When your marital estate includes intangible assets such as investments and business properties or assets that have not fully matured, it is important to work with a family law attorney who has experience handling these issues. They can help you value and divide complex assets such as:
• Stock options and restricted stock: Stock options must be included in the equitable property division if they were provided because of past performance during the marriage.
• Pension plans and retirement accounts: The portion of a pension that was acquired during a marriage is subject to equitable distribution.
• Business executive benefits: Highly compensated individuals may have restricted stock or other forms of deferred compensation/wealth accumulation plans that need to be addressed.
• Multiple homes: Multiple homes, vacation homes and other extensive property must be valued and divided. Who should keep the family home? Should any of the property be sold?
• Businesses: Family-owned businesses must be taken into account during a divorce.
How much is your family business worth? Will one spouse continue to run the business?
Don’t Let Emotions Lead Your Financial Decisions
Divorcing people often want to take out their hurt feelings on exes; however it’s important not to let emotions interfere with the business at hand. In the long run, being spiteful could harm your own pocketbook. Understanding that divorce can be costly, savvy petitioners opt to pick their battles.
Everything Is Divisible and Fair Game
Individuals often make the mistake of assuming that assets that are in their names can’t be claimed by spouses in a divorce. However, divorce experts caution that the opposite is true. Because the same holds true for liabilities like debt and credit cards, couples should be sure to consider all factors when doing their financial planning.
Make Big Purchases Before Filing for Divorce
“Most states issue automatic financial restraining orders prohibiting people from making big purchases or liquidating assets after the divorce is filed, absent a court order or an agreement.”
Keep Track of Your Spouse’s Money
If you’re thinking of filing for divorce or even marriage separation, it’s a good idea to take a look at your spouse’s financial situation. Spouses should start by tracking partners’ new credit card and loan applications.
Gather Key Evidence Before Filing for a Divorce
If you’re thinking of filing for divorce, it can be tough not to walk out the door when your spouse pushes your buttons. However, individuals take time to collect evidence before a split. Along with taking pictures of assets, individuals should make copies of account statements and jot down any important numbers. Preparation is key if you hope to come out ahead in court.
Get Property Valued Before You Part Ways
When it comes to divorce, almost all property is fair game. However, spouses can’t hope to get their fair shares if they don’t know the value of assets.
Don’t Hide Assets
You can try to deceive your spouse by hiding or concealing assets, but don’t forget that you’re also messing with the law. If what you’re hiding is discovered, you’ll lose your credibility in court. There could also be stiff penalties, including monetary sanctions. To protect yourself and your property during a divorce, it’s best to declare all assets upfront.
A Former Spouse Can Be a Great Tax Shield
People who pay alimony are rarely grateful for the opportunity. However, ex-spouses can actually help you out come tax time. People who pay alimony to their exes can write it off as a tax deduction. On the other hand, those who receive alimony must report it as taxable income. It’s important to note that alimony is different from child support, which is neither taxable nor deductible.
If Not Considered Alimony, the Income Is Not Taxable
On the contrary, if the transfer of money in a divorce is not considered alimony, the receiving spouse is in luck: these funds aren’t regarded as taxable income.
There Are Hidden Tax Implications to Watch Out For
During a divorce, it’s important to stay alert to hidden tax obligations. Spouses who are receiving real estate, stocks or bonds need to understand that taxable gains can leave them vulnerable.
Get Job Training or Update Your Education Before Filing
If you are currently being supported by your spouse, you might want to consider taking the time to dust off your resume and freshen up your skill set before seeking a divorce.
Familiarize Yourself With Finances Before You Split
Normally, one person in a household manages the finances. However, this arrangement can create a “power imbalance when it comes time to negotiate settlements.” Seek professional help to guide you in making more informed decisions about finances being filing for divorce. Doing this will help you come out swinging when you get your day in court.
Consider Mediating Your Divorce
It’s no secret that divorce can be expensive. In fact, the average cost of legal fees in a divorce is an astounding $15,000! One way to cut down on these expenses is to use a mediator. A mediator doesn’t work on behalf of any one party, just facilitates agreements. If you want to keep your divorce details behind closed doors while cutting costs, a mediator might be the best bet for both you and your bank account.
Know Your Biggest Asset
Many people mistakenly believe that their house is their biggest asset when it is actually a retirement or pension account. Even if your retirement account is less than robust now, the court will likely consider its future value when dividing assets. “There are many ways to divide your portion of your spouse’s retirement asset (called a qualified domestic relations order) so give that due consideration.”
If Your Lawyer Recommends a PI or Forensic Accountant – Hire One
Many individuals are hesitant to shell out for a PI or forensic attorney when going through a divorce. “Private investigators are useful for investigating people who own small businesses, as independent data about numbers of customers, employees and resources can give a much fuller picture of a person’s true finances.”
The Most Expensive Lawyer Isn’t Always the Best
Pick your divorce lawyer wisely, as it could save your bottom line. “Find one that is experienced and knowledgeable, but is also a good fit for you.” “You have the power to set the tone for your divorce. The attorney should advise you, but also respect your position on how to approach the negotiations.” Just because an attorney has a high hourly rate doesn’t necessarily mean he or she will honour your wishes. For best results, go with your gut feeling.
Understand Debt Obligations
“Some states do not divide marital debt if it’s just in one person’s name, so if possible, during separation you may want to pay down that debt preferentially.” The last thing you want is to be on the hook for debts you didn’t accumulate.
Don’t Forget About Beneficiary Designations
Divorce attorneys note that many clients fail to remove former spouses from their beneficiary designations. For best results, handle beneficiary designations and other tedious paperwork as soon as possible.
Pay Court-Ordered Attorney Fees
Court-ordered attorney fees are no joke. “The court can order one spouse to contribute to the other spouse’s attorney fees,” who went on to explain that this type of debt was treated in a special manner. When it comes to court-ordered attorney fees, the judge can throw the offending spouse in jail for failing to pay. In light of these regulations, spouses who are receiving financial help should have language drafted into agreements clarifying how much money must be paid and by what date. Doing this gives spouses the ability “to enforce the agreement should the paying spouse fail to follow through with his agreement.”
Being the Higher Income Earner, You Might Not Necessarily Want to Ask for All of the Deductible Items
Clients typically strive to get as much as possible in a divorce. However, higher incomes can disqualify individuals from important tax deductions. “If you file single and make more than $380,750, your personal exemption of $4,000 is not available.” In light of this fact, individuals might not want all the items they originally requested in a divorce. For best results, speak to a financial professional about your specific fiscal situation and options.
Take Advantage of Free Legal Advice
To ensure you make the right choice, be sure to consult with a few attorneys before coming to a hiring decision. After all, the outcome of your divorce depends in large part on the quality of your legal advice.
Be Mindful of the Date When Initiating Divorce
While you might be tempted to file as soon as possible, it’s important to note that property division is based on the date of marriage separation in some states. Typically, the court uses a formal date of separation (DOS) to determine property division and the value of certain assets. “If you are expecting a large increase in the value of a major asset upon a certain occasion, be mindful of that when you decide to initiate the divorce.”
Consider Wisely When Designing a Joint Parenting Arrangement
Unlike claiming a child as a tax dependent, claiming head of household is not assignable. If you’re negotiating who will claim a child as a dependent, “You can include a provision that the right to claim the child is dependent on the parent being up to date on their support obligation.”
Plan Finances for After Divorce
Clients often neglect to consider how their financial planning can change after a divorce. “Your risk aversion may be very different than your former spouse [‘s] and you do not need to keep the same investment trajectory you had before the divorce.” If you don’t know where to begin, you might want to hire a financial adviser. Remember to think long-term when planning finances after divorce.
Have a Paper Trail
While most assets are divisible in divorce, there are some exceptions to the rule. Documents can help preserve what you believe to be separate property when it comes to divorce proceedings and should be collected beforehand. “Too many times the necessary documents seem to disappear after a divorce starts, so to the highest degree possible, gather those documents before you start the divorce.”
The Division of Property Can be Complex
Dividing assets and properties isn’t always a simple numerical transaction. “Negotiating the division of property is an art form all its own.” “It’s a three-step process: characterize the asset, value it, divide it.” After the asset is identified as community property, separate property or both, figuring out the value can be tricky. “For instance, a bank account with cash in it is pretty easy to value — look at the balance.” “But a retirement account, a house or securities can have more complex issues.”
Retirement Accounts Are Not Worth the Statement Balance
Just as it can be difficult to value assets, couples often struggle to determine the true value of their retirement accounts. One reason that retirement accounts pose problems is that deferred tax will have to be paid at some point. “If one of the parties will be liquidating a retirement account early, then the highest marginal tax rate and the early withdrawal penalty might need to be subtracted from the value of the account,” “Even if the account is not going to be liquidated, the taxes which will be paid on the money at the time of retirement can be considered and a reduction of the overall value of the asset might [be], and very often is, appropriate.”
How Are Assets and Property Divided?
Utah family courts divide assets fairly and equitably between spouses. Equitable division, however, may not mean equal division. Judges will consider factors including, but not limited to, the income of each party, how each spouse contributed to the accumulation of assets, and your child custody plan when dividing property. Common assets include:
• Partnerships, corporations or other business entities owned by a spouse
• Investment properties
• Commercial real estate
• Residential homes
• Retirement accounts such as 401(k) accounts
• Defined benefit pension plans
• Stocks, bonds and stock options
• Deferred compensation plans
• Bank accounts and offshore accounts
• Personal property such as cars, artwork, jewelry, furniture and more
• Copyrights, patents and royalties
Ultimately, the goal is to provide you the best asset protection possible along with a fair and equitable property settlement in accordance with Utah laws.
Utah Divorce Lawyers
When it is time for divorce in utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506