The year 2020 was certainly one for the books! Now that the holidays are over and we are into 2021, you may be wanting a fresh start. Is it time to make a transition in your life? Are you ready for a new beginning? Before you consider the DIY approach to divorce, beware. There are a lot of mistakes we frequently see people make that can have long-term, and often irreversible consequences.
Advance Division of Assets
Perhaps you and your spouse have discussed how to divide your estate upon divorce and generally have an agreement. That’s great! However, you should resist the temptation to go ahead and divide the assets before filing or finalizing your divorce. Why? First, not all assets are created equal. It may seem reasonable to trade the house for your spouse’s retirement account, but they may not be even swaps. What is the fair market value of the house? Does it need repairs to realize any value from it? The retirement account is not liquid and can result in in penalties and interest if reduced to cash. And don’t cash in the retirement account! You will bring unnecessary penalties to yourself that are not necessary. There is a way to divide the retirement account post-divorce where the non-participating spouse will not be penalized. But it needs to be done correctly. Finally, a division that is just and right may nor may not be a 50-50 division. A lot of factors, including the assets of both spouses and their respective earning powers and the tax effect of the division should all be taken into consideration.
Not Accounting for All Assets
A second mistake we see people make is drafting their own divorce decree and failing to account for all assets. The fact that an asset is in the sole name of one spouse does not mean it does not get addressed in the order. A house purchased during the marriage is presumed to be community property, even if only one spouse’s name is on the title. If you have not told your spouse about that bank account with your mad money or the winning lottery ticket, and he finds out about it later, you may find yourself in further litigation. Undisclosed assets are subject to future division, and in some instances, may be awarded 100% to the other party. The best way to prove disclosure is to list it in your order.
Failing to Properly Account for Debt
Technically, there is no such animal as “community debt”. There is joint debt and individual debt accrued during the marriage. But this debt is factored into the division of the marital estate. People will frequently divide all assets and all debts down the middle, thinking they have evenly divided their estate. But, more often than not, this is not the case! The Court cannot reorder your contractual obligations with your creditors. So, if the automobile debt is in your name, but you agree that your spouse should get the car and she doesn’t make payments, the creditor is only going to look to you for payment! That’s right, she gets the asset, and you get to pay for it! If you decide each of you will pay 50% of a debt that is only in your name, and he doesn’t pay his half, you get to pay all of it! This may not be your intent, so be careful.
Seek Trusted Legal Advice
Drafting a Divorce Decree is very much an art, not a science. All assets are not created equal. And mistakes made in documenting your property division can unintended, and irreversible consequences. Seek legal advice before you file for divorce so you can have peace of mind in knowing you are protected. At The Ramage Law Group, our lawyers will review your divorce plan and work to help you protect your future!