Marriages rarely end on a positive note. The act of uncoupling can be incredibly challenging and complex, with subtle nuances depending on your lifestyle. Factors like how much money someone makes, which shouldn’t be a consideration for marriage, is often a major plot point in the divorce story.
When the other shoe drops, there will be a lot of things to figure out. Here are some tips and considerations for navigating the splitting of assets in a divorce.
Joint Bank Accounts and Shared Liabilities
The first thing many couples will struggle over following the breakdown of their relationship is shared accounts. Couples with joint bank accounts will often fight over the money within. In many cases, one person will remove the funds from the account. This action can cause many problems down the road, especially if the other party can prove that the money was wrongfully taken or if children were left impacted by being “cut off.”
The best thing to do when joint bank accounts are a factor is to change the withdrawal policy immediately— ideally, while the relationship is stable and divorce is a farfetched notion. Changing the withdrawal procedures puts the onus on the bank to ensure both parties have agreed to the removal of funds. It’s a headache of paperwork, but it protects both parties.
While they’re the opposite of an asset, shared liabilities have to be considered as well. If you and your spouse share a home, the mortgage is a shared liability. Debts that are incurred throughout your marriage will be viewed as shared in the eyes of the law. It’s integral to keep records of your accounts at the point of separation to prove if any expenses were incurred after breaking up.
Division of Property
Dividing up property is more complicated than looking at liquid assets. There are a lot of factors that play into who gets what. For example, if you own a home together, but only one spouse is on the mortgage, the other spouse still has a right to the property. As seen on clw.com.au, the division of property is rarely a 50/50 situation.
In addition to real estate, vehicles may also fall under the umbrella of property as well as any valuables in the home. The division could be impacted by how valuable the individual asset is and how it was acquired. Couples could be directed to sell their home and split the assets or have one person buy out the other.
During a divorce, it’s often the division of property and splitting of more considerable assets that cause the most strife.
If one partner owns a business or the couple owns a business together, things get even more complicated. It’s always worth putting a prenup in place when entering a de facto relationship or marriage with a business partner. Additionally, there should be a legal document outlining how a business will be divided in the event of a divorce when either party starts a business.
Considering Financial Resources
Financial resources are categorized separately from assets but often fall under the umbrella of dividing property and assets in a divorce. The difference is that an asset is a tangible thing, like a shared account or a house. A financial resource is something with value for the future, like a super or a retirement fund.
Financial resources can be challenging to divide, as they’re meant to be handled in the future. Moving money around within retirement accounts often comes with a steep financial penalty. Additionally, your spouse may have rights to your super or retirement fund, depending on the nature of your relationship, as this money was meant to build a life together. In the eyes of the law, a stay-at-home parent has equal rights to retirement funds as the person working.
When a marriage starts to dissolve, each party should take some time to change their important documents to reflect the end of the relationship. The top priorities should be life insurance policies, legal wills, and power of attorney. Changing this documentation ensures your ex doesn’t have access to funds in the event of your death.
It’s also worth going through personal accounts to change passwords, as well as pins and online banking permissions. While this process isn’t something that’s covered in the division of assets, it ensures your personal assets are protected.
When to Hire a Lawyer
It’s not always necessary to work with a lawyer when dividing assets. If you and your spouse come to an agreement, you can sign documentation outlining the terms of your arrangement. This documentation comes in the form of a Binding Financial Agreement (BFA) or consent order.
However, even if both parties agree on everything, it’s still worth seeking legal counsel. As mentioned before, an even division of assets is rarely possible or best for both parties.
Moving forward without legal counsel means that there will be no verification of assets. In other words, your spouse could easily hide things from you, thus limiting your settlement. If there’s a power imbalance in the relationship, one party could be bullied into accepting less than they are owed.
Working with a lawyer also ensures that the documentation is done correctly for the bank and other third-party institutions. Furthermore, they can verify that the right language is in place to protect both spouses from having the other come back for more in the future.
Tips for Divorcing Amicably
The best way to get through a divorce is to remove emotions from the equation. The feelings of anger, sadness, and resentment will ultimately delay the process and cost both parties more than is necessary.
Consider creating separate and shared lists of all your assets and debts, being honest and upfront from the get-go. When it comes to property division, don’t be petty— let your spouse take things that have sentimental value.
Retain lawyers to review anything you agree upon before signing. By being logical and understanding the road ahead, you can divide your assets quickly and fairly during a divorce.