When you and your spouse make the decision to divorce, you need to start thinking about how to divide your property.As simple as personal items and household goods, or as complicated as real estate, investments, and retirement accounts, it can be done.You and your spouse can make a choice.You can either live with what the judge decides or you can create a fair and amicable property division settlement.
Step 1: Understand equitable distribution.
The law of equitable distribution is followed by most states.This does not mean split the middle.It means fair, based on factors including the earning power of each spouse, contributions during the marriage, age and health, and future financial needs. If you create a property agreement with these requirements in mind, you are increasing the chances that the judge will accept it without amendment.In California, Texas, Arizona, Idaho, Louisiana, New Mexico, Nevada, Wisconsin and Washington, the standard is community property.The assumption is that there will be an even split of property held in the name of both spouses.The presumption is that there will be a 50% split of the assets.
Step 2: What is separate property and what is wife property?
Marital property is assets that were acquired during the marriage.Whether it is tangible items such as furniture or intangibles like investments or retirement accounts, all marital property is subject to equitable distribution or division as community property.Real estate, vehicles, inheritances, and heirlooms can be included.Unless it is co-mingled, separate property goes to the owner with no claim by the other spouse.The lines are blurry when couples share the same property.One spouse can use inherited money to make improvements to the other spouse's house.If you can't agree on how to divide your property, you should consider hiring an attorney.
Step 3: Determine an asset valuation date.
The value of your property needs to be fixed on a date with you and your spouse.This is important for volatile assets.You can get an updated balance on retirement accounts and interest-bearing financial accounts.For asset trading purposes, calculate the equity in the real estate.The statement date for the mortgage payment is a good day to affix a value to the house.The appraisal and pay-off amount are needed to calculate the equity.
Step 4: You have a right to claim your property.
The easiest pieces are clothing and personal accessories.There shouldn't be an argument about these items.You may need the help of a lawyer or mediation if you disagree.
Step 5: Take the household goods.
This category can be split evenly, as each side takes a certain number of place settings of china.One party wants small appliances in the kitchen while the other wants sporting equipment.The stress of a disagreement should be weighed against the monetary value of the items.
Step 6: You should separate the furniture and decor.
There may be a mixture of separate and acquired pieces in the marital residence.Equity says heirlooms should be separate property even if both parties use an item.You and your spouse can divide the furniture if it is fair and reasonable.The spouse with primary residential custody should keep children's furniture.
Step 7: They should assign the vehicles.
Vehicles can be either marital or separate property depending on how they were purchased.Allow equity and fairness to dictate your decision.If you own two cars, you should know that the court will award one to each party.Each party will usually keep their vehicle.It is expected that each will keep any loan debt associated with the vehicle.
Step 8: The sentimental items are worth considering.
They should be divided evenly.Each party has a share of family photos, souvenirs, and collectibles.Make copies of photos and documents for each party.
Step 9: Don't keep an empty inventory.
As you and your spouse decide on the division of your personal property, you should keep a list with each party initialing it.It can help deter arguments later.If necessary, this inventory can be attached to the settlement agreement.It is proof that the property division was handled fairly.
Step 10: Decide if real estate will be divided or sold.
If both parties agree to a sale, you should contact a real estate agent as soon as possible to begin the process of appraisals, valuation, and staging the property for sale.
Step 11: If transferring equity is the best option, consider it.
One spouse takes over full ownership of the property in an equity transfer.The other party can take a cash payment or a bigger share of another asset in exchange for their equity if you are planning on an equity buy-out.
Step 12: How should separate real estate be handled?
Real estate can be considered exclusive property if it was owned by one party before the marriage.If both parties shared in the use and benefit, then the property may be ripe for equitable distribution or community property.The spouse can give other assets to the other party or stand firm.Seek legal assistance if you and your partner can't agree.The judge will make the decision if you can't agree.
Step 13: Pick out the retirement accounts.
Private funds may be employer-based.Retirement accounts include 401(k) plans, IRAs, pensions, and trusts that mature at retirement age.The mutually agreed-to valuation date is when you will need statements for each account.If your retirement plans are simple, for example, each party has a plan from their employer, you can agree that each will retain their own plan without distribution to the other.Other assets can be ceded to make up the difference if there is a significant disparity in balances.
Step 14: Determine which law covers which plan.
You will need to know which federal law pertains to the distribution if you have a variety of retirement plans.If you don't correctly categorize your retirement assets, you could face tax consequences in the divorce.If you don't know how to handle different accounts, seek the assistance of a lawyer or accountant.You can get tax breaks for your contributions to a qualified plan.This also includes 401(k) plans.A Qualified Domestic Relations Order is used to split qualified plans.A QDRO is a court order instructing the plan administrator to pay a portion of the balance to the spouse.50 percent of the assets dated from the time of marriage to the date of divorce is the amount.The receiving spouse is responsible for taxes and penalties.A QDRO is a very specific document that needs certain information to be valid.The procedure called "transfer incident to divorce" splits IRAs and other private retirement accounts.Individual retirement accounts can be designated to one spouse in a property settlement.Depending on the decree, the financial institution will either treat it as a distribution or a rollover.Penalties and taxes can be triggered by poorly worded QDROs.The IRS may require amended tax returns if the court does not approve the transfer.Unless you have significant legal or financial experience, you shouldn't write your own QDRO.These documents can be prepared by a lawyer or account.
Step 15: The division of military benefits should be evaluated.
Military pensions and survivor benefits are some of the most difficult subjects to discuss in divorces.The Uniformed Services Former Spouses' Protection Act (USFSPA) states that military benefits should be discussed with a lawyer.There are several things to consider when dividing military benefits.Either the date of the marriage or the entry into service is the accrual date.The marriage must have lasted at least ten years.The rule is called the 10/10 rule.The order needs to specify if the calculation is based on Gross Retirement Pay or disposable retirement pay.If one spouse is on active duty during the divorce, the requirements of the Service Members Civil Relief Act must have been met.The non-military spouse can enroll in the plan.After the divorce, non-military ex-spouses can apply to the military to begin payments.A certified copy of the decree showing the property settlement that orders division of military pension benefits is required.Lawyers for active duty soldiers and retirees can be found in the Judge Advocate General's office.Make sure the attorney knows how to handle sensitive financial matters related to divorce.