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Monday, December 9, 2013

Financial disasters associated with divorce: Know how assets are divided

It is not typical  to plan on getting divorced when getting married
Prenuptial agreements are becoming more common
By Bradley Collins

One of the biggest issues that are contested in divorce cases is financial assets. A divorce makes the parties involved take a real look at their financial security.

It is no wonder that prenuptial agreements are becoming increasingly popular. They make it much easier to distribute financial assets should the couple choose to separate in the future. However, when you were getting married you probably thought that it was for life. No one gets married with a plan to divorce (a part from a few isolated cases). You probably therefore, did not make any plans in case you were to divorce.

If you do not have a prenuptial agreement and are unable to agree on the distribution of your assets, the first thing you should do is to seek a professional’s assistance. It is important to have a seasoned divorce attorney assisting you through the process. Your attorney can evaluate your assets and the circumstances of your divorce to give you an estimate of what you have the right to claim. One of the factors you should consider when deciding on how much to claim is your expenses. Many people are not exactly sure about how much money they spend. This uncertainty may cause them to underestimate their expenses and therefore place a claim that may not offer them future financial security.

Take the time to go through your expenses. Store receipts and record your expenditure each month. You should also estimate the amount of money you will be spending in the future after your divorce is final. You will probably have additional expenses such as rent if you are the one leaving your family home.
Parents are not always granted the child custody they expect
Equal division of assets isn't always fair
If you are the parent likely to keep custody of the children, don’t assume that you will be automatically awarded the family home. Your attorney may advise you to leave your home especially if it will be financially draining on you in terms of mortgage payments, maintenance and property taxes.

You may find it difficult at first, but it will eventually save you a lot of money if you moved into a home that costs much less. There could also be an issue with one of the parties facing criminal charges which would make it financially impossible to keep up with certain bills.

When it comes to the division of assets, don’t assume that an equal division of your assets with your spouse is a fair division. It is easy to get caught up in legal jargon during divorce proceedings and fail to realize that many assets have shifting market values. If a court awards each of you assets of equal monetary value, you may not have equal assets as time goes by. It’s therefore important to have a thorough evaluation of current market value as well as projected value before you agree to the terms of the divorce.

Avoid evaluating each asset separately. It is important to have a comprehensive evaluation of your assets so that you can truly understand how the assets interact in terms of losses, taxes, capital gains as well as inflation and timing issues. You will have a much clearer picture of how each financial decision you make during your divorce proceedings affects your future financial security.

About the author: Bradley Collins is a marriage counselor from Los Angeles, California. He has helped hundreds of couples avoid divorce by engaging in counseling and mediation.

Image licenses: Kevin Dooley; CC BY 2.0,  Dark4, CC BY 2.0

1 comment:

  1. Face it, divorce sucks. In one way or another, we have all failed in making the most important commitment in our lives survive and thrive. So take a deep breath and get on with what you have to do. Equitable Mediation Services