A Brief Overview of Dividing Assets and Debts in Divorce

Financial matters are a primary topic of discussion in divorce mediation. While it can be difficult to sort out the entirety of your and your spouse’s combined assets and liabilities, at the end of the day it is important to be informed regarding how finances and property may be divided upon separation. This will protect you and ensure your needs are met.

In order to expedite the process of dividing your assets in mediation (if you do not have a prenuptial agreement), take stock of your financial, personal, and real property now. We will consider the value of your bank accounts, properties, insurance policies, retirement funds, pensions, and investments.

The goal is to enter any discussion about finances with a clear picture of what you want. In separation, the division of assets is measured against an equitable standard, however you and your spouse may make any agreement that is satisfactory. Financial trade-offs are common, and may ultimately be a better benefit to both parties rather than dividing assets down the middle. A few trade-off examples include: Party A keeps his retirement account and Party B keeps the marital home; Party A foregoes paying alimony to Party B in exchange for an agreement that Party A will pay their children’s educational expenses until they turn 18.

Additionally, it is essential to determine what your income and expenses will look like post-separation. In some situations, you may be eligible to receive support in the form of child support and/or alimony. On the other hand, you may be the person obligated to pay support to your former spouse. In any case, it is crucial to create a budget for yourself now. This can be a stressful task, and it is something we can work on in mediation so it doesn’t overwhelm the process of separation.

Finally, post-separation, you should consider working with an accountant to ensure your personal income taxes are accurately prepared, as there are new assets and expenses to consider now that you will not be filing a joint return.