This year’s unprecedented health crisis and uncertain economic situation has complicated property division for couples ending their marriages. The number of couples considering divorce rose by 34 percent from March to June 2020 as compared to that period in 2019. At least half of the people living in this country’s four largest said that they lost some income. Preparation is now even more important for a spouse considering divorce.
Separating assets requires a thoughtful understanding of assets, debts, expenses, and income. Preparation involves collecting tax returns for the last few years, paystub copies, debt statements, documentation of any recent income loss and year-end account statements for 401(k)s, brokerage and bank accounts and other investments.
Spouses should be transparent on their financial situation and communicate. Financial accounts, children and pets and the couple’s house and other property are important areas that need particular attention.
Spouses are generally entitled to an equitable distribution of property. Without understanding your financial situation and assets, you may not know whether you are receiving a fair share of what you earned during the marriage.
Establish your own credit card. If you have a credit card in your name, review your free credit report every year to assure that everything is correct.
Children and pets
There are many everyday expenses such as clothing, books and other school supplies, food, healthcare, and recreation for children. Parents must communicate on who will care for their children and how these expenses will be allocated.
Include costs for special occasions like weddings, bar and bat mitzvahs and graduations. Spouses should discuss how much they want to spend on these events.
Parents must also decide who will claim their children as dependents on their tax return. Only one parent can make this claim.
Shared pets are often important but overlooked. Spouses should address ongoing care like veterinarian care and grooming.
House and other property
Spouses must decide whether one of them will keep the house or whether they will sell it and divide the proceeds. An appraisal from an independent third-party appraiser is an important piece of information for these discussions.
Spouses should remember that a house is not a liquid asset like cash and investments other than retirement accounts that can be sold with smaller tax consequences. Liquid assets, unlike a house, may be sold relatively quickly to pay for expenses.
Sentimentality should be considered, but not too much, when dividing household possessions. You should avoid giving up too many valuable items in return for items with no value.
An attorney can provide advice on dividing property. They can also seek a fair and reasonable decree in negotiations and court proceedings.