The divorce process comes with many moving parts, all of which can be overwhelming, particularly if you have substantial assets that need to be divided. In order to gain some control over the process, spend the time needed to really understand your financial situation and make sure you know your rights before you enter into the settlement process. You are your own best advocate.
List all of the assets that you believe you own individually and together. This should include cash accounts, retirement assets, and real estate and business interests. Make sure to also identify all liabilities and question any debts that you didn’t know about. You can’t even begin to divide assets if you don’t know what you have.
Retirement assets are usually before-tax assets. This means that if you need to access the funds, you will have to pay income taxes on any distributions you receive. Depending on the situation, you may also have to pay a penalty as well. Regarding non-retirement assets, capital gains and income taxes are very important to understand as well. Make sure that you have professional advice to avoid costly surprises.
When reviewing assets and liabilities, make sure that you have the latest statements and that you are using a checklist. You can also make a chart either on paper or in a spreadsheet that details each asset: its description, the date it was acquired, who is the titleholder, the original cost, the source of payment, and its current value.
If you don’t know what you need or want from the settlement, you won’t know what to ask for, what you should fight for, or what you don’t really need. It can be very easy to get caught up in the emotions of divorce, especially if you have a spouse who is determined to make each step of the process difficult. All the professionals you will work with are there to help you reach a settlement that covers what is important to you. Being clear will help them do their job.
If there is a business that is considered part of the marital estate and it has not been valued in some time, seek out the services of a professional business valuator to get an objective assessment. Engaging a team of professionals: attorney, CPA, certified divorce financial analyst, counselor, and even a vocational coach will allow you to experience a holistic and integrated approach. Qualified professionals will be comfortable working as a team and will put your interests at the center of the process.
Usually during the divorce process, the standard of living decreases for either one or both spouses. The not-knowing-about-the-future feeling can create the desire to make decisions quickly, just to get to the next phase. If you are stressed, you may jump into a decision without complete information. Women under stress sometimes don’t seek out all of the support that they need during this time. They are often the caregivers and can find it hard to ask for help. Take the time and care to surround yourself with the right team.
There are career and other assets that have value in a divorce and need to be considered as part of the settlement agreement. These assets can include a company car, a private club membership and Frequent Flyer Miles. Although it is time-consuming, take the time to list them all and discuss how they are to be divided.
If your marital home is where you have raised your family, you may want to preserve memories for your children and keep a sense of stability. In some instances this can be a big mistake for the woman, especially if property taxes, upkeep, and maintenance are too great of an expense. Work with a professional to get a cash flow projection and look at all of your available options. Don’t get stuck emotionally and potentially sabotage your financial future.
Try to get a sense of what you want to see in your overall divorce settlement. Do you want time to go back to school and upgrade skills? Do you need to have childcare in place without it being a financial stressor? You are the one who knows what you want your life to look like at the end of the process. It will be to your benefit not to go into court fighting over each and every item.
In some cases, the most valuable asset can be a pension or other deferred benefit or retirement plan. An attorney and/or certified divorce financial analyst professional can help determine and consider these assets prior to a settlement. In addition, there are some states where pension benefits to the former spouse can accrue after the divorce, so talk to a professional to understand how this might impact you in the case that your spouse remarries. Social Security is another future benefit that should be taken into consideration in the settlement. This is especially important if you stayed home and sacrificed your interests in order to support your husband’s career.
In order to divide assets you first need to be aware of your total financial picture. Getting good advice and representation is also critical to understanding your needs and rights before you sit down to sign a settlement agreement. For the most part, the divorce settlement you reach will last a long time. It can be changed if you both agree, however if you don’t it can feel like the divorce process all over again.
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