Divorce is a significant turning point in a person's life and can have significant emotional and financial consequences. Residents of Louisville, Kentucky, who are considering ending their marriage, should also prepare to avoid winding up with an unfair divorce settlement. Preparation is the key if one wishes to avoid divorce gaffes.
Divorce can become contentious when it comes to property division. Aside from the fact that some marital assets have monetary value, some property can also have great sentimental value which can be difficult to give up. Asset division also becomes more complex and confusing if the spouses do not know what makes up their marital and personal assets and debts, income and expenses.
Typically, assets are the property that the couple owns. The portfolio may include personal property, collectibles, employee benefits, real estate, retirement and non-retirement accounts, money market accounts, bank accounts and cash. It is very important to have an inventory of these assets. To help review these assets, a divorcing spouse can review tax returns and financial documents. For assets that are difficult to value, including business assets, an evaluator can be bought in to help.
Liabilities, on the other hand, are what the couple owes, which may include credit card bills, student loans, auto loans and real estate mortgages. Typically, if a spouse acquires an asset tied to a debt, he or she inherits that debt.
Money that comes from work or investments plays a crucial role in determining who will pay child support and alimony, as well as how much a divorced spouse will pay. Recent tax returns can also be used to determine the income of a spouse.
Expenses are cash outflows and it is important for any divorcing couple to assess their current lifestyle and spending habits to know whether compromises should be made during asset division. This step is crucial because once the divorce is finalized, it can have a significant effect on each spouses' income.
Source: CNBC, "Getting divorced? Get organized first," Valerie Adelman, March 9, 2014