People sometimes think that in divorce the only way to divide property fairly is to split every asset according to the same pre-determined percentage, whether 50/50 or otherwise. Not only is this incorrect, it is usually very inefficient.
Dividing Real Estate
If a property is owned with substantial equity or a very manageable payment, it may not make sense to simply sell the home and award each spouse a percentage of the proceeds. Depending on the current market value and the spouses earning abilities, it might be better to keep that asset in one piece. Of course, there are times when the home is the single biggest asset and the only way to give each spouse sufficient funds to move on is to sell it.
Dividing Retirement Funds
Most retirement funds can be divided without incurring the usual taxes and penalties and need not necessarily be 50/50. One should never take a loan against a retirement plan or withdraw funds in anticipation of a divorce without first talking with a lawyer. Splitting a retirement plan usually involves a Qualified Domestic Relations Order or QDRO. Some executive compensation plans are not subject to a QDRO, but the majority of retirement plans are. If the house is awarded to one spouse, then the other may receive a greater percentage of the retirement accounts.
At the McNamara Law Office, we always recommend that everything in which either spouse owns any interest and every debt owed by either spouse be listed on a spreadsheet. We then try to divide the community estate fairly, taking into account the parties’ goals, the law, and the value of the assets. Often, we are able to award each party various complete assets and are only required to split a single larger one to make a fair division; for example a 401(k) account may have to be split to reach the desired percentage or the house might have to be sold. When one spouse really wants to keep the house, there are options that can be explored.
Please contact the McNamara Law Office at 281-358-3444 with any questions or to schedule an appointment.
DISCLAIMER: This site and any information contained herein in intended for informational purposes only and should not be as legal advice. Seek competent legal counsel for advice on any legal matter. © Copyright Brian McNamara, 2020, may be reproduced with credit to the author.