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4 tips to remember about property division

On Behalf of | Sep 9, 2020 | Property Division

It is not uncommon for couples to amass significant assets over the course of a marriage. Whether it is the creation of a family business, the purchase of several properties, the acquisition of multiple investments or an expanding set of retirement accounts, many married couples focus on growing their finances. Unfortunately, when the marriage comes to an end, these assets must be properly valued and divided.

With the ever-increasing complexity of a financial portfolio, it is wise to remember these four tips when divorce becomes a reality:

  • Understand the tax implications of each asset: When dividing marital assets, many couples will simply look at the value of each item. It is important, however, to consider the far-reaching implications of these assets. For example, $1,000 in your savings account is not the same as $1,000 in an IRA.
  • Carefully assess unique financial assets: It’s the simple reality that some assets are worth more to one spouse than the other. Incentive stock options, retirement plans, private investments, cryptocurrencies – these assets might begin to lose their value or favorable tax treatment when transferred from one party to another.
  • Produce a pro-forma balance sheet: It is wise to examine the expected rates of return for various assets during the negotiation of property division.
  • Carefully consider the sale of the marital home: Many couples will immediately decide to sell the family home and split the profits to enjoy a clean division of property. Unfortunately, this might not be the soundest option. Not only could this be a heartbreaking turn of events for your children, but the housing market might be experiencing a downturn. Similarly, a real estate transaction generally entails numerous fees and associated costs so you might only be capturing a fraction of the home’s actual worth. Options can include allowing one spouse to buy-out the other’s stake in the home or jointly owning the home for a defined period of time.

It is important to consider your options both in the present and for your independent financial future. Many divorcing couples would prefer to get through the divorce process as quickly as possible, but it is wise to take your time and carefully consider the costs and benefits of each financial decision.