Many important legal issues face couples when they end their marriage. This is compounded by the stress and emotions that become involved.
Getting the divorce over quickly and separating yourself from your ex-spouse is tempting. But rushing this process can cause problems such as an unfair division of property. Keep these financial issues in mind.
Valuing assets
Each spouse should have their independent valuation of significant assets to assure they are divided equitably.
Some assets, such as a business, may be complex. Also, houses and other assets change in value over time. It is also important to factor in additional costs such as refinancing the mortgage and paying taxes and maintenance for the house.
Hidden assets
A spouse may try to hide assets in trusts, foreign accounts and through less sophisticated methods like transferring assets to a relative or friend. Take the time to look for hidden assets.
Courts may issue orders requiring a spouse to produce documents or respond to questions about their property. Financial institutions may be required to produce account records.
Debt
Look for all marital debt. Order and review each spouse’s credit reports from the three major credit bureaus. This may reveal hidden credit cards, vehicles, student loans, personal loans, mortgages, and other consumer debt.
Creditors may seek unpaid debt from the spouse who did not acquire that debt in some cases, such as jointly held credit cards. It is important to find these liabilities, pay off and refinance them and gain financial independence.
Retirement assets
Retirement assets may not be jointly owned. But there may be a significant difference in the value of assets held by each spouse. Spouses often lose the opportunity to obtain these assets by staying at home to take care of children or other family members.
Courts can issue a qualified domestic relations order which allows the fair division of retirement assets such as 401(k) plans or IRAs. The account holder or recipients do not incur early withdrawal penalties even though they receive money from these assets before they are 59½.
Child support
Child support calculations involve numerous calculations such as the amount needed to support them, each parent’s income, the time the child will spend with each parent and their age.
Child support decisions should involve daily living expenses, future education costs, medical expenses, health insurance premiums and costs for social activities. Many spouses purchase a life insurance policy as part of the divorce settlement to assure payment of child and spousal support.
Attorneys can assist spouses with obtaining a fair [property division. They can also help protect their rights in legal proceedings.