During a divorce, it can be challenging to divide everything you and your spouse have worked to build together. While each state has divorce laws that help ensure a fair division of property, it is helpful to know what assets could be at risk.
Here is a look at some of the main financial assets you may need to protect during the proceedings.
The Family Home
One of the most emotional matters in many divorces is ownership of the family home. For many people, this property has significant sentimental value, but it is important to focus on the financial aspects to ensure you make the right decision for your future.
In some cases, it may make sense to sell the house. It is helpful to determine whether you will be taxed on the profits from the sale of your primary residence and what the home’s value will be after paying off the mortgage and any applicable broker’s fees. You should also consider the alternative living options available to you in the short and long term.
If one of the spouses wishes to keep the home, they must carefully assess their ability to cover the mortgage, homeowners insurance, maintenance, and real estate taxes with their post-divorce finances.
Some lenders may allow a spouse to take their former spouse off an existing loan; in other cases, it may be necessary to refinance. It is also important to determine whether you would qualify for a refinance with your post-divorce single financial profile.
Health insurance is another major asset to consider in a divorce. Most policies that individuals receive through their employer will remain with the primary owner following a divorce. However, in some states, there are laws that require employers that offer group policies to make them available to employees’ former spouses after a divorce.
Ensuring health insurance coverage for children often forms part of divorce negotiations. In cases where one parent can obtain coverage for their children through an employer, the children may need to be kept on the policy. For those who do not have an employer plan, guaranteeing health insurance coverage for the children may form part of the child support orders.
Retirement accounts are also at risk in divorces. In equitable distribution states like Maryland, assets such as retirement accounts are divided on an equitable basis. This does not always result in an even split, but it is done in a way that is deemed to be fair to both parties. Although retirement benefits are eligible for division, many complications are involved depending on the type of retirement account in question.
Any IRAs, 401Ks or pensions acquired during a marriage are considered marital property. However, the contributions that were made to such accounts before getting married are generally considered separate, along with increases in the value of the account that can be traced directly to the premarital payments in question.
Under Maryland law, the court can transfer ownership of interest in any type of retirement or deferred compensation plan to one or both spouses, even if just one spouse contributed to the account, as long as the contributions were made while they were married.
Investment accounts are also at stake in divorces. It is important to keep in mind that it is the amount that you can keep after taxes rather than the value on the statement that is considered in the standard division of property. When dividing investments in a divorce, couples may choose to sell their investments and divide the proceeds. However, it is important to consider the tax repercussions before proceeding.
Another option is splitting investment holdings. For example, a couple that has 50 shares of stock as part of their marital property can divide them in half, with one spouse receiving 25 shares and the remaining 25 shares going to the other spouse.
Life and Disability Insurance
Whole life insurance policies carry a cash value and might be subject to division in the event of a divorce. However, spouses who had life insurance or disability insurance coverage through an ex-spouse’s employer’s plan may lose their coverage.
Businesses, whether owned personally or with partners, could be at stake in a divorce. This will depend on factors such as when the business started, who is responsible for it, and whether a prenuptial agreement was signed that addressed its distribution in the event of a divorce.
The court may also consider whether the other spouse contributed to the business’s success in any way, such as by staying at home to care for the children to provide the business owner with more time to work.
Protect Your Assets in a Divorce with Help from the Maryland Family Law Attorneys
The experienced family law attorneys at SIEGELLAW can help you ensure your interests are protected in your divorce and work toward the most favorable outcome in your case. Contact us today to schedule a consultation to learn more about your division of property rights.