Dividing Assets In A Divorce

Dividing Assets In A Divorce

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 investments, a business or items like antiques or collectibles, you’ll need a clear view of their value as well as any hidden costs. On investments, for example, you will pay taxes on capital gains from sales, and those gains can vary depending on the purchase price, or cost basis. You may need the help of an investment professional, 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 financial advisor can assist in evaluating investments and making adjustments for the future. They will gladly work with attorneys and accountants to ensure you or your loved one has the information you need. Call your financial advisor to schedule an appointment.

FINANCIAL FACTS

Triple — The total market capitalization of the U.S. stock market was $22.9 trillion as of March 31, 2014. At its bear market low on March 9, 2009, the total market capitalization was $8 trillion (source: BTN Research).    

With And Without A Degree — The nation’s unemployment rate as of March 31, 2014, for Americans lacking a high school diploma is 9.6 percent. The nation’s unemployment rate as of March 31, 2014, for Americans with at least a Bachelor’s degree is 3.4 percent. The nation’s overall unemployment rate is 6.7 percent (source: Department of Labor, BTN Research).    

Next Year — The enrollment period for 2015 health insurance coverage obtained either through the federal exchange or through an individual state-run exchange will begin on Nov. 15, 2014. Health insurance companies will submit proposed 2015 premiums to state regulators by early summer 2014 (source: Affordable Care Act, BTN Research).