subject: When It Comes To Divorce 50/50 May Not Mean Equal [print this page] When It Comes To Divorce 50/50 May Not Mean Equal
Some people mistakenly believe that if their marriage ends in divorce that assets will automatically be split 50/50. However, this is not the case. Laws regarding how to split marital property vary from state to state, but there are two general systems for dividing property in divorce.
Community Property In community property states, any assets accumulated during the marriage are split equally. Property owned before the marriage or income produced from that property is separate. Additionally, inheritances and money awarded as a result of a personal injury case would be separate.
Equitable distribution In an equitable distribution states, property division should be "fair and equitable", but not necessarily equal. There is no set measure for what is "fair and equitable" but certain factors such as length of the marriage and needs of the spouses are considered when determining "fairness."
Deciding how to split marital assets is often the most difficult part of the divorce process. It can take an emotional toll on couples no matter whether they try to deal with it on their own or even if they have the assistance of their respective family law attorneys. Some are tempted to rush through this process simply to end the stress. People sometimes mistakenly believe that dividing everything in half is the simplest and fairest way of handling things. This is not necessarily true.
As an example, let's assume that a couple has a savings account with $300,000 in it and a house that they own out-right worth $300,000. The assumption is that if one spouse takes the house and the other takes the cash that it would be even. However, that is an extremely short-sighted view. The party accepting the house should have also considered other costs such as property taxes and upkeep and maintenance. So, while $300,000 savings account will be earning interest and making one spouse additional money, the other spouse will have extra expenses that they may not have considered.
It is also important to decide who will be responsible for debts acquired during the marriage. It is just as important, if not more important to consider the long-term consequences of accepting liabilities such as car loans, home loans or credit card debt. Just because you have $10,000 left on your car loan and $10,000 credit card debt doesn't mean that the car loan should go one spouse while the credit card debt goes to the other. It's just not that simple.
Even in the best of circumstances, divorce settlements are often agreed upon with limited insight into the long-term consequences. As a result, settlements that seem to be fair and workable initially do not necessarily stand the test of time. Therefore, it is highly recommended that a divorce financial planner be brought into the process so that you can see how decisions you make today will affect the rest of your life.
