Getting a Denver uncontested divorce is often a decision that is fraught with emotion. After all, you are choosing to end a marriage with someone you most likely loved and trusted for many years. For the individuals involved, the emotional aspects of divorce often eclipse other, more practical concerns, yet these factors must also be considered when dissolving a marriage. For example, how does a couple divide their shared finances when divorcing? Here’s what you need to know.
How finances are separated in a divorce comes down to a few key considerations: the amount of shared assets, the number of jointly-owned bank and credit card accounts, and whether one spouse is in greater need of financial assistance than the other.
Real Estate
When it comes to real estate in a divorce, the most important question is whether a property was purchased jointly. Real estate that was bought prior to your marriage by you or your soon-to-be ex, and does not list both of your names on the deed, is not considered marital property and does not need to be included in the divorce agreement. However, nine U.S. states have community property laws, where each spouse is considered to own a share of any assets acquired during the marriage, regardless of whose name is on the deed. If you are getting a divorce in California, Arizona, Nevada, Louisiana, Idaho, New Mexico, Washington, Texas, or Wisconsin, this law will apply to you.
Bank and Credit Accounts
When it comes to separating your finances, one of the first steps is to close any jointly-owned bank accounts, and to each open a separate account if you didn’t previously have one. You’ll also want to close any joint credit lines, such as a credit card or a home equity line of credit, but keep in mind that this can negatively impact your credit score.
Retirement Accounts
Any assets from investment or retirement accounts that bear both of your names will also need to be divided fairly. For employer-sponsored retirement accounts like a 401(k), you can obtain a qualified domestic relations order (QDRO), which is a court order that is used to divide these assets. For IRAs, assets are divided using a process known as “transfer incident to divorce.”
Figuring out how to equitably and responsibly divide your financial assets in a divorce can be one of the most trying ordeals in the entire process. By taking the right steps to protect yourselves from financial damage, you can disentangle your assets and simplify the division process as much as possible. Consult with a divorce mediation specialist as well as a Certified Divorce Financial Analyst (CDFA) to ensure that you’ve checked all the boxes and are protecting yourselves from serious damage to your credit.
