Going through a divorce and property division is financially challenging enough in a normal economy, but during the uncertain economic times that current divorcing couples face the property division process is likely harder. Many couples over the last few years have lost value in their homes and instead of looking at their marital home as an asset some may be viewing their former home as a liability. Over this post and the next we will discuss some tips on how to tackle finances during divorce.
Since 2005 homeowners have lost $7 trillion in equity, and today about one in five homeowners in the United States owe more on their mortgage than what their homes are worth. For years, a couple's house was their largest asset, but now the value of homes and the swinging stock market has thrown a monkey wrench into the division of property process for many divorcing couples. What can individuals going through a divorce and property division do to help themselves?
The first step is to take inventory of assets and debts. Individuals should organize and write down all sources of income, assets, expenses and debts before meeting with their attorney. That way individuals can have an idea of where they are at financially before they develop a plan with their attorney. Many people who have left the finances to their former spouse often find the organization of assets and liabilities to be useful.
Another important item considered in property division is timing which means when items such as retirement accounts are going to be divided. Next time we will begin there.
Source: The Wall Street Journal, "Divorce: Who wants the house?" Kelly Greene, October 1, 2011