8 Tips For Dividing Assets Fairly During A Divorce
If you have filed for divorce, getting a fair settlement is probably one of your top priorities. Most states follow the theory that marital assets should be divided equitably. If you live in one of these states, you will receive a settlement based on your financial circumstances instead of a 50/50 split. Here are eight ways to ensure assets are divided fairly before your divorce is finalized.
1. Work with your spouse to make a complete list of assets.
You won't be able to divide assets fairly until you know what you have and how much it is all worth. Don't forget to list retirement accounts, cash on hand, antiques, collectibles, and other valuable items. Record the value of each item on the appropriate line.
2. Ask your divorce lawyer to request a qualified domestic relations order (QDRO).
You may have the right to some or all of the funds in your spouse's retirement accounts. If this applies to your case, ask your divorce lawyer to request a qualified domestic relations order. This document explains how retirement assets are to be divided in a divorce. You do not need a QDRO for an individual retirement arrangement (IRA), but you will need one if you expect to receive funds from a 401(k), profit-sharing plan, employee stock ownership plan, 403(b) plan, or tax-sheltered annuity.
3. Determine the value of your home and vehicles.
Your home and vehicles are probably some of the most valuable assets you own. It wouldn't be fair for you to get a vehicle worth $5,000 if your spouse is getting one worth $15,000, so be sure you know the value of each item before you agree to a proposed settlement. Use a vehicle valuation service to determine the value of your used car or truck. If you haven't had your home appraised recently, hire an experienced appraiser to ensure you know the property's current market value.
4. Conduct a cost-benefit analysis.
Don't fight with your spouse over items that will not be worth much money in the future. Instead, weigh the benefit of receiving the item now with the cost of maintaining or repairing the item. You may really want one of your jointly owned vehicles, but with depreciation and maintenance costs factored in, you might be better off asking for items that will not lose so much of their value.
5. Sell household items and split the proceeds equally.
If money is a concern, see if your spouse will agree to have a garage sale or yard sale. You'll be able to make money while you get rid of items that remind you of unhappy times. When the yard sale is over, keep half the proceeds for yourself and give the other half to your spouse.
6. Auction off high-value items.
You may want to keep high-value items out of your yard sale and auction them off instead. If you do, work with a reputable auction house to ensure you sell each item for the highest price possible. Split the proceeds with your spouse unless you have made other arrangements.
7. Assign a logical owner to each item.
Once you have a complete list of assets, look at each item and determine who uses it the most. This will help you determine a logical owner for each piece of property. If you have never played golf, assign your spouse as the logical owner of the golf clubs in your garage. Do this with each item on your list until you believe your assets have been divided fairly.
8. Hire a mediator if you cannot agree on a fair settlement.
If you can't agree on a fair settlement, hire a mediator to assist you. Divorce mediation involves resolving issues with a third-party mediator instead of fighting about them in court. A mediator will help you divide your assets, work out child custody issues, and decide how you will handle tax and retirement issues.
There's no reason divorce has to be a painful process. If you are willing to work with your spouse, you may be able to divide your assets fairly instead of fighting over every item in your home. If you do have trouble dividing your assets, your divorce lawyer will be able to advise you.
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