Half – The four letter word in divorce

Some states follow community property rules and other states follow equitable distribution rules to divide assets during a divorce. However, regardless of state rules, math generally equals half.

Fighting the “half” is not productive. Instead, you need to familiarize yourself with what needs to be divided in half. The courts cannot turn over half of your separate property to your spouse. Finding out which property is separate is the magic of a good divorce attorney

Separate property or community property

Separate property is “separate” and not part of the half that is divided. It consists of things like property that a spouse bought before the marriage, inheritance from a spouse, and gifts during the marriage given as separate property. However, if you have separate property and use the money earned during the union to maintain it, then it is considered community property. Also, when you deposit inheritance money into a joint bank account, it is considered community property.

Community property is divided equally by the courts between the spouses during a divorce. This includes real estate, 401Ks, pensions, business, and debt. Equitable distribution means that the court looks at several things to make sure that each spouse receives equal assets and liabilities. It can be considered in situations where one spouse is not working, there has been a prolonged marriage, or the earnings of one spouse are significantly higher than the other. Community property states can also give deference to these issues.

Dividing 401K or IRA

In community-owned states, retirement accounts, such as 401Ks and IRAs, are generally divided evenly between spouses during a divorce. In an equitable distribution state, the judge hearing the case will decide what is fair or equitable but not necessarily equal. Keep in mind that spouses have the right to make agreements about who will receive assets like IRAs and 401Ks. It is not uncommon for compromises to be made during a divorce. For example, a spouse can request to keep the entire 401K in exchange for another asset. If you decide to do this, it is important to have a divorce attorney draft a marriage settlement agreement.

Division of a company

Both spouses have property rights in the divorce. Whether it’s a retail business, medical practice, or restaurant, there are likely community property interests. The professional business is the typical case with which we see the most problems. A professional business is when one of the spouses works as a doctor, account, or lawyer. There is value in the business that should be divided.

There are basically three methods of dealing with a business when there is a divorce: joint ownership, sale of the business, or purchase of the other spouse’s interest. With joint ownership, both partners continue to own the business after the divorce. It is important to note that this method only works well if both spouses have a level of confidence in each other’s managerial skills or in a strong working relationship. Otherwise, it can be a recipe for disaster.

There are pros and cons to selling the business and splitting the profits. On the positive side, spouses can avoid financial ties between them and use the proceeds to launch their own business venture. The downside is that many companies are slow to sell. It can take months and even a year to sell.

Buying the other spouse’s interest is when one spouse takes over the business and the country for the other spouse’s interest. This works well when the buying spouse has enough liquid assets or cash for the transaction. In addition, other assets can be used to offset the purchase, such as securities, IRAs, and the equity in a home.

Who gets the house?

You may want to keep the house for the children or for having an emotional bond. However, you need to think about what is best in the long run. Not all spouses can maintain the same lifestyle after a divorce. It doesn’t matter how attached you are to your home, and whether or not you can keep it is critical. You have to think about mortgage, maintenance and property taxes. And if you don’t have the funds, serious financial problems can loom on the horizon.

Is there fair housing? If not, you are not fighting for an asset, you are fighting for a debt. Another important thing to consider is who’s name is on the mortgage. The title is the owner of the house, the title can be changed freely. The mortgage is the obligation or debt of the house. We have never seen a mortgage company change the name or release a spouse from the obligation. Changing a mortgage requires a refinance, which requires credit approval.

In a community property state, judges are obligated to ensure that community property is divided as equitably as possible. If you bought a house together and you have $ 100,000 in equity, one spouse can get the house, but has to buy the other spouse for his or her share of $ 50,000. The judge can even order the house to be sold. Even if the house is in your name only, you are not allowed to sell it without court approval or the consent of your spouse.

Debt division

Debt is treated as an asset. It must be divided. The problem is that debt holders are not required to enter a divorce decree. So if you take on credit card debt in your name, the credit card can still haunt your spouse if you don’t make the payments. We generally look for named debtors to assume the debt. Sometimes this requires a creative attorney to accomplish this.

A good divorce attorney can educate you on your state’s rules regarding the division of assets in the event of a divorce. This legal professional can also provide good advice on how to handle community property and separate property during a divorce. If you try to go it alone, you may give up something that you are legally entitled to.