Ideally, this person will emphasize collaborative mediation or divorce over litigation. Open accounts only in your name. Order Mortgage and Rent Payments. Get Ready to Share Retirement Accounts.
Open your own account if you don't have one yet. Review your credit report from the three major credit bureaus to identify all the credit cards and loans you share with your spouse. You will also need to divide the assets you have in your investment and retirement accounts. If you own a home with your spouse, decide who keeps it or sell it and divide the profits.
If the house has a mortgage and you want to keep it in your name only, you will need to refinance the loan. Most states use a rule known as equitable division when judges divide marital assets in divorce. Basically, this means that a couple's marital assets and debts will be distributed among them in a way that the judge deems equitable (fair) in the circumstances of the case. It doesn't necessarily mean that the property will be divided equally.
Founded in 1976, Bankrate has a long history of helping people make smart financial decisions. We have maintained this reputation for more than four decades by demystifying the financial decision-making process and giving people confidence in what steps to take next. When divorcing, it's important to talk about the financial future of your minor children. Which spouse, or both, will cover college costs? If there are college savings accounts like 529 involved, which parent will control these assets? Retirement accounts, such as a 401 (k) or pension, can be important assets in a marriage and should be considered in settlement negotiations.
Sometimes, one spouse's retirement accounts can have a much higher value compared to those of the other spouse. These accounts must be processed during the divorce process. In some cases, a qualifying domestic relations order will be established to govern the division of these assets with the non-account holder spouse. When it comes to a QDRO for a retirement plan, such as a 401 (k) plan or a pension, the former spouse who receives benefits under the order will be treated as if the benefits were theirs as the plan participant.
Of course, when we talk about division of property in divorce, that doesn't mean physically dividing each asset between spouses. Meanwhile, while splitting an IRA doesn't require a QDRO, you still need to make a trust-to-trustee transfer, with the funds deposited in a rollover account for the beneficiary, Thompson said. Work with a divorce financial planner or tax accountant to minimize the total tax you and your spouse will pay during separation and after divorce; you can share the money you save. Ideally, the couple can work together to decide how to divide property, debt, and assets.
If you took on joint debt during your marriage, such as a mortgage, a car payment, or a tax debt, you will probably have to divide the responsibility of repaying that debt when you divorce. Here are seven mistakes to avoid when it comes to dividing assets as part of a divorce. An agreement that doesn't give one spouse enough money to live on is likely to default in the future. An uncontested divorce can be much cheaper than a contested divorce, saving you time, court costs and legal fees, as well as helping you avoid prolonged disputes with your spouse.
The distinction between separate and marital assets can sometimes be complicated, such as when couples mix (mix) separate and marital funds in a bank account, or when they use money from a joint account to make improvements or mortgage payments on a home that one spouse owned before receiving married. If you need to talk about the emotional aspects of your divorce, or need professional advice or financial analysis, save money on additional attorney fees and make sure you talk to the right professionals, such as a licensed therapist, vocational expert, or financial planner. If you and your spouse haven't been married for long and own only a modest amount of personal assets, it may not be that difficult to agree on how to divide them between the two of you. However, the fall in the housing market has made it very clear that homes have a very low return on investment and, in some cases, have a negative return; many homes today are still under water and couples have had to move away from their homes and hard-earned money.
Even if the legal division occurs at a time when your employer is not doing open enrollment for benefits, a divorce generally qualifies as a life event that allows you to enroll in most employer plans. . .