Ending a marriage requires reasonable decision-making during a very difficult and stressful time. These are some of the most important financial matters that you should consider in a divorce.
Wanting your soon-to-be former spouse out of your life as soon as possible is an understandable emotion, especially if there is abuse. But rushing a divorce can lead to an unfair property division for the more susceptible spouse.
Couples commingle their assets during marriage. It is important, after assuring your safety, to locate and properly value all of your property and debts.
Alternative dispute resolution
Mediation and arbitration are options that can help avoid the cost, time, and stress of going to court. These procedures allow spouses to keep more control over the resolution of issues and assure more privacy.
The value of assets
Property, especially a business, may be valued differently. Each spouse should obtain an independent valuation of significant assets to assure its fair division. A judge, mediator or arbitrator can review both valuations and help assure an equitable division.
Determine the appreciation of an asset that was obtained before marriage to assure that it is properly valued. Consider whether there are additional costs, such as house maintenance, that should be incorporated into the divorce agreement.
Hidden assets
Spouses may try to hide their assets in trusts or overseas accounts or transfer property temporarily to friends and family to keep more of their share of property. A forensic accountant and an attorney may help locate hidden assets.
Court orders can make a spouse produce documents or provide information about their assets or compel financial institutions to provide records of a spouse’s account.
Retirement Assets
Each spouse typically owns their own retirement accounts, but the accounts may have different values. A qualified domestic relations order allows for the division of these assets without penalty if both spouses are at least 59½. It is important to provide for a spouse who worked less to raise their children or made other contributions to the family.
Child support
The financial support needed for the children’s well-being is a significant issue. Each parent’s income, the time they will spend with their children and the children’s age are part of this calculation. Determining support should not be limited to routine expenses. College, medical and health insurance, and extracurricular expenses should be considered.
Divorce may affect college financial aid because many schools assume a contribution form each parent. Other issues include claiming the child tax credit and advanced child tax credit payments.
