One of the most complex things that people going through a divorce have to do is take care of property division. This effort may become particularly challenging when a couple has considerable assets and debts that need to be addressed.
It’s critical for anyone in this position to ensure they understand their rights and responsibilities as they move forward. This is true whether they plan to negotiate or litigate their divorce process.
Assets must be divided equitably
All assets that were amassed after the wedding need to be divided. Anything that was brought into the marriage might be considered separate property. If there’s a prenuptial agreement, that governs how things are split.
In many cases, people start off by dividing the larger assets and then use the smaller ones to balance out the split. It’s critical for anyone in this position to have an idea of what they want to fight for so that they can focus on those assets.
Debts have special considerations
Debts from the marriage have to be divided during property division as well. This must be handled carefully because creditors aren’t bound by the terms of a divorce order. This means that if one party is ordered to pay a bill and doesn’t, both parties can still be held liable for the debts.
Some people choose to liquidate assets so they can pay off their debts. This takes away the chance of creditors not being paid as they should. Both parties can enjoy a clean financial slate as they embark on their life after divorce accordingly.
Retirement accounts must be handled precisely
Retirement accounts require special paperwork before they can be effectively divided. Qualified accounts, such as a 401(k), require a qualified domestic relations order (QDRO). Without this, a withdrawal from the retirement account can trigger penalties and taxes. Other non-qualified accounts can require a transfer incident to divorce.
Negotiating during the property division process requires a carefully crafted plan. Working with a legal representative who can assist with this process can often help reduce stress associated with these situations.