One of the primary goals of a successful divorce process is the equitable division of marital assets and debts. In order to divide the assets, you need to know what is actually owned by you as a couple, and what debts are outstanding. In an ideal world, you would already know what these are. If the only substantial thing that you both own is a bank account (because your home is rented), the matter of division should not be too difficult. However, this is not an ideal world, so you will probably have a good idea about some of your assets, a vague idea about other assets, and if you are really unfortunate, you will have absolutely no idea about the existence of any remaining assets.
Community Property vs. Equitable Distribution
You should familiarize yourself with your state's laws regarding martial property. In some states, property is divided under the community property rule, which means that all property is divided in half, regardless of whether this is fair or not (and the result can often seem quite unfair). This is particularly so where the marriage has been short and one spouse has made little financial contribution to the assets. Anything that you owned before the marriage and anything inherited before or during the marriage will not count as marital property. However, if over the course of your marriage you added your spouse’s name to the title of your inherited house, it will become marital property.
Other states divide marital assets by means of "equitable distribution," in which property is divided fairly (in the eyes of a judge), but not necessarily equally. The judge will take into account a spouse’s financial contribution to the asset or a spouse’s ability to support themselves after divorce when dividing assets. Marital debt will be determined based on who seems more financially able to pay the debt, rather than by whose name the debt is in.
Ascertaining the Assets
Whether you are a do-it-yourself divorce participant or you intend to hire a divorce attorney, the first thing you will need to do is to take an inventory of the assets. In addition to bank accounts, these may include income tax returns, vehicles (cars, boats, motor homes), investments (stocks and shares), retirement plans, the marital home, holiday home and even a business. If you do have a lot of assets, it would be prudent to hand over copies of all documentation related to them to your attorney. It will obviously be much harder to determine income if your spouse is self-employed, but bank account statements and financial business statements should give a clearer picture of income. Your attorney can make inquiries during the discovery process, which may even turn up assets that you had previously never known about.
The most obvious source of dispute in divorce is cash. Although you may think that you are entitled to it, do not be tempted to empty the checking and savings accounts. Not only is it against the law, but you could also cause all kinds of problems with mortgage payments and other direct debits that bounce. If you believe that your spouse might raid the checking account, you should discuss this with your attorney. You might need to open an account in your name alone and transfer half the money from the joint account into the new sole account. If you have a joint savings account or any type of investment account that you fear your spouse will clean out, you should consider having the account frozen.
Do not do it. Your spouse’s divorce attorney will turn up all corners of the globe to find the assets, and you will in all likelihood be handed the bill for that search effort. The wealthy and celebrities sometimes take extreme measures to hide assets from their spouses, even at a great expense to themselves. Some have even ended up incarcerated for refusing to disclose assets upon an order from a judge. Do not bother to take the risk. Ultimately, you might be ordered to hand over to your spouse the very assets that you tried so desperately hard to hide. This includes money in a personal account. You will lose credibility with the judge, who could conclude that you are not treating the process with the respect that it deserves. If so, you might find yourself unable to win many of assets on your list of perceived entitlement.
Retirement plans and pension plans may also be subject to asset division. If portions of your retirement plans are considered marital property in your state, you should seek advice about the value of the plan from your retirement plan adviser, an attorney or a tax consultant. They will inform you of whether any penalties or tax consequences are likely to arise as a result of division.
Your attorney may find it necessary to hire a professional to appraise the value of any property—particularly real estate and jewelry. It may be important to know when and where the asset was purchased, and whether it was purchased with joint or separate funds.
You may have collected a lifetime of household items and now face the tricky decision of who gets what, including electronics, furniture, art, antiques and photo albums. Even if they have little or no monetary value, each will need to be accounted for. If you are unable to reach an agreement with your spouse about the items, or if your spouse has already moved some of the disputed items from the home, you should alert your attorney. Make a note of what items were removed and their prices. It may be that you will end up having to sell many items and divide the proceeds, regardless of emotional attachment.
Taking Matters into Your Own Hands
If you do choose to negotiate your own settlement without the help of a divorce attorney or a judge, make sure that you have studied your state’s laws carefully. Some states require mediation during the divorce process, and it is cheaper to try to work with a mediator rather than an attorney and the courts. If you do need an attorney, ensure that you and your spouse each select a different one. Before any agreement on division is signed, every attorney has a duty to seek a just and fair settlement for their client.