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How Do You Split Up Debt in a Divorce?
Dividing debt in a divorce can be complex. EP Wealth’s Linda Ginder, CFP®, EA, CDFA®, shares insights on handling mortgages, loans, and credit...
Wondering how you’re going to split assets in your divorce? EP Wealth Certified Divorce Financial Analyst®, Linda Ginder, explains how she helps couples navigate this process. Visit our site to find a CDFA® near you.
How Do You Split Assets In A Divorce?
When couples divorce, they must work out a property settlement that outlines how marital assets will be divided. As an EP Wealth Certified Divorce Financial Analyst® (CDFA®), I help couples navigate financial planning during a divorce. My role is to review the couple’s financials, educate them on the implications of various decisions, and help facilitate a fair and equitable division of marital property.
Below, I share some insights and tips for how a CDFA® can help divorcing couples split their assets.
Understanding Where You Stand Financially
While documenting marital assets can be fairly straightforward for some couples, for others it may require a bit more research.
I see a lot of couples that have different roles within the household. One spouse may handle the finances, leaving the other a bit unclear about what they own or where they stand financially.
As a CDFA®, my job is to give my clients a breakdown of where they stand financially and inform them of any and all assets that they may hold, either individually or jointly with their spouse.
Looking at the Financial “Big Picture”
When I begin working with new clients, I look at the “big picture” of their finances as a married couple.
I assess marital property and separate property that either spouse brought into the marriage. Essentially, we create a net worth statement that includes all of the couple’s assets and liabilities. We account for anything that’s financially related, from real estate and businesses to bank accounts, retirement plans, and investments.
Can Separate Property Be Converted to Marital Property?
It’s also important to determine if any separate property — like a gift or inheritance from a family member — has been commingled with marital assets.
When this occurs, separate property can potentially be converted to marital property, which may be subject to division in a divorce.
Common Mistakes to Avoid When Dividing Assets
When it comes to financial mistakes I see couples make when dividing assets, I would say some may not fully understand how certain accounts are impacted by taxes.
For example, a 401(k) is taxed differently than a checking account or a brokerage account. These accounts may have regulations regarding when you can withdraw funds. Because of these variables, you cannot compare them as equal when dividing assets.
I also have seen clients neglect to request a Qualified Domestic Relations Order (QDRO) during the divorce. A QDRO is a judgment or order for a retirement plan to pay alimony, child support, or marital property rights to a spouse, former spouse, child or other dependent of the participant. If the ex-spouse is not listed as a beneficiary on the retirement account and does not request this before the participant (their ex) retires or passes away, the retirement plan’s administrator may not be able to issue these funds to the non-member.
You Don’t Have to Go Through This Difficult Transition Alone
The above are just a few of the issues I help clients navigate when dividing assets.
I always remind clients that professionals are available to help them navigate the major life transition of divorce. On the financial side, we want clients to know they don’t have to go it alone, and to lean on us for guidance during what may be an emotional time.
Through education and support, your CDFA® can help you understand the implications of the choices you make now on your financial future.
Divorce is a complex process, and negotiations are a large part of it. We provide financial planning services to help you make informed decisions and work toward a property division agreement that makes sense for both spouses.
To learn more about divorce financial planning, or schedule an appointment with a CDFA® near you, call or connect online today.
DISCLOSURES
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. Content does not involve the rendering of personalized investment advice, nor is it intended to supplement professional individualized advice.
- As the author of this piece, EP Wealth Advisors, LLC (“EPWA”) has tailored the messaging of this article to align with the categories, services, qualifications, capabilities and services that it offers and can service. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions with the appropriate professionals. EPWA makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of opinion by the author are subject to change without notice.
- EPWA is not in the business of providing legal services or advice. Always consult your tax advisor and/or attorney regarding your specific situation.
- The Certified Divorce Financial Analyst® (“CDFA®”) that are employed by EP Wealth Advisors, LLC are not practicing attorney, accountant, tax professional, or legal expert. All assessments and subsequent recommendations limited and are performed exclusively under the guise of financial planning. An attorney must be retained in order to professional and accurately assess legal options and/or to provide counsel. We also recommend consulting a CPA, accountant, or tax professional.
- Hiring or working with a CDFA® does not guarantee or ensure that a client or prospective client will experience encouraging or favorable results.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment, tax, or legal advice nor is it intended to supplement professional individualized advice by the appropriate professional(s).
- The decision to work with a CDFA® professional will differ amongst clients and depend on individual circumstances of each respective client. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC and/or a CDFA® will satisfy your divorce service needs. Services offered by other professionals may align more to your specific needs.
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability. Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions with the appropriate professionals. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice. Please consult a professional Financial Advisor before applying any of the approaches or strategies made referenced directly or indirectly in this publication.
- The information presented here is not intended to be regarded as a complete list of things to consider, including but not limited to, categories, services, or qualifications that a client or prospective client should contemplate when assessing or comparing Financial Advisors and/or Firms. As the author of this piece, EP Wealth Advisors, LLC (“EPWA”) has tailored the messaging of this article to align with the categories, services, qualifications, and capabilities that it offers. There is no guarantee or warrantee that the services offered by EPWA will satisfy your financial services requirements. Services offered by other advisors may be more suitable to your specific needs.
- There is no guarantee nor is the intention of this article to establish any sense of assurance, that, if followed, the strategies referenced here will produce a positive or desired outcome. In fact, there is no guarantee or warranty that any of the steps detailed will enable the ability to achieve appropriate, successful, profitable or desired results. The possibility of unfavorable and unsuccessful results is not lessened by the information and strategies made referenced here.
- Hiring and/or working with a qualified financial advisor or financial planner does not guarantee success and does not ensure that a client or prospective client will experience a higher level of performance, results or level of service. No guaranty or warranty is made that any results, projections, or other information being represented directly or indirectly here will be met or sustained.
