The stress of divorce comes not only from the emotional pain that everyone involved is in, but also the anxiety about how to provide for yourself and any dependent children once the divorce is over. Realistically speaking, property division can peel off half the financial assets of each spouse, and if one spouse is responsible for child or spousal support, it can cut into their future earning and saving potential.
Without a doubt, the standard of living of both ex-spouses goes down during and after the split. Even with a steady income, expenses go up to maintain two households, and any plans of building up a nest egg for future retirement may halt. It is important when thinking about divorce to also assess the financial implications, and to plan ahead before you take action.
Property division in New York
When couples in Orange County are preparing an inventory of property, they can expect a judge to look at anything that either spouse has accumulated during the marriage, whether it is the family or vacation home, real estate, investments, stocks and bonds, or cash and bank accounts, as well as any accumulated debt, when deciding on the equitable division of marital property.
There are factors the judge will take into account when ruling on the distribution of property, including:
- Age and health of each spouse
- Domestic requirements of each spouse
- If one spouse will provide alimony or child support
- Future financial needs of either spouse
Splitting assets and debt
It is important not to overlook accumulated debt or tax implications when negotiating the divorce settlement. The two sides should discuss paying off credit card debt, car loans, and the selling or division of vacation properties or rental and business interests. When deciding whether to sell the house, they should discuss selling and splitting the proceeds or paying off the mortgage and any other joint debt.
When splitting combined assets, it is important to think about tax implications that may negatively affect one spouse. Not all of these assets will divide out equally.
For example, if they split two assets of equal value, such as a retirement account and a money-market account, retirement will reduce the value of the first spouse’s asset as they will have to pay taxes on its distributions. And taking cash out of a 401K and giving it to the other spouse can result in an automatic withholding of 20%, plus a 10% penalty if the other spouse is under 60.