A divorce settlement is often a scary thing. Your life is taking a turn you never really expected, with major consequences.
You’re not alone — especially if you’re older. Among Americans 50 and older, divorce rates have almost doubled since the 1990s.
Divorce is intimidating, but there are ways to make everything easier. Keep reading to find out what happens when you divide your assets, and the best way to go about it.
First things first: what happens in a divorce settlement?
The long and the short of it is that “ours” transitions slowly (and not always easily) to “yours” and “mine”.
But it’s not like when you were kids and fighting over a shirt.
What happens to your property after divorce is a legal process that decides who has legal ownership of your property. And it can have a major bearing on your financial future.
Preparing to Divide Your Assets
It’s not as simple as eeny-meeny-miny-moe. When divorces happen, it’s a big change from the future you thought you were going to have when you got married.
And not just growing old together. You had certain ideas about financial security, where you were going to live, etc.
Now, you’re faced with dividing assets that were intended to be shared when you acquired them.
Unless you’re one of the lucky few who can sort through a divorce amicably without tears, frustration, or arguments (chances are, you’re not) then you need to be prepared for what happens next to make the process as smooth and painless as possible.
Here are five things to keep in mind before you jump down the rabbit hole and start divvying up your assets.
Know Your State Laws
Dividing assets in a divorce settlement aren’t just about dividing up the pots and pans. It’s about dividing assets with one eye on your short-term and long-term financial security in mind.
This is where state laws come into play.
But they also vary widely from state to state, so it’s important to know your state’s exact laws on assets in a divorce.
All states have adopted laws relating to the fair distribution of marital property, but fair isn’t the same thing as equal. And that’s where you run into problems because both parties want to get their share.
Know What’s Separate vs Marital Property
Part of state laws deals with separate property versus marital property and how the two are handled in divorce.
If you don’t know what those are, it’s time to brush up.
Separate property is any property acquired before marriage, after divorce, by gift or inheritance during a marriage, or via separate property funds during a marriage.
Marital property refers to property acquired by either spouse during the course of the marriage. Generally, any property acquired during a marriage is considered marital property regardless of whose name the property is under or how it’s titled.
Generally, the two don’t mix. But, separate property can lose its status as separate property if you comingle. For example, if you own an apartment as separate property but add your spouse, it’s no longer separate property.
The separate property that was yours before remains yours. But marital property, even if it wasn’t in your name (like a house or a 401k) is fair game.
Get an Attorney
Let’s be honest. If you’re getting divorced, you need to have a divorce attorney.
Even if you had what seemed like the best relationship with your spouse, the truth is, if you’re getting divorced, things went sour somewhere.
And while there are divorces that proceed amicably, that usually isn’t the case.
In most cases, you need a mediator. They’ll make sure that an equal split is actually an equal split.
There’s also the laws — whatever research you can do, a trained lawyer knows the laws better than you.
Make a List, Check it Twice
Before you ever start a discussion over who gets what, you should know what you’re dealing with.
Make a list of all the assets you have. This should include things like joint property, securities, bank accounts, all vehicles, household items, valuable collectibles and retirement plans. And by everything, we mean everything.
The easiest way to do this is for spouses to make the list together that is honest and fair. It will also save you a lot of trouble later.
What happens after that can get messy, especially if you’re trying to determine who will keep the house. Often, if you have children, it will go to the parent with primary custody, but it’s not a guarantee.
If you don’t have children, well, things are both a lot less messy and a lot messier.
Choose an Asset Valuation Date
This is an important step in the divorce settlement process and one you can’t afford to overlook.
Once you’ve listed out all the property you have between you, you’ll need to choose an asset valuation date. Basically, this is the date when you and your spouse agree to fix the value of your property (an important step with volatile assets like investment accounts).
Since the value of the assets can change day-to-day or week-to-week, the valuation date sets a hard value on the assets being divided, even if the value changes since the assessment.
And above all, when you can manage it, try to play nice.
It isn’t just for the sanity of all involved parties (including your children). Making a divorce settlement as amicable as possible is the easiest way to make sure a divorce doesn’t turn into a long, expensive process where courts determine the value of your assets and who gets what.
The most efficient and painless way to handle a divorce is through property division agreements without trial. But the only way for that option to work is if everyone agrees to get along as well as possible.
Making Sense of a Divorce Settlement
Divorce can be a scary thing. But it can be a lot easier with the right advice from the right divorce lawyer.
Check out our blog for tips on how to best handle divorce, like these tips for co-parenting after divorce.
But if what you really need is sound legal counsel, then it’s time to use a trusted local divorce attorney.
We offer free phone consultations. Head to our contact page to get started.