Divorce can be a complicated process. From a financial standpoint, it is about one thing; the division of marital property and debts. While it may seem straight-forward, especially if both parties are amicable, property division in divorce is complex and can be one of the most difficult tasks for divorcing couples. There are more things to consider than simply who gets the house, the car, and the collection of classic rock on vinyl.
The Two Types of Asset Division
Property division laws vary by state but they all use one of two basic structures: community property or equitable distribution.
Some states follow the community property scheme which classifies all property of a married person as either community property or separate property. During divorce, community property is divided equally between the spouses, each keeping their separate property.
Equitable distribution, the process of division used by other states, says that all assets are divided equitably but not necessarily equally. In this case, a spouse could be ordered to use their own, separate property to even out the settlement. In some cases, spouses may be awarded a percentage and will then get property, assets and debts that add up to that percentage.
In equitable distribution states, there are factors taken into account when dividing assets. These factors include the financial situation of each spouse, length of marriage, income and earning potential of each party, age and health of each spouse, standard of living maintained during the marriage, role of a spouse in regard to education and earning power of the other, and the needs of the custodial parent.
This already sounds somewhat complicated. Now throw in emotions and hurt feelings and consider the fact that there is a long list of property that doesn’t usually come immediately to mind while you’re wondering why your wife suddenly has an attachment to your vinyl collection.
Assets to Consider
Generally, the first question that comes to mind when divorcing is “who gets the house?” The most common assets are real estate, cars and bank accounts. Couples might consider investment plans, life insurance policies, pensions, and stocks. Property that might not come immediately to mind includes:
- Collections and memorabilia-whether buried in storage or displayed prominently, many collections are potentially valuable.
- Intellectual property-trademarks, patents, copyrights and royalties should not be overlooked, even if they failed to generate much income during the marriage. There is potential they could generate income in the future and should be part of the settlement.
- Money loaned-if you or your spouse loaned money to someone, the money paid back can possibly be divided in divorce
Other assets to consider are keepsakes, pets, tax refunds, club memberships, travel reward points and the list goes on. The first advisable point of action when dividing up property should be to create a list of all tangible assets (dishes, pots and pans, tools, furniture, etc.) and be thorough. The best way to accomplish this is to create an inventory with your spouse.. For method regularly advised for couples is to have one spouse make an inventory and then divide that inventory into two fair and equitable lists, List A and List B. These lists as prepared by spouse #1 are then presented to the spouse #2, who then gets to choose which list he or she wants. This method helps to foster fairness, so no one party gets a lopsided asset list inasmuch as the second spouse could choose the lopsided list if they chose to. Following the choosing of asset lists, the couple may barter and swap items from their lists until both parties are satisfied with the outcome. Of course there is still the potential for disagreement, but one would think that the fine-tuning negotiations could be carried out without the need for legal counsel to get involved.. Realistically, you’ve been given an great opportunity to make the process as effortlessness and non-argumentative as possible.
Do I Really Need a Lawyer?
There is no rule that says that divorcing couples need to hire lawyers to see them through divorce. It is possible to get a divorce with no attorneys involved in any part of the process. Couples can order forms and take care of everything on their own.
Some states are even encouraging this by setting up self-service centers in which couples can facilitate their own divorce. However, lawyers can be important to the process, especially if a couple has been married for several years and their assets have become intertwined. Assets that have increased in value may bring forth tax issues that need to be dealt with.
In other words, what may seem like an easy split might have hidden complications that, if ignored, will cause problems down the road. Your spouse appears reasonable. You both agree how to divvy up physical property, bank accounts and she even acquiesces on the vinyl record collection. You are proud of how adult you are both being as you fill out the do-it-yourself forms and finalize your divorce. It is a clean break. Then later you find out her uncle is paying back a large loan she made while you were married, and that you might be entitled to royalties she is earning on an endeavor she completed during the marriage. These are things that didn’t come up when you were agreeably dividing assets. Thinking things are done and finalized, when you ask her about this money, she says it is too late. She might be right. Unless the spouse agrees, modifying the divorce decree can be complicated and expensive. That is why it is wise to hire a third party to assist in negotiating an agreement. With the help of attorneys, couples can often try to negotiate a divorce settlement, avoiding trial. In the long run this proves to be the most efficient and inexpensive route to settling assets, especially if you are already in disagreement. An experienced attorney will work to negotiate a favorable settlement, hoping to avoid litigation, but will be prepared to litigate if it comes to that. The bottom line is, couples who try to negotiate their own divorce often run into trouble later and find they have surrendered their rights.
The truth is divorce isn’t easy, no matter how amicable it may be. And what makes property division so tough for most couples is that their emotions are tied up in these “things”. It isn’t as if your wife really cares about the vinyl collection, but for her, it has become a symbolic way to win a battle.
This entanglement of emotions with “stuff” can cause both parties to lose perspective and this leads to the messiness that so often defines divorce.
When dividing up assets, each person involved needs to remember that much of what is being argued over is replaceable. You can spend months fighting over trivial assets and paying steep lawyer fees, or you can concede the couch and simply get a new one. Ask yourself if the emotional toll is worth the fight?
On the flip side, some people want nothing to do with the process and will refuse to negotiate anything, allowing the spouse to take whatever they want. When the dust settles, these people often realize their mistake and see the disservice they’ve done to themselves and their future.
Remember, going back later to change the decree is complicated and expensive, if even possible. Divorce is complicated, dividing years of accumulated property is complicated and trying to separate emotions from business is easier said than done.
When couples make an effort to understand the process, hire attorneys to help mediate the process and attempt to set aside hurt feelings, they find the process quicker, more manageable and hopefully experience less emotional impact.
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