The White Paper You MUST Read!
Dividing Assets and Debts During Divorce, PART 1
One of the thornier issues that comes up in divorce negotiations is how to divide assets and debts. Who gets to live in the family home? Who’s responsible for car payments? Which one of you should keep the wedding china? And what happens to all of your joint credit card debt?
Your state of residence might have an answer for you if you live in one of the nine community property states. Otherwise, decisions about the division of assets and debts can be determined in mediation, by your lawyers or in court. Additionally, if you and your spouse signed a prenuptial or postnuptial agreement, that can affect who gets what.
Asset Management Advice for Carlsbad: Community Property States
If you live in a community property state (Wisconsin, Louisiana, Texas, California, Arizona, Idaho, Nevada, New Mexico and Washington) and don’t have a pre- or postnuptial agreement, your assets and debts will likely be split right down the middle, 50 percent to you and 50 percent to your spouse. Regardless of who purchased the asset or acquired the debt or how it is titled, each spouse has an equal interest. This division only applies to marital property—anything acquired during the marriage other than gifts and inheritances. Property and debts acquired prior to marriage are considered separate property, and are not divided 50/50.
Asset Management Advice for Carlsbad: Equitable Division of Property States
The division of assets and debts is more complicated if you live in one of the other 41 states, called equitable division of property states. Divorcing couples who live in an equitable division of property state have some work to do in negotiating who gets what. Assets and debts are designated marital property or separate property in the same way as in a community property state, but it does not have to be split 50/50. Each spouse is awarded a percentage of the assets and debts, called equitable distribution. The court decides what is fair and reasonable based on how long the marriage lasted, what each spouse brought to the marriage and what they each earn, among other factors.
Asset Management Advice for Carlsbad: Some Facts about Dividing Assets and Debt
You and your spouse can work together with lawyers and financial planners to achieve the greatest benefits for both parties. For instance, you can pay off debts before the divorce is final, postpone the sale of your home or other asset or make tax-free investment asset transfers to your spouse.
Whether you’re in a community property state or not, if you’ve combined credit accounts with your spouse, both parties’ credit scores are on the line for all debts, even if your divorce decree states that one party is responsible for paying them off.
If you and your spouse are unable to negotiate a settlement on the division of your assets and debts, you’ll be at the mercy of the court’s decision. After negotiations are complete and the court signs your divorce decree, the decisions are final.
Want to Find out More?
Click on the following link to get more advice on asset management during divorce: Financial Planner in Carlsbad, PART 2.
If you want to get started on your journey today or would like individualized investment/financial advice from LPL financial advisor, John Lohrenz, please contact JKL Wealth Management at:
Phone: (858) 535-1705
Fax: (858) 535-1701
Alternatively, fill out the Contact Form and we’ll get back to you shortly.
731 S. Hwy 101, Suite 2K, Solana Beach CA 92075
About Carlsbad, North San Diego County
Carlsbad – once home to the Luiseño people – is located along the Pacific Ocean in North San Diego County, in the heart of California, U.S. The northern part of Carlsbad belongs to a tri-city region, which is also made up of southern Oceanside and western Vista. After a short 87 miles drive from Carlsbad, lies the city of Los Angeles, or for an even shorter drive, of 35 miles, San Diego. With regards to history, the first ever modern skateboard park was created in 1976 and is called the Carlsbad Skatepark. There are many recreational activities to enjoy in Carlsbad, including tanning and surfing at the beach, dining out in one of the trendy restaurants or visiting its many historical sites and landmarks.