3 Common Financial Issues to Watch Out for in a Divorce
Divorce is an act of permanent separation, and it includes more than merely separating yourself from your spouse. You’re not only turning one household into two and diverging your paths in life, but you also have to separate marital assets, and this can be a complex undertaking, especially when emotions are already high and the situation is contentious.
You and your attorneys will have to account for all shared assets and debts so that they can be fairly divided. With luck, both parties will be aware of all existing assets and debts, neither will try to hide information, and there will be no surprises after the fact.
Of course, if you don’t fully understand the process involved in division of assets, you might end up surprised by how little you get or how much you owe. Here are just a few common financial issues you should be aware of when finalizing your divorce.
1. Splitting up Real Estate
Owning a home is a key component of the American dream, but it can turn into a nightmare during a divorce, when this major asset must somehow be divided. It’s not like you can split it down the middle and each live in half. You’re going to have to find a way to divide the value of the home.
Many families with children prefer to allow one spouse, the primary caregiver, to continue living in the family home with the kids. However, this can be difficult if the parent remaining in residence doesn’t have the cash on hand to buy out an ex-spouse. In some cases, divorcing parties agree that both will retain ownership of the home and sell at a later date, splitting the proceeds at the time (perhaps with an offset for the resident who continues to build equity by paying the mortgage).
If spouses cannot agree to such an arrangement, they may simply have to sell the home, split any profit, and each move into new residences in the aftermath of divorce. This could be hard on kids, but perhaps easier on parents, especially if one parent cannot support the existing family home without the aid of a second income, or even with the help of spousal and child support.
2. Divvying Debts
Assets are only one side of the coin when it comes to division of assets. Spouses are also legally liable for marital debts, including mortgages, auto loans, credit card debt, and in some cases, even medical debt (although generally, student loan debt is assigned to the person who accrued it).
Michigan is not a community property state, which means divorcing couples are subject to equitable division of assets. In other words, assets and debts are divided fairly, but not necessarily equally. This may affect who ends up being responsible for specific debts.
3. Planning for Future Tax Returns
Just because you are divorced doesn’t mean you are totally done with joint financial obligations, especially if you have children. For years to come, you may have to contend with issues like who will claim children as dependents. This is something you’ll want to decide before the divorce is final.
If you’re struggling with how to divide assets and debts during divorce, you want the qualified experts at The Gucciardo Law Firm on your side. Call today at 248-723-5190 for legal guidance and support.
Too much information?
We focus exclusively on family law matters so we are always available to answer your questions and help.