The money in your financial accounts represents your children's education fund and your future retirement. However, when you get a divorce, you will need to divide these assets.
Remember, even if the account doesn't have your spouse's name on it, if you acquired the assets inside it during the course of your marriage, you'll need to divide the account in your divorce. Because your and your family's future depends on it, you'll want to handle your financial accounts -- including bank accounts, investment accounts and other types of accounts -- with care.
Consider the following regarding financial accounts in a divorce
You will want to take the following key points into consideration while dividing assets in your divorce:
- All assets acquired after marriage must be divided: Aside from a few exceptions, like inheritance money that has not been commingled, money earned after marriage must be divided. Even if the IRA only has your name on it, you and your spouse will need to divide it. The same rules apply to 401(k)'s, pensions and even military and government retirement plans.
- You might want to freeze your financial accounts: If your divorce gets contentious and trust between the spouses no longer exists, you'll want to freeze your financial accounts. This will prevent your spouse from removing assets from financial accounts. Sometimes spouses try to hide assets, spend them or give them away -- and you don't want that to happen.
- You may need to liquidate investments: Certain investments and real estate could be impossible to divide without selling them first. By selling assets, you can convert them to their cash value and divide them appropriately.
- Appraisals can help: In some situations, spouses may need to higher a professional to appraise different assets -- like art, collectibles, antiques, real estate and businesses -- in order to sell and divide them. An appraisal can also allow spouses to divvy up their assets according to their values and what each spouse wants.
- Don't forget about tax implications: Whenever you divide assets, don't forget to consider the tax liabilities that the assets carry. Maybe you have a painting that tripled in value and another painting that halved in value. The painting that tripled in value will have capital gains taxes associated with it, which will need to be paid upon the sale of the painting, but the other painting will not.
Know your asset division rights
Spouses should learn as much as they can about their current financial situation. They should also learn about their marital asset division rights. A complete understanding of the law will help spouses ensure that they get a fair shake during their divorce process.