If you are going through a divorce proceeding, the media portrayal of custody battles, alimony checks, and spouses squabbling over their home may have you on edge. Yes, the process of property and asset division is one of the more sensitive natures in a divorce proceeding. So before you go into it blind, here are three things you should know about property laws and divorce.
1. Joint Accounts and Contracts
Your joint banking accounts will need to be liquidated for distribution when you divorce. If tensions are running high, it can be a good idea to call your bank and freeze all joint accounts so that no withdrawals or transfers can be made without the approval of both parties. This will prevent one spouse from emptying the accounts in an attempt to hide the money and make for a less-than-equitable asset division.
For the matter of joint credit card accounts, all should be closed once the divorce papers are filed. To do this, you must pay down any debt that has accrued on the card. Both spouses are responsible for debt on a joint credit account, no matter who swiped the card. A malicious spouse may use this to their advantage. They can run up the balance and tarnishing the other's credit. So, make sure to take all precautions if you suspect your partner is capable of such behavior. Other accounts to take into consideration include:
- phone accounts
- safety deposit boxes
- equity lines of credit
- utility accounts
- joint investments
- security margin accounts
- any form of a cosigned loan
2. Household Necessity Debt
As a general rule, in common law states, debts are owed by both spouses only if the debt benefits the marriage overall. So, debts incurred for the purpose of buying items like food, shelter, clothing, childcare, and other household necessities are considered just as binding on both parties as those that were expressly undertaken jointly. If you or your spouse have any debts that fall into this category, make sure to include the necessary payments in your overall financial plan.
3. Gifts and Inheritances
Gifts exchanged between spouses may be treated as joint marital property. This is true even in cases where one spouse transfers something like a car title from their name alone to joint property, thereby converting a separate asset into a joint one. Gifts and inheritances given by third parties may be considered either a gift to an individual or gifts to the couple, depending on the state law. The lines in many of these situations are not always crystal clear, so it's best to have a professional, like Wade Bettis, J.D., Ph.D., PC, walk you through it all.
These are the top 3 most often overlooked areas of property and asset division in your divorce. You and your spouse may decide to come to an equitable division on your own. However, you both having a divorce attorney reviewing everything will ensure your agreement is fair for both sides and that nothing gets overlooked.