Divorce can be a complex process, and one of the many questions that couples face is how to divide their assets. In most cases, assets are split equitably, meaning each spouse receives a fair share. However, there are some instances in which specific assets may be awarded to one spouse over another. Here we’ll look at some factors that go into asset division during divorce and who gets a house in a divorce.
An asset is anything of value that a person owns. It can include property, such as a home or land, savings, investment accounts, furniture, and vehicles. It can also include intangible assets, such as stocks, bonds, and intellectual property.
In a divorce proceeding, assets are typically equitably divided between the two spouses, and each spouse receives a fair share of the assets based on their contribution to the marriage. However, there are some instances in which specific assets may be awarded to one spouse over another. Factors that can influence this decision include:
The reason for divorce: In some cases, such as when there is evidence of adultery or abuse, the court may award a more significant share of the assets to the victim’s spouse.
The needs of spouse: If one spouse has a greater need for certain assets, such as a family home or retirement savings, the court may award those assets to that spouse.
The contribution of each to the marriage: If one spouse has made significant financial contributions to the marriage, such as through their career or by paying for their children’s education, the court may award them a more significant share of the assets.
The future earning potential of each spouse: If one spouse is likely to earn more money than the other, the court may award them a more significant share of the assets.
The custody arrangement for any children: In some cases, the custody arrangement can influence the asset division. If one parent is awarded primary custody, they may also be awarded the family home.
The tax implications of the asset division: In some cases, how assets are divided can significantly impact the taxes each spouse will pay. For this reason, it’s crucial to speak with a tax advisor before finalizing any divorce settlement.
The most common assets that are split during a divorce settlement are:
The family home: In many cases, the family home is the most valuable asset a couple owns. If the home’s awarded to one spouse, they may be required to buy out the other spouse’s share.
Savings and investment accounts: These can include savings accounts, investment accounts, and retirement accounts. Each spouse is typically awarded their account, and the balance is divided between them.
Vehicles: Each spouse is typically awarded their vehicle. The vehicles may be sold, and the proceeds split evenly between the two spouses.
Furniture: In most cases, each spouse is awarded their furniture. However, the furniture may be sold sometimes, and the proceeds are split evenly between the two spouses.
Courts typically use a process known as equitable distribution to determine who gets what assets during a divorce settlement. This process considers many factors, including the reason for the divorce, the needs of each spouse, the contribution of each spouse to the marriage, the future earning potential of each spouse, and the custody arrangement for any children.
The court will consider the tax implications of the asset division when making its decision. In some cases, it may be beneficial for one spouse to receive a particular asset to minimize their tax liability. Speaking with a tax advisor before finalizing any divorce settlement is crucial.
One way is to hold assets in separate accounts in your name. It can be challenging to do if you have joint accounts, but transferring some of the assets into separate accounts may be possible before filing for divorce.
Another way is to have a prenuptial agreement before getting married. This agreement can outline how assets will be divided in the event of a divorce and can help to avoid any conflict later on.
Finally, you can also try to negotiate a fair settlement with your spouse outside of court. It can be done through mediation or Collaborative Law and can help to avoid the stress and expense of a court battle.
One of the most common mistakes people make when dividing assets during a divorce is failing to account for all the assets in the marital estate. It can lead to one spouse receiving less than they are entitled to.
Another mistake is failing to consider the tax implications of the asset division. It can be a costly mistake if you are not aware of the tax consequences of certain assets.
Finally, people sometimes fail to consider their future needs when dividing assets. For example, they may fail to account for their future income potential or their need for health insurance, which can make them worse off financially in the long run.