Filing for divorce can be an overwhelming process. It can, and often does, take an emotional and financial toll those it affects. However, there are steps you can take to try to lessen the stress and reduce the unpredictability of the divorce process.
Perhaps one of the most contentious issues for all divorces is how to divide marital property between spouses. In Texas, the division of marital community property, which includes wages, retirement, and property acquired during the marriage, is divided in a “just and right” manner which often means a 50/50 split. However, there are some important caveats which may lead to an uneven division of marital property. Some factors which may impact the division of property are the nature of the assets in the community estate, the tax implications of the assets, debts held by the marital estate, and the size of the spouses’ separate estates. In addition, special considerations exist when there is fault in the break-up of the marriage, such as adultery or cruelty, or when there is family violence, waste, or fraud.
One of the most important steps to take in making the divorce process easier is gaining an accurate understanding of the finances.
Due to various factors that can create complexity in dividing property in a divorce proceeding, it is important to obtain certain information before filing for a divorce. One of the most important steps to take in making the divorce process easier is gaining an accurate understanding of the finances. A good place to start is to take an accounting of all debts and assets owned by both parties. Some common items that typically comprise a marital estate include real estate, bank accounts, brokerage accounts, retirement accounts, stocks and bonds, and vehicles. Determining the value of assets is not only helpful in the negotiation phase of a divorce, but is also useful in keeping track of assets before a divorce proceeding occurs. In some instances, spouses may panic or become erratic and may divert funds to unknown accounts or increase their spending habits. Having an accurate financial picture can help prevent unwarranted spending or asset sheltering. Consulting with a divorce attorney who is Board Certified in Family Law by the Texas Board of Legal Specialization or a financial planner can help determine the size and contents of a marital estate, too.
In addition to assets held in various financial accounts, it is important to ascertain the value of items that may be more difficult to accurately appraise or quantify. One example is determining how much and in what manner your spouse is paid. Identifying earnings and deferred benefits can help create a clear picture as to where potential marital assets may lie and may help in determining payments due to be made after the divorce. Additionally, taking inventory of household and family assets, such as jewelry, artwork, antiques, furniture, collectibles, and items held in safety-deposit boxes, can help in achieving an accurate accounting of the marital estate and facilitate appraisals.
An often-overlooked area in preparing for divorce is in determining any tax liabilities and benefits arising from previous years’ tax returns. In divorce proceedings, tax liabilities are particularly important since in most instances couples choose to file “married filing jointly” when preparing their taxes. While choosing to file jointly while married can be beneficial for various tax reasons, it can also be a cause of concern because it creates joint liability for any taxes due from the couple’s tax return. What this means is, even after the divorce is settled and finalized, a former couple may still receive a surprise tax bill from the IRS that both parties will be responsible to pay. On the other hand, the existence of a tax benefit can create a situation where one party mistakenly leaves an asset out of the division of property. Mistakenly leaving out tax benefits from property division negotiations, such as an expected refund, can be detrimental. A Certified Public Accountant or a board- certified family law attorney can help identify potential tax issues in a pending divorce.
Finally, one of the simplest ways to facilitate an accounting of the marital estate is to make copies of financial documents, which include tax returns, bank statements, check registers, life insurance policies, mortgage documents, credit card statements, wills, automobile titles, Social Security statements, business financial records, retirement account statements, and investment statements. If possible, creating digital copies of documents mentioned above will make it easier for a divorce attorney or a financial professional to determine the size, value, and liquidity of the marital estate before any divorce proceeding has commenced. In addition, after a divorce is filed, obtaining access to important documents may become contentious. Making copies of them beforehand can help avoid potential unnecessary conflict as the divorce action progresses.
Going through a divorce is among the most difficult life events that one can experience. However, taking the above-mentioned steps may help an otherwise unpleasant process go a bit smoother.
This post was created by D Partners Studio on behalf of The McClure Law Group. Kelly McClure, a collaborative law advocate, board certified in Family Law by the Texas board of Legal Specialization, leads the firm with more than 25 years of mediation and trial experience. She and her team provide clients with extraordinary expertise in every method of resolution for their family law concerns. Visit mcclure-lawgroup.com to learn more about how to protect yourself and your fortune during divorce.