One of the most insightful movies about relationships is "When Harry Met Sally," a romantic comedy that contains a telling scene about how to divide property. Harry, played by Billy Crystal, warns his friend Jess (Bruno Kirby) that, if he breaks up with his live-in girlfriend, they eventually will end up arguing over an unusual wagon-wheel coffee table that Jess had in his apartment. An argument over a coffee table seems silly, but anything can happen when emotions and money mix, and they will if you need to divide property after a divorce.
The emotions involved with a split add a whole new dimension to dividing property in divorce. First, you need to look at the laws that are specific to your state to determine what they advise. For example, in community property states, property owned by both spouses is split equally. In other states, the community property may be distributed differently.
Then, you and your soon-to-be-ex spouse need to sit down together, no matter how painful it is, and create a list of all your personal property. You will need to figure out the value of the property, and you may need to bring in realtors or appraisers. Then, if possible, determine who owns each property.
At this stage, it is crucial to get all of your accounts out in the open. Divorce is acrimonious, and you may be tempted to hide accounts and items from a spouse out of fear that they will try to take a piece of the pie. However, if these hidden pieces of property emerge in court, then you will only prolong the divorce proceedings and put yourself at a disadvantage.
While you are bringing what you own to light, make sure your future ex does the same. You may need to ask your spouse about old accounts. This isn't snooping, especially if the two of you have been mingling your assets for years. You need to know what the two of you share, and your spouse should be willing to tell you.
Also consider what you will need in the future. You may feel that your divorce is settled fairly, but you won't really know until you figure out how much you need to live on per year and if you need to adjust your standard of living.
If you and your spouse don't have much and are able to come to an agreement that both of you feel is fair, then you will need to have the division of property approved by a court. If you can't come to an agreement, both of you will need to consult with lawyers.
Calculating the Fair Value of Property
Some forms of property are simple to divide, and you may know who takes what, but others are far more complicated:
Stocks, Bonds and Other Negotiable Securities: Consult a financial advisor to determine the fair market value of negotiable securities and what kind of tax consequences will be incurred when the securities are sold. This includes your retirement accounts, and, even if those accounts are in your name and include your money, they may still be community property depending on your situation and your state's laws.
Collectibles: Coins, comic books and other collectibles typically have real negotiable value, so it's good to seek out an expert opinion at places like coin and collectible shops. The owners can determine the worth of an item, recommend a good standard price guide and possibly purchase the item for a fair amount.
Vehicles: If a car or truck is involved in a divorce settlement, consult an online resource such as the Kelley Blue Book to determine the fair market value.
Real Estate: The easiest and fairest way to determine the value of a house or other piece of real estate is to have the property appraised. One party in the divorce may want to buy out the other's interest in a piece of property, so it's important to get an accurate estimate of what the property is worth. Also, if you have children, the house may end up going to the person who has custody.
Businesses: If you and your future ex own a business and don't plan on ending it, one of you can buy each other out. However, you may need a tax attorney as well as a divorce attorney to avoid surprises.
Keeping Things Civil
When dividing property during a divorce or other life-changing event, it's important to keep an open mind and not let emotions enter the equation. Dividing property is all about dollars and cents. It's important to remain calm when negotiating with a spouse or significant other in order to walk away with a fair and equitable settlement no matter what.
If possible, discuss things in a setting that's comfortable for everyone. If these discussions get heated, consider bringing in an objective third party such as a negotiator or mediator.
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