Property division is an important part of any divorce process, whether you and your spouse have come to an amicable agreement or if you are litigating your case in court.
What Goes Into The Property Division Process?
Some aspects of the marriage that are taken into consideration when dividing property include:
• How long the marriage lasted
• Which spouse had a higher income
• Whether or not there was a prenuptial agreement
• If children are involved
Making sure that your property is divided fairly is divorce attorneys’ top priority. Their goal is to help you get through your divorce as peacefully as possible so that both of you are able to live your best life after the divorce. However, they can also assist you in contentious matters, facilitating discussion and helping guide you and your spouse to an agreement.
Familiarize Yourself With Your Finances Before You Split
Normally, one person in a household manages the finances. However, this arrangement can create a “power imbalance when it comes time to negotiate settlements.”
Consider Mediating Your Divorce
It’s no secret that divorce can be expensive. In fact, the average cost of legal fees in a divorce is $15,000. One way to cut down on these expenses is to use a mediator. A mediator doesn’t work on behalf of any one party, just facilitates agreements. If you want to keep your divorce details behind closed doors while cutting costs, a mediator might be the best bet for both you and your bank account. When you call Ascent Law, we will help you work with mediation to save costs on your divorce.
Don’t Forget About Beneficiary Designations
Divorce attorneys note that many clients fail to remove former spouses from their beneficiary designations. If you fail to remove these designations, “those amounts may end up being paid out to a former spouse.” “Usually that’s not the result you want.” For best results, handle beneficiary designations and other tedious paperwork as soon as possible.
Consider Your Income Before Asking for All the Deductible Items
“If you file single and make more than $380,750, your personal exemption of $4,000 is not available.” In light of this fact, individuals might not want all the items they originally requested in a divorce. For best results, speak to a financial professional about your specific fiscal situation and options.
Be Mindful of the Date When Initiating Divorce
While you might be tempted to file as soon as possible, it’s important to note that property division is based on the date of marriage separation in some states. Typically, the court uses a formal date of separation (DOS) to determine property division and the value of certain assets. “If you are expecting a large increase in the value of a major asset upon a certain occasion, be mindful of that when you decide to initiate the divorce.”
Design a Joint Parenting Arrangement Wisely
Unlike claiming a child as a tax dependent, claiming head of household is not assignable. If you’re negotiating who will claim a child as a dependent, “You can include a provision that the right to claim the child is dependent on the parent being up to date on their support obligation.”
Plan Finances for After the Divorce
Clients often neglect to consider how their financial planning can change after a divorce. “Your risk aversion may be very different than your former spouse [‘s] and you do not need to keep the same investment trajectory you had before the divorce.” If you don’t know where to begin, you might want to hire a financial advisor. Remember to think long term when planning finances after divorce.
The Division of Property Can Be Complex
Dividing assets and properties isn’t always a simple numerical transaction. “Negotiating the division of property is an art form all its own,” After the asset is identified as community property, separate property or both, figuring out the value can be tricky. “For instance, a bank account with cash in it is pretty easy to value — look at the balance,” said Nelson. “But a retirement account, a house or securities can have more complex issues.”
Retirement Accounts Are Not Worth the Statement Balance
Just as it can be difficult to value assets, couples often struggle to determine the true value of their retirement accounts. One reason that retirement accounts pose problems is that deferred tax will have to be paid at some point. “If one of the parties will be liquidating a retirement account early, then the highest marginal tax rate and the early withdrawal penalty might need to be subtracted from the value of the account,” said Nelson, who went on to explain that the value of these assets is often drastically reduced as a result. “Even if the account is not going to be liquidated, the taxes which will be paid on the money at the time of retirement can be considered and a reduction of the overall value of the asset might [be], and very often is, appropriate.”
Division of Property’ Depends on Where You Live
When a divorcing couples heads to court for a property dispute, state law is used to divide the property using one of two classifications: community property or equitable distribution. With community property, both spouses own income and assets equally, and items can be divided evenly. Additionally, individuals can keep separate property.
Some States Are Better for Getting a Divorce
According to the government research site InsideGov, the five states with the easiest and most lenient divorce laws are Alaska, South Dakota, Wyoming, Iowa and Washington. The ease of filing, fees and processing times are all considered as part of the rankings. If time and cost are of the essence, you might want to consider where you live before filing divorce papers.
Be Mindful of the Worst States for Divorce
Based off InsideGov’s data, the most difficult states to get a divorce include Arkansas, New Jersey, Rhode Island, South Carolina and Vermont. Arkansas takes the longest amount of time at 540 days. If you live in one of these states, you and your spouse might want to consider relocating to expedite the divorce process.
When in Doubt, Seek a Professional — Or It May Cost You
Capital and a financial analyst who has helped many individuals dealing with divorce, advises clients to seek professional help at all costs. “A simple mistake that drops your credit score 40 points can cost you thousands on your next mortgage.” “Making a mistake separating accounts, renaming beneficiaries or not setting up life insurance properly can cost you hundreds of thousands and impact you for years.”
Make Sure You Actually Implement the Divorce
Despite their eagerness to be divorced, many people actually fail to complete all the steps needed to make their divorces legal. For the best results, clients should make sure all their bases are covered and check up on spouses to ensure they have completed the necessary steps. “You don’t want to find out that your ex-spouse never refinanced the house five years ago like he was supposed to and [it’s] now in foreclosure.” “By the time you find out about it, your credit will be destroyed for years.”
Compromise Could Help You
Unfortunately, divorcing spouses often refrain from compromising out of spite. While you might be tempted to fight every battle that comes your way, agreeing to compromises could save you a lot of headaches and money on legal fees when going through a divorce. As an added bonus, your decision to compromise could encourage your spouse to do the same.
Belts Are Always Tightened During a Divorce
While individuals tend to factor the price of getting divorced into their budgets, they don’t always consider other everyday expenses incurred during the process.
Take Action but Be Wary
It’s important to make sure you have the current statement for your spouse’s brokerage account before announcing and filing for the divorce. After all, a deceitful spouse could very easily liquidate the account with no paper trail by neglecting to cash checks until later. The last thing you want is to find out your spouse set up a new account after the divorce settlement while leaving the current brokerage statement with a zero balance.
Avoid Underestimating Living Expenses
You need to know what your spouse earns monthly, as well as where the money goes. According to a Divorcenet.com article, when considering the cost of future living expenses, it’s important to take into account the effect of inflation.
Don’t Let Emotions Get in the Way of Selling the Family Home
Whether you have an emotional attachment to your family home or are just being vindictive toward your former spouse, be sure you’re thinking wisely about your decisions with regard to shared property. You don’t want to discover later that you gave up other assets just to keep a home in which you can’t afford to live.
Know What You Value
When contemplating divorce, it’s important to consider what assets you value most and be prepared to let some things go. “A major mistake in divorce that everyone can get trapped into is spending hundreds or thousands of dollars fighting for something that you don’t even want.” Take your time so you can make the most rational and intelligent decisions.
Dress Appropriately for Court
It might seem like a small matter, but buying nice clothes for court can boost one’s confidence. “You will feel better and likely fair better with the judge.” Of course, clients should remember to keep it professional and avoid dressing in a manner that’s flashy or overly pompous. Play it safe by keeping clothing neutral and accessories to a minimum. It’s important to remember that divorce law varies by state, and some of these tips might not be applicable in your region. Be sure to find a divorce attorney in your area to advise you on how to get a divorce. Doing this will help protect your assets and property while ensuring the process goes as smoothly as it possibly can.
Factors Affecting Property Division
If you and your spouse cannot amicably divide assets and debts, the court will do it for you. In most cases, it is better that you come to an agreement on the fair and equitable distribution of property. While the court will come to a fair and equitable distribution, you may not get an asset that you want.
When determining how to divide assets equitably, courts consider:
• How long the parties were married
• Each spouse’s contributions to the marriage
• The future needs of each spouse
• Alimony awards
• Child custody
• The health and age of each spouse, which includes employability, potential retirement, and business chances after the divorce
• The occupation of each spouse, which determines earning power
• Each spouse’s education as it pertains to employability
• The non-marital assets of each spouse
Debts are considered in much the same way, but do have some additional parameters:
• Premarital agreements
• Real property may be sold, one spouse may buy the other out, or one spouse may keep the marital home in exchange for other assets. If the real property is sold, equity is divided equitably between the spouses. Generally, if one spouse keeps the house, that spouse is responsible for the mortgage. If possible, the mortgage should be refinanced to protect the other spouse.
• Vehicle payments are generally paid by the spouse who keeps the vehicle. If the parties have two vehicles, each spouse gets one along with the corresponding car payment.
Retirement plans and pension benefits are handled a bit differently. In most cases, if a plan or benefit is considered a marital asset, the person whose name is on the account gets it. However, if the plan or benefit skews the equitable distribution, the court will split it. If only one spouse’s name is on the plan or benefit, the court enters a qualified domestic relations order (QDRO) to order the account holder to divide it between the spouses as dictated by the court.
How Is Property Value Determined?
The amount of money a piece of property is worth is defined as a fair and impartial assessment of the property’s value. An accurate evaluation of real property value is determined by a professional real estate appraiser. In general, household items are not included in the division of assets during a divorce unless there are items of significant value. Personal property like furniture, collectibles, and vehicles will be determined by the resale value.
Property Division in Utah
Utah law requires equal and fair division of all marital property, which does not necessarily mean a 50/50 split. The court will take into consideration each spouse’s contribution to the acquired marital property and assets, regardless of income, and each spouse’s future needs. All marital property can be divided, regardless of location or whose name is listed on the title or deed. Utah law requires equal and fair division of all marital property, which does not necessarily mean a 50/50 split. Long-term marriages may end up as a 50/50 split or may be fairly distributed as more or less than 50 percent. For short-term marriages, the court may attempt to restore each spouse to their individual economic standing prior to the marriage.
Marital vs. Non-marital Property
Marital property is considered any property, income, other assets, or debt acquired during the marriage. The most common marital property is real property of land and any structures or buildings attached to it, such as a house. Personal property such as cars, jewellery, and furniture can also be considered marital property. Property can be considered marital even if a title or deed is only in one spouse’s name. Marital property can also include retirement or pension plan benefits.
Non-marital property is generally considered any property owned or acquired prior to the marriage. A gift or inheritance received by one spouse during the marriage may also be considered non-marital property. At the end of the marriage, each spouse keeps his or her own non-marital property. However, if any non-marital property was used to somehow benefit the marriage, it can legally be considered marital property.
How Equitable Distribution In Utah Works
In Utah, if you and your spouse can agree to a fair and reasonable division of property, the court will accept both spouses’ decision as long as it’s fair and reasonable. If you, on the other hand, cannot agree without getting the court involved, the marital estate and other property will be divided within the Judgement of Divorce by the district or family court in Utah.
How Utah Courts Divide Property In Divorces
What makes equitable distribution in Utah so confusing and unpredictable is that judges in the state almost never rely on some fixed and definitive rules when it comes to dividing property in a divorce. Instead, judges in Utah enjoy discretion to take into account all factors and circumstances of each marriage before issuing a Judgement of Divorce. But in no way does it mean that judges in Utah have freedom to divide marital property however they see fit. Courts still consider a variety of factors in equitable distribution such as:
• The length of the marriage;
• The age and health of both spouses;
• The employment occupations of both spouses;
• The sources and amount of each spouse’s income;
• How the spouses acquired the marital property;
• Post-divorce medical needs and childcare costs faced by each spouse;
• Each spouse’s level of education and earning potential; and
• The economic impact of the divorce on each spouse.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
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West Jordan, Utah
84088 United States
Telephone: (801) 676-5506