Going through a divorce can be one of the most challenging experiences in life, and sorting out financial matters can make it even more complicated. Asset division is one of the most contentious issues that couples encounter during a divorce and can be one of the most expensive aspects of ending a marriage.
In particular, complexities arise when dealing with investments, real estate, and pensions, which often demand specialized knowledge to separate them without significant financial complications. And, if you are dealing with grief, this process can seem overwhelming.
In this blog post, we will explore how assets and investments are divided in a divorce to help you understand the process better and obtain the compensation you deserve.
If you and your former partner have been planning for future financial security, the chances are that, throughout your life together, you have built a portfolio of properties, insurance policies, investments, and other assets.
Diving these assets during a divorce is not straightforward, and each separation is often analysed on a case-by-case basis. However, a layer will help you split the following assets equally:
Family homes and real estate: When dividing the family home and other real estate, factors such as who will retain custody of the children or who can afford to keep the property are taken into consideration.
Credit cards: The division of credit card debt depends on whose name the card is in and who accrued the charges, with both parties possibly responsible for any outstanding balances.
Investment accounts: Investment accounts can be split evenly or divided based on each spouse’s contributions to them during the marriage, among other factors.
Loans and debt: Debts such as mortgages, car loans, and personal loans are divided based on whose name they are under and what assets they were used to purchase.
Retirement accounts and social security: Retirement accounts and social security benefits earned during the marriage may be split equally or based on each spouse’s individual contributions or earnings history.
Life insurance and other insurance policies: Life insurance policies may be designated to one spouse or divided between them if they were purchased during the marriage, while other insurance policies such as a car or health insurance are typically maintained by each individual separately after divorce.
Other aspects accounted for during a divorce include separate and marital properties, prenuptial agreements, and assets that cannot be divided. Let’s look at these elements in more detail below.
When dividing assets during a divorce, it is crucial to distinguish between separate and marital property. Separate property refers to assets that are solely owned by one spouse before the marriage or acquired during the marriage through inheritance or gift.
These properties are not usually divided during a divorce. Marital property, on the other hand, includes everything else acquired during the marriage and is split fairly and equally during a separation.
A prenup is essentially a legal contract between the spouses that outlines how assets will be divided if the marriage ends.
Prenups can cover everything from property and business interests to debts and spousal support. They can also address issues like inheritance, family trusts, and retirement accounts. If you are thinking about a prenup, it’s best to speak with an attorney who specializes in family law to help draft an agreement that meets your specific needs.
Some assets are simply not divided during a divorce. These include:
Before undergoing a divorce, it is important to understand the financial repercussions of this choice. According to recent statistics, the average cost of a divorce in the US is as high as $12,900, while the median cost of a divorce is $7,500.
If you are undergoing an uncontested divorce and you and your former partner agreed on the division of your assets and on child custody, you can reduce these costs to $4,100.
However, if you are facing disputes regarding asset division or alimony, you will require the support of a full-scope attorney. The hourly fee requested by a specialized professional can be as high as $270, which can increase the cost of your divorce to $11,300 per spouse.
Additionally, if you decide to go to trial, you and your former spouse will need to face fees as high as $23,300.
If you are unsure about the financial implications of a divorce, a specialized attorney can help you consider the price of divorce and choose the best option for your needs.
When you are in the process of ending your marriage, you may be blinded by grief and overwhelmed.
This can cause you to act spontaneously or emotionally, which can lead to significant financial losses and repercussions in the long term. A specialized attorney can fight your corner and help you obtain the compensations and assets you are entitled to during a divorce.