Divorce is commonly seen as one of the most stressful experiences one will ever go through. Along with all of that stress, you are also making financial decisions that will most likely affect the rest of your life and perhaps the lives of your children as well. For that reason, it’s a good idea to get the advice of a Certified Divorce Financial Analyst™ or some other financial professional during your divorce process.
Dividing Assets One at a Time
I see this all of the time, especially when there is an engineer in the mix. One of the spouses will put together a complex spreadsheet on how they are going to divide each bank account in half, divide the college funds in half, divide the retirement accounts in half, and then either one spouse will buy the other spouse out of the house, or they will elect to sell the house and divide the proceeds in half.
This is not how we look at it. I like to look at the couples overall financial picture. Add up all of the assets and liabilities and figure out what constitutes the marital estate. Their Net Worth if you will. From there, we decide what kind of division is fair and then we try to award accounts in their entirety as much as we can. Ending with one large assets that is divided at the end to make up the difference.
For example, if one spouse get’s the matrimonial home, the bank accounts, and the nicer car, then the other spouse might get the vacation home, the brokerage accounts and the not as nice car. After those divisions are made, we can balance the final division out by using the large 401k account allocated to BOTH parties and shoot for the division percentage we are looking for.
Keith Powell, Certified Financial Planner® and Certified Divorce Financial Analyst™
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