Dividing Assets Fairly In A Divorce Settlement

Going through a divorce involves many important decisions, and one of the most significant is how to divide assets between both parties. Below are some key principles that can help create a fair division of property.

Identifying Marital And Separate Property

One of the first steps in the process is determining which assets belong to both spouses and which belong to only one. Marital property typically includes anything acquired during the marriage, such as homes, cars, retirement accounts, and business interests. Separate property, on the other hand, usually includes assets owned before the marriage, inheritances, and gifts received individually.

It’s important to gather financial records and account statements to establish a clear picture of what is shared and what is not. Courts will generally focus on equitability rather than a strict 50-50 division, meaning that fairness is the goal rather than an exact split down the middle.

Assessing The Value Of Assets

Once assets are identified, the next step is determining their value. This can involve professional appraisals for real estate, business valuations, or financial assessments of investment and retirement accounts. Even personal property such as jewelry, artwork, or collectibles may need to be evaluated.

Debts should also be considered. Any shared loans, mortgages, or credit card balances need to be accounted for when dividing property. Both assets and liabilities contribute to the overall financial picture, making it important to factor in obligations as well as wealth.

Options For Dividing Property

There are several approaches to splitting assets, depending on the preferences and circumstances of both parties. Some couples agree to divide everything equally, while others focus on maintaining financial stability by allocating property based on individual needs.

One common approach is trading assets of similar value. For example, one spouse may keep the family home while the other retains retirement accounts of comparable worth. Another option is selling assets and splitting the proceeds, which is often done with real estate or high-value investments.

If one spouse is keeping a shared asset, such as a house or a business, they may need to compensate the other through a buyout. This can be done with a lump sum payment or structured over time.

Considering Tax Implications

Taxes play a significant role in asset division and should not be overlooked. Certain transfers may have tax consequences, such as capital gains on investment properties or early withdrawal penalties on retirement funds. Some assets, like traditional retirement accounts, may appear equal on paper but have different tax liabilities when withdrawn.

It’s a good idea to consult with a financial and divorce lawyer to understand the potential tax impact of any decisions. Attorneys like those at Kantrowitz, Goldhamer & Graifman, P.C. can attest to the importance of structuring a settlement that accounts for both present and future financial well-being.

Finalizing The Agreement

Once both parties agree on asset division, the terms should be put in writing as part of the divorce settlement. This agreement must be legally reviewed and approved by the court to be enforceable.

While this process can be challenging, focusing on fairness and long-term financial security helps create a resolution that allows both individuals to move forward.