In as much
as the fifty states have differing divorce laws,
one aspect of divorce is fairly uniform. Dividing
the marital property will be done by one of two
methods:
Community Property Division
In community property states, each
spouse is entitled to one-half of all the property
acquired during the marriage. There are nine such
states. They include: Arizona, California, Idaho,
Louisiana, Nevada, New Mexico, Texas, Washington
and Wisconsin. Separate property, or non-marital
property isn't included in property division in
community property states. "Separate Property" includes
property or businesses owned prior to marriage
or living together, gifts and inheritances from
family that haven't been "co-mingled" with
community assets (such as in a joint bank account),
or pension proceeds of either spouse that vested
prior to marriage.
Equitable Distribution
In the remainder of the states, courts
will divide a couple's assets in an "equitable" (fair)
manner. "Equitable" doesn't necessarily
mean "equal," but what's fair to both
spouses. The question then becomes: What's equitable?
Courts will commonly take into account the length
of your marriage, the work history and job prospects
of each, the physical and mental health of each,
the expense of any children, and the source of
particular assets.
Full and Accurate Disclosure
In providing a list or inventory of
property (or assets), it is vital that the inventory
be as accurate as possible. Don't count on your
soon-to-be ex spouse 'forgetting' about a particular
asset. Full and accurate inventory avoids more
time and expense later. Typically lawyers have
checklists designed to stimulate memories into
recall.
Property Valuation
In the likely event you and your spouse
will be unable to agree on the value of one or
more assets, a third-party appraisal will be necessary.
Any prior valuations or appraisals will be helpful
to the process, so if you have those documents
you should produce them.
Assets that occasionally get overlooked
can include: stocks and bonds, IRAs, Pension and
retirement accounts (past and present), certificates
of deposit money market accounts, items from your
safety deposit box, insurance policies, business
partnerships and the like.
As emotions are likely to be running
high through this phase, you should be mindful
not to get too focused on or attached to any one
particular asset as one you absolutely have to
have, or that you deserve; as fighting your spouse
over 'the artwork over the sofa' can end up costing
more than its value.
Taxes and Divorce
Sometime before the property settlement
agreement is finalized, you'll want to determine
what tax implications will arise from selling or
dividing your assets. In some cases capital gains
taxes can be such that the parties look for a different
settlement solution. A CPA or tax attorney can
be very cost-effective here. See our section on
Divorce and Taxes.
General
In most states, and in most cases,
if you and your spouse can agree on how to divide
your assets, whether it follows your state's guidelines
or not, the court will approve of your division.
It is important to understand that the parties
can "structure their divorce" and divide
their assets in most any fashion that an agreement
will allow. Issues that remain unresolved will
be decided either by mediation or by the court.
If and when the parties agree, the
attorneys will draft a property settlement agreement
that will include the various stipulations and
agreements. This document should specifically detail
who gets what. As in any legal document, you'll
want to review the document to make certain it
is in order. Once it's signed and a permanent part
of the final divorce decree, it's set in stone,
and you'll need a chisel to change it later.
No Loose Ends Just
as soon as the property settlement is approved
or the court finalizes the divorce, you'll want
to complete the details of property transfer: Have
your ex-spouse sign any deeds, stock transfers
or bank account forms that will be necessary to
transfer property into your name; determine what
payments need to ne made to fulfill your end of
the property division arrangement; begin the process
of refinancing property if that is a part of your
agreement; and release your name on the title to
any property your ex-spouse is receiving. Your
first inclination after its over is to distance
yourself emotionally from the experience. Don't.
Cross the T's, dot the I's, and don't leave any
loose ends. THEN you can relax. |
