Equitable distribution of assets must be managed or it can get messy. Achieve justice when dividing marital assets in a divorce and be done once and for all.
- Step 1: Transfer certain assets to your children to see that your dependents are properly cared for. If you aren't talking to each other, wait for the judge to do it for you.
- TIP: Pensions have their own specific rules and regulations, requiring an expert to formally calculate the legal worth. A divorce is the only way that funds can be taken from retirement benefits without penalties or taxes.
- Step 2: Get a judge to sign a division of retirement benefits through a Qualified Domestic Relatives Order, instructing the administrator of your retirement benefits as to how percentages are to be directed. It's never pleasant in a divorce, so do everything you can to get it right the first time.
- FACT: By 2009, divorce was a $28 billion a year industry in the U.S., costing on average over $20,000 for each spouse.
- Step 3: Decide which person gets to keep the majority of stock shares, which, to make it equitable, may require an asset trade or substitution. Generally, inheritances, gifts, money, or property are offered to close these matters.
- TIP: Mediation can untangle joint debts -- such as a house, credit card balance, or car loan -- so it may be better to have an objective party referee a resolution.
- Step 4: Sell the marital assets and reduce debts prior to the divorce to smooth proceedings once discussions about property division begin. Buying out the other person's equity, for instance, removes that contentious debate from the table.
- Step 5: Consider agreeing to store art, furniture, and even an extra car if the market is bad, rather than rush the settlement and lose money in a bad market. Even real estate can be held back until both parties find a good time to sell.
- Step 6: Look into creating a limited partnership under the Uniform Family Limited Partnership Act, recognized under federal law, in which a spouse can act as a general partner and control the asset. As limited partners with joint ownership, both handle tax liabilities on their individual returns.
- Step 7: Consider that it's not possible to achieve a perfect split, but cash payments can even the score if both sides want to settle quickly and avoid court costs.