Few times of crisis require immediate, clear-headed financial thinking like a divorce. From the time of the split to the signing of the settlement, both parties will face making those decisions in a whole new context – alone and with an adversary. In even the most amicable split, the decisions about who gets what can come with emotional baggage.
Knowledge, as Sir Francis Bacon wrote in the 16th century, is power, so arm yourself by gathering every detail of information on your finances. Request your credit report – you are entitled to one free copy a year from the three major reporting agencies – and check what you and your spouse owe. Open individual bank, credit card and brokerage accounts. Close all joint accounts – a sometimes tricky task if those accounts are sizable. Your attorney can help make sure you get your share of liquid assets.
At some point, one or both of you will leave the family home. This can be the most agonizing split because of the emotional bonds the home represents. Remember that home ownership involves a great deal more financial obligation than just a mortgage payment. The partner who gets the house also gets the taxes, the utilities, the upkeep and the payments to the spouse being bought out – all on one salary instead of two, or on no salary at all if the spouse has stayed at home.
If your assets as a couple include a business or items like antiques or collectibles, you’ll need a clear view of their value as well as any hidden costs. You may need the help of an appraiser or forensic accountant to ensure that what looks fair on paper will be fair when the settlement is finalized and, down the road, when assets are liquidated.
There’s no single best way to split assets during a divorce. Your best defenses are to be informed about your assets and liabilities and to select a team of trusted professionals to help you weigh the pros and cons of different options.
If you or a loved one faces a divorce, a certified financial planner can assist in evaluating investments and making adjustments for the future, and typically they will work with attorneys and accountants to ensure you or your loved one has the information you need.
Homes – The average value of a single family home in the U.S. as of Sept. 30, 2012, is essentially unchanged (actually down 1.6 percent) from the average value nationwide as of Sept. 30, 2004, i.e., flat over the past eight years (source: Federal Housing Finance Agency, BTN Research).
That’s All? – Only 131 million Americans voted four years ago in the November 2008 presidential election, representing 56.7 percent of eligible voters nationwide (source: Presidentialelect.org, BTN Research).
Big Bucks – The average cost for one year of college education at an in-state public college is $17,860 for the 2012-13 school year (including tuition, fees, room and board). The total one-year cost has increased 5.9 percent per year over the past 30 years. If that same rate of inflation continues, then a first grader today will pay $155,277 for his or her four years of education at an in-state public college during the years 2024-28 (source: College Board, BTN Research).