Understanding the Financial Aspects of Divorce
In any divorce one of the most primary and contentious areas is the division of assets. Splitting the equity in the home and the credit card bills, agreeing on child support and who keeps what can lengthen negotiations, bring up bitter arguments and send couples to court. Understanding what assets may come under fire will better prepare you for divorce proceedings.
Assets that you can keep after divorce
There are certain kinds of assets that are, in theory, yours to keep after the divorce.
- Money or other assets acquired prior to the marriage (note: absent a prenuptial agreement and depending on the length of the marriage, these assets may be fair game as well)
- Separate gifts received during the marriage, which were clearly intended by the giver to go to only you — this includes heirlooms, sentimental gifts, etc.
- Inheritances are also considered separate property
The issues become complicated when assets and cash are “commingled” with join money. For example, if you bought a house together and one of you provided the down payment, but the mortgage was paid for by one or both spouse's salary (which is joint property), who gets the house in a divorce? This is one example where a qualified attorney can help you sort through the mess.
Assets likely to be split in a divorce
These are the kinds of assets most likely to come under scrutiny for valuation and division during the divorce:
- Real estate, whether the family home, investment property or commercial
- Stock options and business interests
- Professional license, especially if it was earned during the marriage
- Jewelry, collectibles or other valuable personal property
- Retirement assets such as IRAs and 401k plans
Valuating these assets properly and professionally is critical. Often in the heat of a contentious divorce, assets are moved or transferred to a third party or their valuations adjusted to benefit the spouse who controls them. Having legal advice early in the process can prevent such actions, or can uncover and unwind them if they are discovered in time.