?
- What are the items your spouse specifically wants?
- What items is your spouse hopeful about being able to keep?
- Which belongings does your spouse personally does not care about?
Ultimately, you need to ask what are each other’s expectations of your monetary assets.
If you are a woman that is recently divorced or going through the process, you may share the #1 fear of divorced females, which is the fear of running out of money. There is an extremely helpful course offered by Laurie Itkin, financial advisor, wealth manager, and certified divorce financial analyst (CDFA). The Woman’s Guide to Financial Independence After Divorce can help you take ownership of your financial future.
In these negotiations, always remember to protect yourself. A good practice is to close or freeze joint accounts. Another key step is to keep track of debts accrued or paid throughout the divorce. Keep a current list of all your assets. Compiling all of this will give you a better picture of the total assets you will redistribute between yourselves.
Yes, this can all be very daunting! Fortunately, there are procedures and documents available to you in order to properly sort this out. Forms are available at the courts that allow you to itemize and add up the collective assets, and where they’ll be divided.
Depending on how your rapport with your soon-to-be ex-spouse has been going during the separation, this can go smoothly. The key is to keep the communication going, and documented of course. Working together is essential to mapping out the fair division of what you had amassed together.