Splitting Assets in Divorce

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Gardener
Posts: 190
Joined: Sun Nov 18, 2012 3:03 pm

Splitting Assets in Divorce

Post by Gardener » Sat Jan 06, 2018 6:14 am

Quick background:

Wife and I have decided to divorce. We have one very young child together. Child would probably see mom/me 60/40 respectively.

Wife earns ~125k
I earn ~100k

Assets:

Primary Home Equity: ~200k (Valued at ~400k, Mortgage Balance ~200k)
Condo Equity (different state): ~0k (Valued at ~50k, Balance ~40k, essentially a wash if we were to sell) Condo is in her name only
401ks/TSP: ~280k
Roths: ~85k<br/>
Checking/Savings: ~20k
Taxable Mutual Fund: ~12k

Other perhaps pertinent information to add in the interest of fairness:

For 7 of 8 years of marriage, wife earned ~125k, while I earned only ~50k. Last year and going forward, I will earn ~100k and likely increase 10% each year
We paid off her student loans of ~60k, paid of her 30k truck
I have 10k (@1,49% interest) remaining on a 20k car

Wife and I get along extremely well as friends (but she decided she wants something different and I feel the same way). Both of us are only interested in splitting things fairly and neither one of us is contentious in nature. We believe we can split fairly on our own. She seems indifferent as to whether she wants to stay, keep the home in the long term. Both of us do not want to get lawyers involved. In the short term, she has agreed to stay in the home and I will move out. We are both in our early 30's.

Questions:

1. Is there a way to split retirement accounts fairly without generating a taxable event and avoiding the penalty for early withdrawal?

2. What is the best way to split the equity of the house, assuming one of the spouses still wants to live in the house?

3. Is there a reasonably priced professional that would be worth paying to assist in this? Or given that we are both amicable, can we do this on our own?

4. How do we account for the fact that wife has earned more for majority of marriage?

5. What would be fair for child support?

6. Any other advice for me?

Thank you

denovo
Posts: 4026
Joined: Sun Oct 13, 2013 1:04 pm

Re: Splitting Assets in Divorce

Post by denovo » Sat Jan 06, 2018 6:36 am

Gardener wrote:
Sat Jan 06, 2018 6:14 am

2. What is the best way to split the equity of the house, assuming one of the spouses still wants to live in the house?
A lot of the questions you posed are difficult and will likely lead to a wide range of opinions, but this one should be pretty straightforward. Once you both agree how you want to divide the assets (percentage-wise), the spouse who keeps the house removes the other spouse from title and, and the departing spouse would get an equivalent asset to make up for the loss.
"Don't trust everything you read on the Internet"- Abraham Lincoln

jerkstore
Posts: 66
Joined: Tue Mar 08, 2011 12:52 pm

Re: Splitting Assets in Divorce

Post by jerkstore » Sat Jan 06, 2018 6:42 am

6. Any other advice for me?
Seek an attorney. If your state offers dissolution, then you both basically agree upon all the details of a plan (asset split, child support, custody, visitation, etc.), and submit it to the court for entry/approval. Even in that situation, you both should have an attorney, but this could save you many thousands of dollars.

Katietsu
Posts: 1383
Joined: Sun Sep 22, 2013 1:48 am

Re: Splitting Assets in Divorce

Post by Katietsu » Sat Jan 06, 2018 6:52 am

1) This one is easy. Section 408(d)(6) of the Internal Revenue Code says that the transfer of an individual's interest in an IRA to a spouse or former spouse is not a 'taxable transfer. A QDRO is used to transfer retirement or pension assets. So, whatever decision is made, the retirement account assets can have ownership adjusted without taxation.

2) I think the only reasonable way to keep the house is that one party gets a mortgage in their name alone and buys the other party out. Just determine the value of the equity and include this as part of the division of assets. You can decide if it is necessary to each hire an appraiser to determine home value or if you are confident in your estimate of the home value.

3) It sounds like you do need a professional to help you through this. There are professionals that specialize in non contentious divorce.

4) You are probably under no legal obligation to account for your lower earnings. If you feel that you want reduce your share of the assets that sounds like a personal choice without a mathematical answer.

5) Child support and child custody are about the rights and welfare of the child. Your state laws and guidelines will need to be consulted first.

Mues
Posts: 22
Joined: Wed Jan 11, 2017 6:59 pm

Re: Splitting Assets in Divorce

Post by Mues » Sat Jan 06, 2018 7:04 am

As a general thing.

Getting lawyers involved does not mean you have to fight.

For example in Australia you need a binding financial agreement. Otherwise in 5 years if you won the lotto or inherited money she would have a claim.

I’d just agree to 50/50. If she pushes give up a little bit. Then have the lawyers make sure it’s executed properly.

Best to move on with your life quickly.

Plus, in the most polite way. You don’t have that much money in comparison to what you will earn in the future. Or as we put it here. You ain’t exactly playing for sheep stations.

ausmatt
Posts: 54
Joined: Sun Jan 02, 2011 1:53 pm

Re: Splitting Assets in Divorce

Post by ausmatt » Sat Jan 06, 2018 7:37 am

First - I'm very sorry you are going through a divorce. No matter the amicability, they are tough (in my experience).

You should hire an attorney to help guide you through all this. You can likely get all the advice and paperwork done for <$1000 if it is truly amicable. They will also recommend some consulting/therapist time with a family counselor that specializes in divorce and joint parenting - do this no matter what the expense.

As others have said, a QDRO will split most of the assets without tax implications, etc. But an attorney would help you navigate this properly.

Also, and I hate to be the negative pessimistic person on this thread ... but make sure your child custody is exactly how you want it because things could change in terms of the amicability level. Furthermore, make sure you have clean rights on who is paying for what medical, childcare, etc. and who has what rights in terms of medical (e.g., invasive medical procedures).

Gardener
Posts: 190
Joined: Sun Nov 18, 2012 3:03 pm

Re: Splitting Assets in Divorce

Post by Gardener » Sat Jan 06, 2018 7:44 am

Katietsu wrote:
Sat Jan 06, 2018 6:52 am
1) This one is easy. Section 408(d)(6) of the Internal Revenue Code says that the transfer of an individual's interest in an IRA to a spouse or former spouse is not a 'taxable transfer. A QDRO is used to transfer retirement or pension assets. So, whatever decision is made, the retirement account assets can have ownership adjusted without taxation.

OP RESPONSE: Katie, can the transfer of funds from an IRA be taken out as cash and given to the former spouse w/out pentalty?

2) I think the only reasonable way to keep the house is that one party gets a mortgage in their name alone and buys the other party out. Just determine the value of the equity and include this as part of the division of assets. You can decide if it is necessary to each hire an appraiser to determine home value or if you are confident in your estimate of the home value.

3) It sounds like you do need a professional to help you through this. There are professionals that specialize in non contentious divorce.

OP RESPONSE: Forgive my ignorance, but what kind of professional is sought out for something like this?


4) You are probably under no legal obligation to account for your lower earnings. If you feel that you want reduce your share of the assets that sounds like a personal choice without a mathematical answer.

5) Child support and child custody are about the rights and welfare of the child. Your state laws and guidelines will need to be consulted first.
Last edited by Gardener on Sat Jan 06, 2018 7:48 am, edited 1 time in total.

Gardener
Posts: 190
Joined: Sun Nov 18, 2012 3:03 pm

Re: Splitting Assets in Divorce

Post by Gardener » Sat Jan 06, 2018 7:47 am

Thank you everyone.

Are there any good books to read on this topic?

I suppose that I am looking for somewhat of a step by step plan to navigate through this as smoothly and inexpensively as possible.

Thanks

User avatar
Ruprecht
Posts: 525
Joined: Fri Aug 17, 2007 10:34 pm
Location: a very nice cardboard box
Contact:

Re: Splitting Assets in Divorce

Post by Ruprecht » Sat Jan 06, 2018 7:56 am

I don't have any personal experience with divorce, but a friend of my wife's just quit her usual job to become a divorce mediator. She went through some sort of abbreviated training program for it. I assume her services would be much cheaper than a lawyer. I would bet there are people doing that sort of thing all over the country. Even if you are planning to do everything amicably, it might still be valuable to have someone like that to be the "neutral third party" that can look over everything to make sure it's all fair.

pennywise
Posts: 424
Joined: Sat May 31, 2014 6:22 am

Re: Splitting Assets in Divorce

Post by pennywise » Sat Jan 06, 2018 8:22 am

Gardener wrote:
Sat Jan 06, 2018 7:44 am
Forgive my ignorance, but what kind of professional is sought out for something like this?
This was mentioned in another response but a divorce mediator can work with you both without going into full fledged lawyer up mode.

I have no connection other than that one of the principals is a friend of a friend, but here's a website for a local mediator that specializes in this situation. Perhaps you can find something similar where you live (unless you live in South Florida in which case here's a suggestion :happy )

http://www.divorcewithoutwar.com/

harrington
Posts: 116
Joined: Tue Jun 21, 2011 9:09 am

Re: Splitting Assets in Divorce

Post by harrington » Sat Jan 06, 2018 8:25 am

I got divorced 10 years ago. We sat down on a Sunday afternoon and figured out all the logistics. I bought her out of our home and we split the $$ down the middle. Our child is grown so that wasn't an issue. I hired an attorney to draw up the papers and we split the cost of the attorney. Total legal fees were $1500. We still remain friends based on how we handled things. Divorce doesn't have to be difficult.

Determined
Posts: 177
Joined: Sat Aug 12, 2017 7:43 pm

Re: Splitting Assets in Divorce

Post by Determined » Sat Jan 06, 2018 9:16 am

ausmatt wrote:
Sat Jan 06, 2018 7:37 am

Also, and I hate to be the negative pessimistic person on this thread ... but make sure your child custody is exactly how you want it because things could change in terms of the amicability level. Furthermore, make sure you have clean rights on who is paying for what medical, childcare, etc. and who has what rights in terms of medical (e.g., invasive medical procedures).
Yes, to this. I wish you all the best. As far as child support and alimony, you need to refer to your state and local guidelines.

User avatar
bottlecap
Posts: 5491
Joined: Tue Mar 06, 2007 11:21 pm
Location: Tennessee

Re: Splitting Assets in Divorce

Post by bottlecap » Sat Jan 06, 2018 9:23 am

I would try to come up with what is fair (should you both be debt free, have paid off cars, etc...) get an idea of what you want and then jointly seek out a lawyer to help you get the process done.

Contributing financially for the child may be an issue and you haven't mentioned it. If you can work that out, then this strategy might work.

Some lawyers might be hesitant because of the potential for client conflicts, but if you tell the lawyer that this is what you want done and he is simply to effectuate it, some lawyer may be willing to do it. Agree with your spouse before hand if a lawyer tries to create an issue between you, you will drop the lawyer and seek another.

A variant is to have each of you use a lawyer, but I think the potential for adversity goes up.

Note that I am not a divorce lawyer, I'm just trying to think outside the box.

Good luck,

JT

User avatar
StevieG72
Posts: 735
Joined: Wed Feb 05, 2014 9:00 pm

Re: Splitting Assets in Divorce

Post by StevieG72 » Sat Jan 06, 2018 10:22 am

When I seperated 10 yrs. ago neither of us wanted to pay lawyers thousands of dollars to decide how we should split assets, decide custody of our child etc.

That being said, they are still needed. In a short period of time I hired a well respected lawyer to produce a seperation agreement. Cost was $800, money well spent. We basically decided how assets would be split, how custody would be handled etc. Lawyer put this in a binding formal aggreement. If you skip this step you will likely have issues in the future. You both may decide what is fair today, but a year from now one of you may see fairness differently.

Child support and custody could be brought up at anytime, there is nothing final about these issues until the child is an adult.

We divorced roughly 2 yrs following the seperation agreement. The only issue / change was that child support was reviewed.

10yrs. later and we have had no issues, and no need to get the courts involved in our lives. I anticipate this to be the case indefinitely.

We decided on shared custody. It is literally 50/50, our child is very well adjusted and wants this time with each parent. We are both very flexible with our time with the child. If one parent wants to take a vacation for 2 weeks for a trip to Alaska with the child, no problem. We work together to get kid to and from school, activities etc. We agree on parenting, both overprotective / borderline helicopter parents. Our kiddo is an only child, I tell her if we had a backup there would be less need to be overprotective!

Best of luck to you with this new chapter in your life. I hope you have great results with co-parenting.
Fools think their own way is right, but the wise listen to others.

Katietsu
Posts: 1383
Joined: Sun Sep 22, 2013 1:48 am

Re: Splitting Assets in Divorce

Post by Katietsu » Sat Jan 06, 2018 10:28 am

If money is withdrawn/distributed from an IRA or retirement plan, it is subject to all the ordinary penalties and taxes. What the special rules allow for is s transfer of assets to the former spouse. For example, spouse 1 has $100,000 in an IRA and spouse 2 has no IRA. Using a court order that can be part of the divorce judgement, $50,000 of the IRA assets can be transferred to a new IRA in the name of spouse 2. Assets within a retirement plan like a 401k or TSP can also be split similarly. Thus, a former spouse can end up with a retirement account for an employer for whom they have never worked.

I am not suggesting that this type of transfer is desirable in the OP’s situation. Just that it is an option.

ResearchMed
Posts: 6240
Joined: Fri Dec 26, 2008 11:25 pm

Re: Splitting Assets in Divorce

Post by ResearchMed » Sat Jan 06, 2018 10:29 am

jerkstore wrote:
Sat Jan 06, 2018 6:42 am
6. Any other advice for me?
Seek an attorney. If your state offers dissolution, then you both basically agree upon all the details of a plan (asset split, child support, custody, visitation, etc.), and submit it to the court for entry/approval. Even in that situation, you both should have an attorney, but this could save you many thousands of dollars.
This ^^^

If you "show up" with all the financials sorted out, this is not an expensive legal process.

But you have a young child.
The court almost definitely WILL be involved in making sure the custody and support is "okay", so you probably want to get that part okay'd by an attorney anyway, before submitting court docs.

But you also might each want to consult with your *own* attorney (paid separately by each of you, with no connection between the attorneys), so that *IF* in the future, things become contentious ("one never knows", etc.), neither of you can claim there was coercion, misleading, or such.
Even "Best Friends Forever"... sometimes aren't...

It would be wonderful if you can both remain friends, for each of you, and especially for your child.
Even so, it's not easy.

Best wishes for a comfortable process, etc.

RM
This signature is a placebo. You are in the control group.

wrl
Posts: 23
Joined: Wed Mar 05, 2014 7:24 pm

Re: Splitting Assets in Divorce

Post by wrl » Sat Jan 06, 2018 10:43 am

I would advise both get separate lawyers that agree to mediation. Mediation is a great, low cost way to divorce but still have legal help.

Since she has always earned more than you, you may be able to get alimony from her or at least have her pay the majority of child support. Post marriage assets will likely be split 50/50 regardless of income earned over the marriage. Most states have child support calculators on their website in which you put in you and your spouses financial information and such and it will give you the amount each contributes. Judges usually use these guidelines in their final decision.

User avatar
BolderBoy
Posts: 3879
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: Splitting Assets in Divorce

Post by BolderBoy » Sat Jan 06, 2018 12:47 pm

Gardener wrote:
Sat Jan 06, 2018 6:14 am
6. Any other advice for me?
Your state likely provides a how-to document on-line to aide in preparing your own divorce paperwork. But be advised that many/most states require an attorney be hired if there are minor children involved.

Sorry that it has come to divorce. No matter how amicable, it still hurts.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

Not Law
Posts: 175
Joined: Sun Sep 14, 2014 8:05 am

Re: Splitting Assets in Divorce

Post by Not Law » Sat Jan 06, 2018 1:49 pm

Consider maintaining the home for the child, with each custodial parent moving in and out of the house for parenting time. Have an apartment on the side that either of you lives in when the other is at home with the child. Makes for a more stable childhood.

You must have a lawyer familiar with drafting QDROs (qualified domestic relations order). This is the only way to have a tax free transfer of retirement funds. Each fund has its own quirky requirements. It is not uncommon to have to submit several drafts before the fund will accept the order.

Dottie57
Posts: 3295
Joined: Thu May 19, 2016 5:43 pm

Re: Splitting Assets in Divorce

Post by Dottie57 » Sat Jan 06, 2018 1:57 pm

A mediator might help.

Good luck ar a fair divorce.
Last edited by Dottie57 on Sat Jan 06, 2018 2:19 pm, edited 1 time in total.

ResearchMed
Posts: 6240
Joined: Fri Dec 26, 2008 11:25 pm

Re: Splitting Assets in Divorce

Post by ResearchMed » Sat Jan 06, 2018 2:04 pm

Not Law wrote:
Sat Jan 06, 2018 1:49 pm
Consider maintaining the home for the child, with each custodial parent moving in and out of the house for parenting time. Have an apartment on the side that either of you lives in when the other is at home with the child. Makes for a more stable childhood.

You must have a lawyer familiar with drafting QDROs (qualified domestic relations order). This is the only way to have a tax free transfer of retirement funds. Each fund has its own quirky requirements. It is not uncommon to have to submit several drafts before the fund will accept the order.
This sounds complicated (= $$).

How much does each of you have in tax-deferred accounts?

If it's not too asymmetric, perhaps it could be "fixed" by taking cash and adding to an IRA for the one with less, or perhaps the employee contribution wasn't maxed?
Perhaps you could then avoid dealing with QDRO's.
If only one of you has those, then that's not going to work.

As for leaving the children in the house, and alternating living there with them, we've had friends who did this, and it worked really well.
However, they did NOT share an apartment for "off" time. They each had their own smaller place, so they could comfortably have their "own lives"...

RM
This signature is a placebo. You are in the control group.

dbr
Posts: 26601
Joined: Sun Mar 04, 2007 9:50 am

Re: Splitting Assets in Divorce

Post by dbr » Sat Jan 06, 2018 2:24 pm

BolderBoy wrote:
Sat Jan 06, 2018 12:47 pm
Gardener wrote:
Sat Jan 06, 2018 6:14 am
6. Any other advice for me?
Your state likely provides a how-to document on-line to aide in preparing your own divorce paperwork. But be advised that many/most states require an attorney be hired if there are minor children involved.

Sorry that it has come to divorce. No matter how amicable, it still hurts.
Yes, my limited experience would suggest that there are enough legal pitfalls that legal advice is pretty much necessary no matter how amicable the settlement. I understand courts may not allow settlements when it may be that the interests of some parties might not be adequately represented.

User avatar
dm200
Posts: 16003
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: Splitting Assets in Divorce

Post by dm200 » Sat Jan 06, 2018 3:17 pm

No personal experience myself - BUT I suggest you BOTH need separate legal advice. Beware of unintended consequences. This is one example of some acquaintances.

Both had public service careers with DB pensions. Property settlement indicated that upon "retirement" (getting DB pension) he would get part of hers and she part of his. She was somewhat more financially challenged. Then, she had to take early retirement (and collect DB pension) while he still worked. HE got a part of her DB pension - but she could not get anything from his until he would retire years later.

I suspect there are many such situations, not readily apparent, that should and could be addressed in the divorce and property settlement.

User avatar
Sandtrap
Posts: 4411
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳

Re: Splitting Assets in Divorce

Post by Sandtrap » Sat Jan 06, 2018 3:23 pm

dm200 wrote:
Sat Jan 06, 2018 3:17 pm
No personal experience myself - BUT I suggest you BOTH need separate legal advice. Beware of unintended consequences.. . . .
I suspect there are many such situations, not readily apparent, that should and could be addressed in the divorce and property settlement.
+1
No matter how amiable. . . seek legal counsel.
Sometimes the smallest details have long term repercussions.
j

User avatar
aspirit
Posts: 53
Joined: Wed Jan 03, 2018 12:52 am
Location: Bos/Mia-south

Re: Splitting Assets in Divorce

Post by aspirit » Sat Jan 06, 2018 3:38 pm

dm200 wrote:
Sat Jan 06, 2018 3:17 pm
Beware of unintended consequences. +1

Sandtrap wrote:
Sat Jan 06, 2018 3:23 pm
+1
No matter how amiable. . . seek legal counsel. (preferably with fixed costs, like an hr. only financial planner.)
Sometimes the smallest details have long term repercussions.
j
Another +1 = 2, or 3. :oops: . Good luck!
Time & tides wait for no one. A man has to know his limitations.

vested1
Posts: 1422
Joined: Wed Jan 04, 2012 4:20 pm

Re: Splitting Assets in Divorce

Post by vested1 » Sat Jan 06, 2018 4:13 pm

It is important to knows the laws for the State you live in, so getting an attorney is a must. Several here have mentioned that retirement assets (not IRA's or 401k's) are community property. That is not accurate in some States, which don't impose sharing of a pension or a lump sum when the marriage is under 10 years in duration. A QDRO is required when retirement vehicles like a pension or lump sum are involved, but not usually when they are not.

I'm on my 3rd and final marriage of 25 years so far, and have painful experience with QDRO and all other aspects mentioned by others here. My best advice is to keep it friendly if at all possible, but don't place your full trust in your soon to be ex. Divorce decrees have a nasty habit of providing unwelcome surprises at a later date.

Concerning your question about cashing out money for one of the recipients: If that is done make sure the receiving party is recorded as being responsible for the taxes due on the distribution. I would also try to come to an agreement to file joint taxes in the first year of the divorce. This should save you money in the short term, which will be needed for relocation expenses and legal fees, however small. Also keep in mind that under the new tax law, alimony agreed upon after 1/1/18 is not tax deductible for the one who pays, nor counted as taxable income for the recipient. Since you now make approximately the same I would avoid the subject of alimony. What you were making before as individuals is irrelevant to a judge if you are making fairly equivalent wages now.

Sandi_k
Posts: 669
Joined: Sat May 16, 2015 11:55 am
Location: SF Bay Area

Re: Splitting Assets in Divorce

Post by Sandi_k » Sat Jan 06, 2018 4:22 pm

There are many details that have not yet been mentioned.

For example, who gets to take the child as a tax deduction? You want it in writing that this is done in alternating years, for example.

Second, who maintains health insurance for the child, and how does the other parent compensate the providing parent for that cost?

What about visitation over Christmas, Thanksgiving, Spring break, summer break? Who pays for daycare?

If you have any documents that detail who had what savings on date of marriage, I'd put that in a spreadsheet. Then add up totals to get to present day valuations. The additions during the marriage are deemed equal, assuming a community property state, regardless of who paid them. So subtract the beginning values from ending value - and divvy up accounts 50/50 on that differential.

For example: there is $280k in 401(k) accounts, and $85k in Roths. Let's say that $100k was her 401(k) balance on marriage date, $20k was yours, and $160k is growth. In deciding the QDRO amount, she'd retain the initial $100k, you'd retain $20k, and then you each get half of the growth - $80k each. Same with the Roths.

I would advocate selling the house and splitting the equity. Your "very young" child doesn't know the difference, and it's simple. If she wants to keep the house, she needs to refinance and buy you out.

And for the person who suggested letting her take the house, and re-titling it in her name - NO WAY! Not unless she refinances and provides proof that you're no longer named on the loan. I had a friend whose ex-wife got him to sign a quitclaim deed to the house, but she could not refi because she had no income. He lived in squalor for 5 years post-divorce, because he couldn't qualify for a new mortgage or decent apartment, given the mortgage on his credit report. He was only released once she inherited funds and paid it off.

So remember - title and loan go together - don't release the asset unless you've been officially released from the liability.

My condolences - this is not easy stuff, even when amicable.

WhyNotUs
Posts: 1257
Joined: Sun Apr 14, 2013 11:38 am

Re: Splitting Assets in Divorce

Post by WhyNotUs » Sat Jan 06, 2018 4:26 pm

You could sell the house and use equity to balance the retirement assets.

Mediator can be a good step in finalizing terms and making sure that everything is covered.

Don't forget college. I ended up paying for all of it x2 by default.
I own the next hot stock- VTSAX

User avatar
dm200
Posts: 16003
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: Splitting Assets in Divorce

Post by dm200 » Sat Jan 06, 2018 4:38 pm

One very often misunderstood situation is the difference between contractual obligations/liability and divorce/property settlement agreements.

Example: Husband and wife have joint car loan with a credit union. Couple agrees that Husband will get the car and will make the payments. This is part of the divorce and property settlement. Ex-wife thinks she has no obligation to the credit union "because that is what a judge says". She is wrong. Her debt obligation to the credit union remains unless there is a new or replacement loan agreement releasing her from the obligation.

User avatar
TNL
Posts: 345
Joined: Sat Jul 25, 2015 2:13 pm

Re: Splitting Assets in Divorce

Post by TNL » Sat Jan 06, 2018 5:02 pm

Good advice above from everyone. Former family law attorney here. When you have a child or real estate, do not attempt to do this on your own. I made a ton of money fixing divorces that people had done themselves. In most cases, it cost them much more to fix than if they had simply ponied up $2500 to do it right the first time. Look at the $2500 as a cost of doing business and doing it right. Happy to discuss in more detail but the descriptions above, particularly on the real estate, cover it.

It sounds like you have identified all the assets. Now sit down and figure out how to horse-trade back and forth to reduce having to transfer money as much as possible. Reduces transaction time and costs.

If you are transferring 401k or IRAs, I always used to add that the paperwork needed to be started within 60 days of the divorce being final. Get the assets under your name and control; don't let these things sit for years before rolling out to your own 401k etc.

Most states have draft template parenting plans that cover holidays, vacation time, etc.

Most states have child support formulas to calculate child support. Each parent's income goes in and then how much time the child spends with each parent. Hit the button and poof! Out comes the number and who pays who. It will also take into account who is covering the child on health insurance and put that into the figure.

Based on the length of the marriage and each of your respective incomes, you may or may not be legally entitled to alimony. This is usually state- and case-specific and usually not formula based. Talk to an attorney before you waive your right to anything.

Been divorced from my child's parent for 10 years, very amicable, went to court 1 time on a preliminary motion hearing to get some assistance when child went into elementary school for a few years and we were not agreeing on parent time, then we went to mediation and resolved it. This was 3 years ago now and everything going great. If the both of you can always commit to putting your child first, you are 75% of the way there. Best of luck to you.

Rupert
Posts: 2997
Joined: Fri Aug 17, 2012 12:01 pm

Re: Splitting Assets in Divorce

Post by Rupert » Sat Jan 06, 2018 5:45 pm

Gardener wrote:
Sat Jan 06, 2018 6:14 am
Wife and I get along extremely well as friends (but she decided she wants something different and I feel the same way). Both of us are only interested in splitting things fairly and neither one of us is contentious in nature. We believe we can split fairly on our own. She seems indifferent as to whether she wants to stay, keep the home in the long term. Both of us do not want to get lawyers involved. In the short term, she has agreed to stay in the home and I will move out. We are both in our early 30's.
I don't have anything to add re the technicals. You've gotten excellent advice above. Because of the minor child, I believe you would be best served by two lawyers, which doesn't mean it will be contentious. Note that there are divorce lawyers known for being contentious and divorce lawyers known for being more mediation types. Make sure you do your homework locally and get two lawyers of the latter variety. (In my city, for example, there were for years two lawyers who handled all the really nasty divorces; all the other family lawyers referred the nasty cases to those two lawyers). The lawyers can actually save you money in the long run by thinking of issues/potential problems you might not have thought of. Finally, I hope I'm not overstepping my bounds by saying that you may feel the way you do ("We believe we can split it fairly on our own"; "She seems indifferent . . .", etc.) now because you are in the throes of it and likely still care for each other a great deal. You may not feel as charitable a few years down the road when one or another of you has met someone new, gotten remarried, etc. It really is best to let objective professionals help you through this. The mediation option sounds great.

Sandi_k
Posts: 669
Joined: Sat May 16, 2015 11:55 am
Location: SF Bay Area

Re: Splitting Assets in Divorce

Post by Sandi_k » Sat Jan 06, 2018 9:58 pm

One other thing to add:

My friend and his ex had "agreed" to amicably DIY the divorce. Only for him to find out that the day they appeared in front of the judge to finalize their "agreement" - she showed up with a retained attorney, and he had no one.

Even if it's amicable to start, you want to have at least minimal representation, in case there is something else lurking under the surface of which you're currently ignorant or naive.

Get an attorney.

UpperNwGuy
Posts: 429
Joined: Sun Oct 08, 2017 7:16 pm
Location: Washington DC

Re: Splitting Assets in Divorce

Post by UpperNwGuy » Sat Jan 06, 2018 10:04 pm

I am divorced. It started out amicably. Nevertheless, we each got an attorney. That turned out to be a good decision.

You need to get an attorney.

User avatar
9-5 Suited
Posts: 191
Joined: Thu Jun 23, 2016 12:14 pm

Re: Splitting Assets in Divorce

Post by 9-5 Suited » Sat Jan 06, 2018 10:11 pm

Sorry you are going through this - I'm sure it is tough even if it's a mutual feeling.

I'm going to state this as bluntly as I can in the hope it lands: you would be a fool not to involve an attorney. You seem to imply that using a lawyer to execute the divorce implies there will be intense fighting over details. But that's just false. The lawyer makes sure you dot the I's and cross the T's appropriately, and it can be perfectly amiable.

My wife and I used lawyers for our pre-nuptual agreement. Didn't lead to a bunch of fighting, just made sure we considered all angles. Happily together since 2004.

nordsteve
Posts: 606
Joined: Sun Oct 05, 2008 9:23 am

Re: Splitting Assets in Divorce

Post by nordsteve » Sat Jan 06, 2018 10:20 pm

Check out 'collaborative divorce'. It's for couples who want a respectful, non-adversarial end to their marriage.

User avatar
dm200
Posts: 16003
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: Splitting Assets in Divorce

Post by dm200 » Sun Jan 07, 2018 9:27 am

One category of later "issues" I have seen in even amicable splits relates to property, collateral, contractual loan obligations - and the negative impact of one (sometimes both) ex-spouses of getting credit, buying a house, etc. The time to clear this up is probably at and during the divorce and property settlement. So, for example, in a very amicable split - one spouse stays in the house, pays the full mortgage, etc. The other moves on. Everybody is happy. Then, the other ex that has moved on wants to buy a house, get a mortgage, etc. BUT - the records and legal obligations still show the "other" obligated on the original home, mortgage, etc. That could prevent the purchase of a home.

tibbitts
Posts: 7502
Joined: Tue Feb 27, 2007 6:50 pm

Re: Splitting Assets in Divorce

Post by tibbitts » Sun Jan 07, 2018 9:37 am

dm200 wrote:
Sun Jan 07, 2018 9:27 am
One category of later "issues" I have seen in even amicable splits relates to property, collateral, contractual loan obligations - and the negative impact of one (sometimes both) ex-spouses of getting credit, buying a house, etc. The time to clear this up is probably at and during the divorce and property settlement. So, for example, in a very amicable split - one spouse stays in the house, pays the full mortgage, etc. The other moves on. Everybody is happy. Then, the other ex that has moved on wants to buy a house, get a mortgage, etc. BUT - the records and legal obligations still show the "other" obligated on the original home, mortgage, etc. That could prevent the purchase of a home.
I would hope that a settlement would include eliminating any shared debts, although that might involve some inefficiencies in terms of one party or the other no longer having optimal terms in some financial arrangements.

User avatar
dm200
Posts: 16003
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: Splitting Assets in Divorce

Post by dm200 » Sun Jan 07, 2018 9:51 am

tibbitts wrote:
Sun Jan 07, 2018 9:37 am
dm200 wrote:
Sun Jan 07, 2018 9:27 am
One category of later "issues" I have seen in even amicable splits relates to property, collateral, contractual loan obligations - and the negative impact of one (sometimes both) ex-spouses of getting credit, buying a house, etc. The time to clear this up is probably at and during the divorce and property settlement. So, for example, in a very amicable split - one spouse stays in the house, pays the full mortgage, etc. The other moves on. Everybody is happy. Then, the other ex that has moved on wants to buy a house, get a mortgage, etc. BUT - the records and legal obligations still show the "other" obligated on the original home, mortgage, etc. That could prevent the purchase of a home.
I would hope that a settlement would include eliminating any shared debts, although that might involve some inefficiencies in terms of one party or the other no longer having optimal terms in some financial arrangements.
Yes - seems like it should address the issue. Sometimes, however, I have seen situations where this comes as a "surprise" a few years later.

User avatar
Pajamas
Posts: 5122
Joined: Sun Jun 03, 2012 6:32 pm

Re: Splitting Assets in Divorce

Post by Pajamas » Sun Jan 07, 2018 11:27 am

I agree that this is a situation where getting legal advice would be helpful and almost necessary because of the multiple assets and because you have a child. Just one good piece of advice or information could make the cost worthwhile. There are so many factors and potential pitfalls involved and the law varies from state to state.

You could approach it by deciding in principle how you want the divorce to work and then how you want to divide assets first. Something you might consider is selling the real estate if it doesn't fit into your future plans. Neither has to keep it.

In the more successful divorces that I have seen, each spouse puts the needs of the children first and considers the other spouse's needs at least as much as their own, if not more so. Seems like your situation is fairly cooperative and amicable, which helps. You want everyone to be as happy as possible ten and twenty years from now.

Sandi_k
Posts: 669
Joined: Sat May 16, 2015 11:55 am
Location: SF Bay Area

Re: Splitting Assets in Divorce

Post by Sandi_k » Sun Jan 07, 2018 12:15 pm

tibbitts wrote:
Sun Jan 07, 2018 9:37 am

I would hope that a settlement would include eliminating any shared debts, although that might involve some inefficiencies in terms of one party or the other no longer having optimal terms in some financial arrangements.
Nope, divorce deals with the ending of the marriage and the splitting of assets. Debts are already contractually agreed to - with your lienholder. It's a terrible surprise to find out that a debt agreement, entered into as part of the divorce, has no binding status. So if your ex agrees to pay the car loan on which you're both legally the borrower, if the "agreed upon" party stops paying the loan, both get their credit record shot. It's the same as co-sigining - unless the loan is paid off or refinanced, you're still liable.

It's why I relayed my story above about a friend who was unable to get a house OR APARTMENT after splitting from his wife - his credit report - with the mortgage still reflected - made him a credit risk. He ended up living on a boat in the local harbor for several years, which was cold, damp, and pretty awful.

As a result, I would refuse to sign final papers unless and until the house was refinanced, the joint credit cards closed down, and the cars sold or paid off or refinanced.

JGoneRiding
Posts: 1041
Joined: Tue Jul 15, 2014 3:26 pm

Re: Splitting Assets in Divorce

Post by JGoneRiding » Sun Jan 07, 2018 2:05 pm

I didn't read everything. There are arbitrators that specialize in this and then present an agreement to the judge. I suggest you together employ one in your state. No need for any lawyer at all either in the splitting process or in court when the judge agrees. Split every thing as right down the middle as possible.


Given that it has zero value a lot if head ache and is already in her name I personally would 100% leave the condo alone and ask for 10k extra to pay off the car since she has a free and clear truck. I would argue for no child support given the income difference and a 60/40 split but that part is actually soley up to the judge

User avatar
dm200
Posts: 16003
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: Splitting Assets in Divorce

Post by dm200 » Sun Jan 07, 2018 2:41 pm

Sandi_k wrote:
Sun Jan 07, 2018 12:15 pm
tibbitts wrote:
Sun Jan 07, 2018 9:37 am
I would hope that a settlement would include eliminating any shared debts, although that might involve some inefficiencies in terms of one party or the other no longer having optimal terms in some financial arrangements.
Nope, divorce deals with the ending of the marriage and the splitting of assets. Debts are already contractually agreed to - with your lienholder. It's a terrible surprise to find out that a debt agreement, entered into as part of the divorce, has no binding status. So if your ex agrees to pay the car loan on which you're both legally the borrower, if the "agreed upon" party stops paying the loan, both get their credit record shot. It's the same as co-sigining - unless the loan is paid off or refinanced, you're still liable.
It's why I relayed my story above about a friend who was unable to get a house OR APARTMENT after splitting from his wife - his credit report - with the mortgage still reflected - made him a credit risk. He ended up living on a boat in the local harbor for several years, which was cold, damp, and pretty awful.
As a result, I would refuse to sign final papers unless and until the house was refinanced, the joint credit cards closed down, and the cars sold or paid off or refinanced.
Very good points. The parties can decide what to sign or not sign, agree or not -- as long as the potential consequences are well understood.

Note also that similar issues and risks may apply to splits of those not married. Our adult son faced some "backlash" from a former girlfriend who dumped him a few years ago. She had helped him buy a car, cosigned the car loan and had the car title in both names. She wanted her name taken off the loan and name off the title of "his" car immediately - which was not at all possible to accomplish for about six months after the breakup.

User avatar
8foot7
Posts: 639
Joined: Mon Jan 05, 2015 7:29 pm

Re: Splitting Assets in Divorce

Post by 8foot7 » Sun Jan 07, 2018 2:48 pm

Not Law wrote:
Sat Jan 06, 2018 1:49 pm
Consider maintaining the home for the child, with each custodial parent moving in and out of the house for parenting time. Have an apartment on the side that either of you lives in when the other is at home with the child. Makes for a more stable childhood.
This is a disaster of an idea.

Sandi_k
Posts: 669
Joined: Sat May 16, 2015 11:55 am
Location: SF Bay Area

Re: Splitting Assets in Divorce

Post by Sandi_k » Sun Jan 07, 2018 2:49 pm

One final thought:

My understanding is that in come cases, you can file a formal Separation Agreement with the courts. This means that any debt agreed to by the soon-to-be-ex is solely in their name, and the lienholder cannot come after you as the joint borrower.

So even if it takes awhile to negotiate the final terms, it might be worth hiring an attorney to file a formal Separation Agreement.

Sandi_k
Posts: 669
Joined: Sat May 16, 2015 11:55 am
Location: SF Bay Area

Re: Splitting Assets in Divorce

Post by Sandi_k » Sun Jan 07, 2018 2:50 pm

8foot7 wrote:
Sun Jan 07, 2018 2:48 pm
Not Law wrote:
Sat Jan 06, 2018 1:49 pm
Consider maintaining the home for the child, with each custodial parent moving in and out of the house for parenting time. Have an apartment on the side that either of you lives in when the other is at home with the child. Makes for a more stable childhood.
This is a disaster of an idea.
Agreed, especially as the OP notes that they have a "very young" child. No need to stay co-mingled with an expensive asset, and unable to move on in your private life when the kid doesn't know or care where his/her bed is....

User avatar
dm200
Posts: 16003
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: Splitting Assets in Divorce

Post by dm200 » Tue Jan 09, 2018 11:01 am

8foot7 wrote:
Sun Jan 07, 2018 2:48 pm
Not Law wrote:
Sat Jan 06, 2018 1:49 pm
Consider maintaining the home for the child, with each custodial parent moving in and out of the house for parenting time. Have an apartment on the side that either of you lives in when the other is at home with the child. Makes for a more stable childhood.
This is a disaster of an idea.
Who knows?

A former coworker of mine had a girlfriend who was divorced and shared custody of her two children with her ex-husband. They chose to rent apartments in the same complex so the children could easily and conveniently be in either apartment, depending on the situations. One big "happy family". The three adults got along very well.

ResearchMed
Posts: 6240
Joined: Fri Dec 26, 2008 11:25 pm

Re: Splitting Assets in Divorce

Post by ResearchMed » Tue Jan 09, 2018 11:10 am

dm200 wrote:
Tue Jan 09, 2018 11:01 am
8foot7 wrote:
Sun Jan 07, 2018 2:48 pm
Not Law wrote:
Sat Jan 06, 2018 1:49 pm
Consider maintaining the home for the child, with each custodial parent moving in and out of the house for parenting time. Have an apartment on the side that either of you lives in when the other is at home with the child. Makes for a more stable childhood.
This is a disaster of an idea.
Who knows?

A former coworker of mine had a girlfriend who was divorced and shared custody of her two children with her ex-husband. They chose to rent apartments in the same complex so the children could easily and conveniently be in either apartment, depending on the situations. One big "happy family". The three adults got along very well.
That is *SO* different than the divorced parents *sharing* "an apartment on the side" for whenever each isn't staying with the children.

RM
This signature is a placebo. You are in the control group.

Socal77
Posts: 38
Joined: Thu Oct 19, 2017 1:14 pm

Re: Splitting Assets in Divorce

Post by Socal77 » Tue Jan 09, 2018 11:20 am

I haven't read all the responses but I divorced a few years ago and used a paralegel in Southern CA. My ex wife and I were amicable (and she didn't want alimony or long any term payments).

We decided how much money she/we were comfortable with and had the paperwork filled in accordingly.

It was a "Dream" divorce, so to speak. Clean, amicable break.

I cant remember exactly but was something like 5-700 bucks total.

I highly recommend using a paralegal instead of lawyers, and keeping things amicable, if at all possible.

User avatar
djpeteski
Posts: 519
Joined: Fri Mar 31, 2017 9:07 am

Re: Splitting Assets in Divorce

Post by djpeteski » Tue Jan 09, 2018 1:35 pm

Your incomes are irrelevant in the splitting of assets. The only time they matter is in the calculation of child support. Most states have worksheets to do such, and you can certainly do that on your own.
Gardener wrote:
Sat Jan 06, 2018 6:14 am
30k truck (zero balance)
remaining on a 20k car (10K balance)
If you keep your car and she keeps her truck, she basically owes you 15K. (40K worth of automobiles, and she takes out 30k , you assume the 10K loan).

The cash assets are around 597k. Subtract 15K, and divide by two. She gets 291k, you get 306k.

The biggest fight you two might get into is who get responsibility of the condo. What a pain.

ResearchMed
Posts: 6240
Joined: Fri Dec 26, 2008 11:25 pm

Re: Splitting Assets in Divorce

Post by ResearchMed » Tue Jan 09, 2018 1:43 pm

djpeteski wrote:
Tue Jan 09, 2018 1:35 pm
Your incomes are irrelevant in the splitting of assets. The only time they matter is in the calculation of child support. Most states have worksheets to do such, and you can certainly do that on your own.
Gardener wrote:
Sat Jan 06, 2018 6:14 am
30k truck (zero balance)
remaining on a 20k car (10K balance)
If you keep your car and she keeps her truck, she basically owes you 15K. (40K worth of automobiles, and she takes out 30k , you assume the 10K loan).

The cash assets are around 597k. Subtract 15K, and divide by two. She gets 291k, you get 306k.

The biggest fight you two might get into is who get responsibility of the condo. What a pain.
The tax-deferred monies should be weighted differently than after-tax money (or property), unless both types are equally split.

RM
This signature is a placebo. You are in the control group.

Post Reply