Whatever may be the reasons for a divorce, there’s no denying the fact that it takes a severe toll on you, your emotional wellbeing, finances, and every sphere of your life. Although it seems like the last thing you want to hear when going through the hurt, it’s advisable that you keep a clear head when managing marital assets after a divorce.
How you conduct the division of all your property can affect the future financial stability of each of you, as well as the kids, if you have any. Like the folks at Jezic & Moyse advise, hiring legal counsel is a smart option. Not only can you deal with the legalities of ownership, but it helps to have a fair mediator when the two of you can’t seem to have a conversation without arguing.
Do You Have a Pre-Nup?
A pre-nup or pre-nuptial agreement is a document that many couples opt to draw up before they tie the knot. This legal contract outlines how the participants will be managing marital assets after a divorce. If you have one, splitting the estate according to the clauses in the agreement is easy. But, if you don’t have one, the court dictates the sharing of the movable and immovable property according to their present and future values. The settlement will also take into consideration the current lifestyle you both have and make provisions to maintain it after the split. You should also know that each state has their own laws about the equitable distribution of your belongings. Engaging the services of expert legal representation can help you understand the laws, so you have a clear view of the taxes you’ll incur.
Understanding What Constitutes Individual Property
When managing marital assets after a divorce, know that individual property or separate property belongs to you solely after the settlement. Check this article on FindLaw, and you’ll understand the assets you’re entitled to claim rightfully.
- Any assets clearly mentioned in the pre-nuptial agreement
- Any assets you owned before marriage including bank accounts and other belongings
- Any inheritance or gifts you received before or during the marriage
- Any assets you purchased during the marriage using your personal funds and not used by your spouse or for the benefit of the union
- Any assets you acquired by way of personal injury settlements; however, compensation for lost wages does not form a part of your individual property
- Any property you purchased during the marriage with the intention of using and maintaining it separately from the marriage
- Any assets that have a title clearing stating that you’re the sole owner
While individually-owned assets certainly belong to you alone, know that any acquired debt is also only yours. Spouses cannot be held liable for any commitments if they have not been beneficiaries of the debt.
Understanding What Constitutes Community Property
According to the law in some states, all the property that couples acquire using the earnings during the marriage is considered community property. As explained by this feature on Nolo, the state expects that both parties will have equal shares in not just the assets, but also in any debts they incur. Of course, if the creditor considers the separate property of one of the spouses, only that individual is responsible for the debt. Certain states have common law regulations. If that law applies in your state, all property will be divided equally regardless of when it was acquired. That is, unless an agreement clearly indicates that a specific property belongs only to one person.
When managing marital assets after a divorce, you’ll also want to take into account any 401(k) and retirement funds the two of you own. Dividing these funds can be a complicated legal process. For this reason, it is advisable to consult an expert lawyer who has the necessary knowledge and expertise to guide you.
Several Factors Influence the Division of Assets
The courts take into account several factors when working out how the assets and belongings will be divided between the divorcing couple. Here are a few of the important ones outlined by the Forbes magazine that you should know about when managing marital assets after a divorce.
- Duration for which the marriage lasted
- Lifestyle standards the couple built during the union
- Financial condition of each spouse at the time of the divorce
- Income, property, and any other assets each spouse brought into the marriage
- Physical and emotional condition of each spouse
- Age of each spouse
- Income and earning capabilities of each spouse
- Any support one spouse may have extended toward the business, educational qualifications, training, or earning abilities of the other spouse
- In case the couple has children, the law takes into consideration the funds and other resources that will be needed to take care of the kids while they live with the parent having custody.
Taxation Laws on Alimony Have Been Updated
As a couple working out alimony payments and managing marital assets after a divorce, know that new laws have been implemented. These regulations will influence how earnings are viewed by the law. According to the Tax Cuts and Jobs Act, which will become applicable starting on January 1st 2019, spouses receiving alimony will no longer pay taxes on the income. However, the updated laws may also raise the Discretionary Spending of the spouse making payments toward alimony and child support. Discretionary spending is the sum left behind after deducting all expenses including taxes, spousal support, and housing, among others. If you’re filing for divorce in the year 2019, consult an expert attorney for information about how the new regulations will affect your income. Consequently, you might see unexpected changes in the assets you were expecting to receive after the divorce.
Dividing your assets and working out your financial status after a divorce can be a complicated process. It is best that you work with an expert lawyer who can offer you practical advice on how to manage your assets, earnings, expenses, and debts.
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