Some states follow community character rules and other states follow equitable dispensing rules for divvying up assets during a divorce. However, in spite of of the state’s rules, the math typically equals out to half.
Fighting the “half” is not productive. Instead you need to familiarize yourself with what needs to be divided in half. The courts cannot half your separate character to your spouse. Figuring out which character is separate is the magic of a good divorce lawyer
Separate character or Community character
Separate character is “separate” and not part of the half being divides. It consists of things like character that a spouse purchased before the marriage, inheritance of once spouse and gifts during the marriage given as separate character. However, if you have separate character and use monies earning during the union to continue it, it then is considered community character. Also, when you place monies given as an inheritance into a joint bank account, it is considered community character.
Community character is equally divided by the courts between the spouses during a divorce. This includes real estate, 401Ks, pensions, businesses and debts. Equal dispensing method that the court looks at several things to ensure each spouse receives equal limitations and assets. Consideration can be given in situations where a spouse doesn’t work, there has been a lengthy marriage, or the earning of one spouse is considerably greater than the other. Community character states may give deference to these issues in addition.
Dividing 401K or IRA
In community character states, retirement accounts, such as 401Ks and IRAs are usually divided equally between spouses during a divorce. In an equal dispensing state, the estimate hearing the case will rule on what is fair or equitable but not necessarily equal. Keep in mind that spouses have the right to make agreements about who will receive assets like IRAs and 401Ks. It’s not uncommon for trade-offs to be made during a divorce. For example, one spouse may request to keep the whole 401K in exchange for another asset. If you should decide to do this, it’s important to have a divorce lawyer draft a marital settlement agreement
Dividing a Business
Both spouses have ownership rights in divorce. Whether it’s a retail business, medical practice or restaurant, there probably community character interests. The specialized business is the typical case we see the most problems with. A specialized business is when one spouse is in business as a doctor, account, or lawyer. There is value in the business which should be divided.
There are basically three methods of dealing with a business when there is a divorce: Co-ownership, selling the business, or buying out the other spouse’s interest. With co-ownership, both partners continue to own the business after the divorce. It’s important to observe that this method only works well if both spouses have a level of trust in the other’s management skills or a substantial working relationship. If not, it can be a recipe for disaster.
There are pros and cons to selling the business and dividing the profits. On the upside, spouses can avoid financial ties to each other and use the proceeds to set afloat their own business venture. The downside is that many businesses take time to sell. It can take months and already year to get it sold.
Buying out the other spouse’s interest is when one spouse keeps the business and pays for the other spouse’s interest. This works well when the buying spouse has enough liquid assets or cash for the transaction. In addition, other assets can be used to offset the buy, such as securities, IRAs and the equity in a home.
Who Gets the House?
You may want to keep the house because of kids or having an emotional attachment. However, you need to think about what’s truly best in the long run. Not all spouses can continue the same lifestyle after a divorce. No matter how attached you are to your home, and it’s basic to know whether or not you can provide to keep it. There’s a mortgage, maintenance and character taxes to think of. And if you don’t have the funds, serious financial trouble can loom on the horizon.
Is there equity in the home? If not then you are not fighting for an asset, you are fighting for a debt. Another important thing to consider is whose name is on the mortgage. The title is who owns the home, can title can be change freely. The mortgage is the obligation, or debt of the home. We have never seen a mortgage company change the name or release one spouse from the obligation. Changing a mortgage requires a refinance, which requires credit approval.
In a community character state, judges are bound to ensure that community character gets divided as uniformly as possible. If you purchased a home together and it has $100,000 in equity, one spouse may get the home but have to buy out the other spouse for his or her $50,000 proportion. The estimate may already order that the home be sold. already if the home is in your name only, you are not permitted to sell it without court approval or your spouse’s consent.
Debt is treated just like an asset. It must be divided. The ridge is that the debt holders are not obligated to a divorce decree. So, if you take the debt of a credit card with his name, the credit card can nevertheless go after your spouse if you miss the payments. We typically look for the named debtors to take the debt. Sometimes this takes creative lawyering to accomplish.
A good divorce attorney can educate you on your state’s rules pertaining to the dividing up of assets in the event of a divorce. This legal specialized can also render good advice on how to manager community character and separate character during a divorce. If you try to go it alone, you may give up something that you’re legally entitled to.