Considering the percentage of people who divorce here in the United States, you more than likely know of at least one person who has been through it. Once you decide to end your marriage, you will probably know more people who have divorced, since they tend to come out of the woodwork offering advice and consolation.
The odds are pretty good that more than one of them will complain about the financial settlement. This may include property division and the division of debts. This often happens because people fail to consider the real value of assets and debts, tax liabilities and properly splitting retirement accounts.
Splitting up the marital property
Nebraska is one of nine community property states. This means that the courts assume you and your spouse own everything acquired during the marriage equally. When you negotiate who gets the furniture versus who gets the boat, you may want to make sure that you don’t end up with the lion’s share of the assets. The court may not approve your settlement and could send you back to the drawing board.
You may need to consider the true value of each asset as well. If you want the house, but can’t realistically afford to keep it on your own, it may make better financial sense to sell it and split the proceeds. This type of analysis may be necessary for several of the marital assets.
Splitting up the marital debts
Just because your soon-to-be former spouse agrees to take responsibility for a debt doesn’t mean that you are off the hook for payment according to the creditor. If the debt is a joint one, you both retain responsibility for it regardless of what your divorce settlement indicates. It is not a requirement that your creditors abide by that document.
Therefore, you may want to take whatever measures you can to protect yourself in case your former spouse fails to pay the debt. If you can get your name off the debt, that would be optimal, but the creditor doesn’t have to do that either. You may simply need to keep track of the debt and confront your ex if he or she doesn’t pay. You may be able to take the matter to the court, but in the meantime, you may still owe the debt.
If the divorce is friendly, you may consider remaining legally married long enough to pay off at least some of the joint debts. Then they won’t be an issue for you in the future.
Retirement accounts and taxes
If you plan to split retirement accounts, be sure to do it in a manner that prevents either of you from owing taxes or penalties on the split. Furthermore, you need to plan for yourself to rebuild the money given to your ex.
Speaking of taxes, you may need to sort out who can take certain deductions, who can claim the children as dependents and who can claim head of household.
The bottom line
Whatever agreements you and the other party make, they need to be in writing. You may also include consequences for failing to comply with the agreement. For instance, what happens if one of you fails to pay a joint debt you agreed to pay?
The more detailed your agreement is, the better off each of you will be. Take the time to do some research regarding the best way to deal with certain assets, how to divide your retirement accounts and what tax ramifications or benefits you each receive. Even though you may just want to get the process over with, rushing through it could be costly in the future.