Splitting It Down the Middle — Really???

Most all of us are aware that this is a community property state. So what exactly does that mean when it comes time to splitting community assets in a divorce. Let’s look at the global explanation first and then I will attempt to give you my 2 cents or make that 1 cent; if we split it. Community property is a term used to describe property and assets acquired after the marriage. Currently, there are nine community property states. As we know, Texas is one of them.

In addition, Puerto Rico operates under a community property doctrine and Alaska allows couples to choose to designate specific items as community property. So, what does all this mean when you divorce?

Does “community property” mean a 50/50 split?

In general terms, yes. During the property distribution process in a community property state, the court will attempt to divide the property as equally as possible between the two parties. This distribution is usually done using monetary values so that if the divorcing couple came in with $100,000 in assets, each should leave with approximately 50% or $50,000.

Division of Assets

So there you go. Pretty simple, huh? All assets are not created equal and not all assets can be easily split. But a greater concern regarding division of assets it– it is suitable, reasonable and appropriate for the asset to be maintained by one of the parities.

Concerns such as the knowledge to manage certain brokerage accounts, rental real estate, small businesses, etc could put an asset in the hands of someone who is challenged to manage it, growth, it and just plain old live with it.

Questions such as , “Is it better to transfer an assets in kind (maintain the actual stock/bond /mutual fund) or liquid the holdings into cash and then transfer can bring into the picture tax concerns and estate planning issues. Should we do a QDRO with retirement assets or just maintain our own plans assuming they are relatively equal? What about the defined benefit plans which many public workers and military have? How do we value a future value asset today ?

Certified Divorce Financial Analyst

Well the good news is that if you’re in mediation, or at least working together, sky is the limit. Someone like myself with a Certified Divorce financial Analyst designation can help weed through the myriad of pros and cons along with the attorney to find the best split without necessarily splitting everything.

A divorce is probably one of the most important financial crossroads you will ever encounter. Like my dad used to say , “An ounce of prevention is worth a pound of cure.” Spend a little extra money and get the expert advice…you will be very happy you did.

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