Asset division is a key component of any divorce—and understanding how those assets are likely to be divided is key to preparing for your financial future. While your divorce attorney will handle the actual negotiations involved with asset division, meeting with a financial planner can help you to better understand the financial intricacies of asset division during divorce and how that can impact your finances.
At Smart Divorce Decisions, LLC, we specialize in working with individuals who are considering, currently experiencing, or have recently gone through a divorce. We understand the unique financial circumstances that surround this milestone in your life and can help you to become better informed on these important financial matters.
While we are not divorce attorneys, as financial planners, we have a thorough understanding of how financial assets are divided in a divorce. We’ve answered some of the most common questions we receive on this topic below, but encourage you to reach out to us if you have further questions or need answers that are specific to your financial situation.
One of the key considerations when dividing assets in a divorce is whether the property was marital or separate property. However, many individuals are unsure what these terms mean. While states can differ slightly in the details, generally speaking, separate property includes:
However, these are only general categories, and the “separate property” status can be lost if it is commingled with marital property. For example, let’s say you received an inheritance in the amount of $50,000 from your grandfather, and you deposited those funds into your joint bank account that you share with your spouse. That inheritance has now commingled with shared funds and is now considered marital property.
As you can see, the designation between separate and marital property is not as clear cut as you might think, and understanding those gray areas can have a huge impact on your future finances. We strongly encourage you to meet with a financial advisor to discuss any assets that fall into these gray areas so that we can help you.
The exact answer to this question will vary depending on the exact circumstances surrounding your business’s creation and growth, as well as the terms of your divorce. We strongly encourage you to speak with both your divorce attorney and a financial advisor about these matters. Generally speaking, if your business was established prior to your marriage and your spouse had no role in growing the business, they won’t have any financial claim to your company.
However, there is such a thing as active appreciation—the value that a spouse can contribute to a company based on unpaid services provided. For example, let’s say your ex established their business before your marriage, but you helped to entertain clients, provided ideas and advice on expansion, and tended to household needs so they could work late. This all contributes to the company’s ability to grow, making you partially invested in the business finances.
At Smart Divorce Decisions, LLC, we can work in partnership with you and your divorce attorney to ensure fair distribution of assets during your divorce. Our financial expertise can provide you with essential knowledge in making important decisions for every stage of your divorce. Call now to schedule a consultation with our experienced financial advisors.
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