Divorce and Finances

Division of Property

The assets and debts accumulated during the marriage will be dealt with in one of two ways: equitable distribution or community property.

Equitable Distribution

In a state where equitable distribution of property is used to divide marital assets, the Court decides what percentage each spouse receives. This may mean an even 50-50 split, but that is not necessarily the case. In determining what is fair and reasonable in the situation before it, the Court may choose to award most or all the marital assets to one spouse or the other.

In making this determination, the Court will consider such factors as:

• Length of the marriage
• Assets owned by each spouse before marriage
• Debt accumulated during the marriage
• Each person's income
• Whether the couple has children and which spouse will have custody

If you can demonstrate to the Court that your spouse sold or disposed of an asset to avoid having it included in marital property, you may be awarded a cash payment or be given another asset to compensate. It is to your benefit to provide your lawyer with as much financial information as possible. Provide your legal counsel with copies of any bank/credit card statements, insurance policies, pension forms, and receipts for household expenses.

Community Property

The states with community property laws in effect are Wisconsin, California, New Mexico, Louisiana, Texas, Arizona, Nevada, Washington, and Idaho. Other states use the equitable distribution system.

In a community-property state, all assets accumulated during the marriage are split 50-50. Debts are treated in the same way.

If you are considering a divorce and live in a community property state, it is imperative that you have detailed financial records. You don't want your spouse deliberately running up debt with the knowledge that you are responsible for half of the amount. Consult with an attorney to map out the best course of action for your particular situation.

Divorce and Finances: Coping with Credit

While the details of your divorce are being finalized, make sure that payments for utilities and credit cards are made on time. Rent or mortgage payments also need to be kept up. If your spouse has been responsible for making those payments, you may want to ask the creditor to advise you if payments are not being made on time.

Another option is to have bills transferred into the name of the person who will be paying them. Joint bank accounts can be frozen while the financial settlement is being worked out.

Open a Bank Account in Your Name Only

If your pay check has been deposited into a joint bank account, open an account in your name only and have your pay deposited there. Have your name taken off any joint accounts held with your spouse; you do not want to be held liable if he or she is overdrawn.