When you and your spouse make the decision to divorce, you need to start thinking about how to divide the property you accumulated during your marriage.It can be as simple as personal items and household goods, or as complex as real estate, investments, and retirement accounts.You and your spouse can decide.If you want to live with what the judge decides, you can create a fair and amicable property division settlement.
Step 1: Understand equitable distribution.
The law of equitable distribution is followed by most states.This does not mean that you split down the middle.It means fair, based on factors such as the earning power of each spouse, contributions during the marriage, age and health, and future financial needs, if you create a property agreement with these requirements in mind.The standard is community property in California, Texas, Arizona, Idaho, Louisiana, New Mexico, Nevada, Wisconsin and Washington.There is an assumption that there will be an even split of property held in the name of both spouses.The presumption is that there will be a 50% split of assets.
Step 2: What is separate property and what is marriage property?
Marital property is assets that were acquired during the marriage.Whether it is tangible items such as furniture or intangibles like investments or retirement accounts, all marital property is subject to equitable distribution or division as community property.Real estate, vehicles, inheritances, and heirlooms can be included.If it is co-mingled, separate property goes to the owner with no claim by the other spouse.The lines are blurry when couples share the same property.One spouse can use inherited money to make improvements to the other spouse's house.If you can't agree on how to divide your property, you should consider hiring an attorney.
Step 3: Decide on a valuation date.
The value of your property needs to be fixed on a date with your spouse.It's important for volatile assets.An updated balance on retirement accounts and interest-bearing financial accounts such as savings, CDs, and money market accounts can be obtained.For asset trading purposes, calculate the equity in the real estate.The statement date for the mortgage payment is a good day to put a value on the house.To calculate the equity, you will need an appraisal and pay-off amount.
Step 4: You have the right to claim your property.
The easiest pieces to start with are clothing and personal accessories.There should be no arguments about these items.You may need the help of a lawyer or mediation if you disagree.Legal counsel has higher rates than mediators.
Step 5: The household goods should be apportioned.
This category can be split evenly, as each side takes a certain number of place settings of china.One party may want small appliances in the kitchen while the other wants sporting equipment.The stress of a disagreement should be weighed against the monetary value of the items.
Step 6: The furniture and decor should be separated.
A mixture of pieces may be included in the marital residence.Equity says heirlooms should be separate property even if both parties use an item.You and your spouse can divide the furniture if it is fair and reasonable.Children's furniture should be with the spouse who has primary residential custody.
Step 7: The vehicles need to be assigned.
Vehicles can be either marital or separate property depending on how they were purchased.Allow equity and fairness to dictate your decision.If you own two cars, you should know that the court will award one to each of them.Each party will usually keep the vehicle they drive.It is expected that each will keep any loan debt associated with the vehicle.
Step 8: Consider the items that are sentimental.
They should be split evenly.Each party has a share of family photos, souvenirs, and collectibles.Make copies of photos and documents for each party.
Step 9: Take care of a running inventory.
As you and your spouse decide on the division of your personal property, you should keep a list with each party initialing it.This can help keep arguments to a minimum.If necessary, this inventory can be attached to the settlement agreement.It is proof that the property division was handled fairly.
Step 10: Decide if the real estate will be sold or divided.
If both parties agree to a sale, you should contact a real estate agent as soon as possible to begin the process of appraisals, valuation and staging the property for sale.
Step 11: If a transfer of equity is the best option, consider it.
One spouse takes over full ownership of the property after an equity transfer.The other party can take a cash payment or a bigger share of another asset in exchange for their equity if you are planning on an equity buy-out.
Step 12: Determine how to divide the real estate.
Real estate can be considered exclusive property if it was owned by one party before the marriage.The property may be ripe for equitable distribution or community property if both parties shared in the use and benefit.The spouse who brought the property to the marriage can give other assets to another party.If you and your partner can't agree, you should seek legal assistance.The judge will make the decision if you can't agree.It might be better to let one spouse hold onto the house instead of selling it and splitting the proceeds.
Step 13: You have to identify the retirement accounts.
Private funds and employer-based funds may exist.Retirement accounts include 401(k) plans, IRAs, pensions, and trusts that mature at retirement age.The mutually agreed-to valuation date is when you will need statements for each account.If your retirement plans are simple, for example, each party has a plan from their employer, you can agree that each will retain their own plan.Other assets can be ceded to make up the difference if there is a significant disparity in balances.
Step 14: Determine which law covers each plan.
If you have a variety of retirement plans, you will need to know which federal law relates to the distribution.If you don't correctly categorize your retirement assets, you could end up with a divorce and tax consequences.If you don't know how to handle different accounts, you should seek the assistance of a lawyer or accountant.You can receive tax breaks for your contributions to a qualified plan.This also includes 401(k) plans.A Qualified Domestic Relations Order is used to split qualified plans.A QDRO is a court order that requires the plan administrator to pay a portion of the balance to the spouse.50 percent of the assets dated from the time of marriage to the date of divorce is the amount.The receiving spouse is responsible for taxes and penalties.There are certain information that must be valid in a QDRO.Private retirement accounts are divided using a procedure called transfer incident to divorce.Individual retirement accounts can be designated to one spouse in a property settlement.Depending on how the decree is worded, the financial institution will either treat it as a distribution or a rollover.Penalties and taxes can be triggered by poorly worded QDROs and IRA transfers.The IRS may require amended tax returns if the court doesn't approve the transfer.Unless you have significant legal or financial experience, you should not write your own QDRO.These documents can be attached to your property settlement.
Step 15: Evaluate the benefits of the military.
Military pensions and survivor benefits are some of the more complicated subjects.The Uniformed Services Former Spouses' Protection Act (USFSPA) states that military benefits should be discussed with a lawyer.There are several things to consider when dividing military benefits.The accrual date is either the day of the marriage or the date of entry into service.The marriage had to last at least ten years and overlap time in service.The rule is called the 10/10 rule.The order needs to specify if the calculations are based on Gross Retirement Pay or disposable retirement pay.If one spouse is on active duty, the requirements of the Service Members Civil Relief Act must have been met.The non-military spouse can enroll in the benefit plan.The military accepts applications from non-military ex-spouses to begin payments after the divorce.A certified copy of the decree showing the property settlement that orders division of military pension benefits is required.Lawyers for active duty soldiers and retirees can be found in the Judge Advocate General's office.Make sure the attorney has the experience and training to handle sensitive financial matters related to divorce.