Will having separate bank accounts protect you in divorce?

Unlike most married couples, you and your spouse have separate bank accounts. Now that you and your husband or wife have decided to divorce, you wonder if your unconventional approach to marital finances may speed up your split, allowing you to start the next phase of your life sooner.

CNBC Make It notes that such an approach does not always make the asset division process of divorce easier.

Equitable distribution

Florida operates under equitable distribution laws. That means that anything you earned during the marriage is yours. That said, there is no guarantee that your spouse cannot convince a judge that all of your assets are marital property. Additionally, a judge may decide to use your separate assets to fund your divorce settlement.

Access to money 

This is not to say that having and maintaining separate bank accounts during divorce is without its advantages. One good thing is that your having a separate account gives you quick and easy access to your own funds should you need them during your divorce. Your spouse may decide to limit access to a joint fund, which could make it difficult for you to buy whatever you need to move on with your life.

Additional protective measures 

To better protect yourself and your finances during divorce, consider printing out financial statements for the month before you married your spouse. This makes it clear what you brought into the marriage and how to properly divide assets.

Maintaining a separate bank account during your marriage may not offer you the protection you think it may during divorce, but it is not entirely futile.

What is the best way to divide a 401K?

Dividing your assets during your divorce in Florida is often one of the most difficult processes. You need to come up with valuation for all marital property and reach an agreement that the court will find to be fair and equal. This can take a lot of work, especially if you have difficult assets to divide. Often retirement accounts may pose an issue, but if you have a 401k, you will discover that it actually makes division rather easy. 

Forbes explains that a 401k has a daily cash value. This means that you can easily determine the valuation, which is often a tricky part of dividing retirement accounts. You also have the option to divide a 401k in any way that you want without a lot of restrictions. 

One of the best things about a 401k is that as a spouse, you can roll over any 401k funds from your spouse to another 401k without any penalties. This can save you a lot on taxes. Another way to avoid taxes but that allows you to take the money out of the account is with a Qualified Domestic Relations Order. A QDRO lets you avoid taxes if you withdraw the money before the age of 59 1/2. 

Do note, though, that even withdrawing through the QDRO, you will still have to pay income taxes on the money. You only avoid the tax penalty for an early withdrawal. So, the best option to maximize the money is probably to roll it over into your own account. 

How one is compensated can have impact on property division

In today’s employment market, there are many forms of compensation. While this is not an issue most of the time, during a divorce, different forms of compensation can affect the property division negotiations. Florida residents who are preparing to file for a dissolution may benefit from reviewing all of their assets. 

For those who earn a straight salary, the division of marital assets will likely be fairly simple. Those whose pay includes non-traditional forms of compensation may need to time their divorce filing carefully, or ensure that the terms for dividing assets will not lead to some assets being over-valued. Some payments that may need careful consideration are bonuses that include a “claw-back” provision. These are bonuses paid upon employment but which could be subject to repayment if one loses employment due to under-performance or other employee-performance reasons. When these bonuses are counted as marital assets, there may need to be provisions that will ensure a spouse will also have to re-pay his or her portion of these monies.

Two other payments that can affect property division are year-end bonuses and commissions. If a year-end bonus is included in marital assets, it is important that this compensation is not double-counted when it comes to calculating support payments. If commissions are part of one’s pay, then it may be important to stipulate whether these payments were received before or after a divorce filing. If after, it may be argued that they are separate assets. Other forms of payment that may have a bearing on negotiations are stock options, new job bonuses and other perks that may be counted as marital assets.

If one is in a position to determine his or her own salary, it is important that salary meets the going market rates. During a divorce, the property division negotiations may significantly impact future financial stability. In order to arrive at the best settlement, Florida residents may wish to consult with an experienced family law attorney.

Property division in divorce often difficult prospect for spouses

The end of a marriage is filled with many conflicting emotions and important decisions. While child custody is often the most important matter for parents, property division is a topic that can lead to considerable conflict. Florida residents who are divorcing likely have a number of questions regarding this important issue.

The family home where children were raised is often a central focus of divorce proceedings. Does it matter if a home is titled in only one spouse’s name? If the home is a marital asset, as opposed to the separate property of one party, the name on the title usually does not matter. If one spouse is insisting a home be sold, negotiations can center on whether one spouse can buy out the other spouse’s interest in the equity.

The parties can either agree upon the value of the home or get a formal appraisal. The home can be sold and net proceeds divided or one spouse can retain the home and refinance any remaining debt in that individual’s name. If the spouse keeping the home does not have the separate funds to buy out the other spouse’s share, his or her interest in another marital asset might be an acceptable substitute. If a spouse invested money into a home before the marriage or inherited the property, it is usually possible to recoup those separate funds, though it is sometimes challenging to determine which portion of a property’s equity is to be considered separate, especially if marital assets were used for upkeep and/or mortgage payments.

If the real property is not the residential home, similar solutions may still apply. Rental income may contribute significantly to the value of the property and may also be taken into consideration when deciding matters relating to support. Florida residents who are preparing for divorce proceedings may benefit from the advice of an experienced attorney who can work to ensure that the property division settlement will best meet the needs of the client.

Gray divorce and property division require skillful negotiation

The divorce rate among younger couples has decreased over recent years. The same is not true for the older generations, as the so-called “gray” divorce rates have climbed significantly since 1990. Though there are many reasons why these older spouses are calling it quits, what is common to most is the importance of property division for older individuals. Florida residents who are divorcing at a later age may benefit from consulting with financial professionals.

At this stage in life, many unhappily married spouses are choosing to seek more enjoyment by divorcing rather than remaining with a partner who no longer provides the companionship they desire. However, due to age and possibly limited options for financing retirement goals, the need for negotiating a suitable settlement becomes the focus. If either spouse has retirement savings or plans that were financed during the marriage, they will likely be split as evenly as possible. Other assets, such as stocks or other holdings may require more skill to determine how they can be divided. 

If one spouse has a lower income, or did not have outside employment, the negotiations may include a provision for alimony, though the paying spouse may object based on a fixed income in the near-future. Social Security will likely be an integral component within the discussions over assets. If the assets include a small business, the negotiations may become more complex, unless there is a pre-existing agreement covering how it will be handled in the event of a divorce. 

Those who own separate assets may also encounter difficulty, especially when both parties are worried about planning for their financial future. Every divorce requires careful consideration, no matter the circumstances. Florida residents who are planning for a new future after their divorce may benefit from the guidance of skilled professionals, especially a divorce attorney who can ensure that the property division will provide for a secure financial foundation.

Want a fair property division? Consult an attorney early

Once a marriage is showing signs of instability, some may feel that exploring their options is a last resort. However, if one desires an equitable share of the marital assets, consulting with a family lawyer is a prudent step. Florida residents who are concerned about how the property division will affect their future security benefit from seeking guidance sooner rather than later.

Some may feel that consulting with an attorney is akin to giving up on the relationship too soon. However, choosing to get information early can only help in the end, especially once the petition to divorce has been filed. If a couple has children or significant assets, then waiting until the other spouse has contacted a lawyer may be counterproductive. Furthermore, it is recommended that the other partner is not informed about a consultation ahead of time unless the couple has already decided that a mediation approach is the best fit for their situation.

It is also not recommended that parents enter into an informal agreement over child custody or support. Doing so may make it more difficult to change the terms once the divorce process has started. Since the process of filing for a divorce can be costly, it is helpful to have an idea of the fee schedule and what the terms of a contract for services will include, which is another reason to contact an attorney early.

Lastly, seeking a consultation with an experienced attorney early does not mean that the marriage is over. In fact, having a clear picture of what one’s rights may bring enough peace of mind to allow a spouse time to analyze whether a relationship may be repaired. In the end, if Florida residents do decide that a divorce is the appropriate solution, the time spent on early planning may ease stress, which may lead to less contentious property division negotiations for all of the parties involved. 

Property division involving a business requires careful planning

A divorce is draining on many resources, especially time, energy and emotions. If the property division will include a family-run business, careful planning is required in order to avoid unpleasant financial repercussions. Florida residents who own a small business have reasons to be concerned over how the divorce will impact their future.

Small business owners make up most of the successful enterprises across the country. As such, those who devised the tax codes have taken steps to ensure that these companies are taxed appropriately. However, the recent changes to the tax code may have many owners worrying about how to avoid possible tax penalties. Determining the accurate value of the business requires that allowable exemptions will not lead to a higher tax rate or that assets are not double valued for support payments. In many cases, it is difficult to separate personal income from business assets.

In addition to determining the company’s current worth, it is prudent to ensure that possible tax consequences are taken into consideration when working on a settlement agreement. It’s possible that property purchased for use in the business may be transferred to a spouse who will convert it to personal use, and this may lead to a tax recapture that could affect future earnings. In addition, spouses who need to set up support payments may elect to use life insurance agreements that will become part of the divorce settlement.

A divorce that involves a business requires more time, planning and finesse than a straightforward proceeding. Florida residents may find that they will benefit from the assistance of financial advisers who are experienced in helping determine how the property division will impact the future of the company. Regardless of one’s particular circumstances, a divorce deeply affects all aspects of life; therefore, those who are preparing for a divorce may be best served by consulting with an experienced family law attorney to reach the best possible solutions.

Family business in a divorce can complicate property division

A divorce can be an emotionally and financially exhausting process. For those who own a family business, decisions involving that company may complicate property division negotiations. Florida residents who own a business are likely concerned about the best approach to dividing their assets when a marriage ends.

Operating a business requires a significant investment of time, energy and assets to ensure its success. When a divorce becomes the best option for a troubled relationship, the question of how to handle that business may be a difficult one to resolve. The first step is obtaining an accurate assessment of the value of the company. After that, there are three options that may be considered — the first being that one spouse will retain the company by buying out the former partner’s share. This option is the most popular, as it is usually tax neutral and allows the company to continue.

If one spouse lacks the liquidity to purchase the shares outright, an agreement for settlement payments can be drawn up that will avoid the possibility of capital gains tax consequences. A second option for couples who remain cordial is to continue operating the company together after the divorce. This may not be an attractive option for the majority of owners, as it is often difficult to work with a former spouse.

The final solution is to sell the business outright. While this may be best for many owners, it can lengthen the divorce process, as selling a business takes time. Once the company is sold, the spouses can split the profits and use them as they see fit. One of the most important considerations for Florida residents who are seeking a divorce is the property division, because this may help determine their financial stability in the future. An experienced attorney can help ensure that a settlement agreement allows one to reach future financial goals.

Creative thinking may help when it comes to property division

The prospect of getting married and then divorced later in life may seem daunting.  However, with age comes the experience to find creative solutions to problems that a younger person may not consider. In many situations, when it comes to property division, Florida residents may be able to work out a solution that will enable them to still achieve their dreams. 

No matter how old one is when he or she chooses to marry, he or she hopes that it will last. Unfortunately, a marriage may become unsustainable, and then a divorce becomes the best option. When a couple sits down to work out a settlement agreement, they may discover that they are no longer able to afford the upkeep on the marital home. Under these circumstances, many will choose to either sell the house and split the proceeds, or one spouse will attempt to refinance. 

One woman explained that, when she married in her 40s, she and her husband purchased a dream home. After they decided to divorce a few years later, they realized that, on their own, neither would be able to afford the house, which was located in an upscale neighborhood. Once the wife was able to secure a mortgage in her name, she decided to rent out a portion of it. In this way, she was able to retain her dream home and achieve her goal of wanting to operate a scaled-back version of a bed and breakfast.

Though no one ever sets out to divorce, this woman found an opportunity to make a better life for herself after her divorce. Going through a divorce can be a difficult process for many Florida residents, especially when it comes to the property division aspect. A family law attorney can provide the experience and guidance necessary in order to arrive at an agreement that will ensure a secure financial future.

Navigating Florida’s property division laws in divorce

The decision to marry is often based on emotions. Unfortunately, when a marriage ends, the matter of determining which spouse gets which assets cannot be based on emotions as this would likely result in an unfair agreement. In order to protect each party, Florida has specific laws regarding property division during the settlement proceedings.

While there are a handful of states that are community property states where the assets and property that are accumulated during a marriage are considered jointly owned and are therefore usually divided in half, the majority of states subscribe to the equitable distribution policy. This means that a court will strive to ensure that the division is equitable, though not necessarily equal. In order to arrive at an equitable split, the court will take several factors into consideration.

These factors will include the amount and effort that each spouse contributed to the marriage. The role and sacrifices that each party may have contributed, including whether a spouse was a stay-at-home parent instead of working outside of the home. The current economic situation of each spouse will be reviewed as will how long the marriage lasted and the value of assets that each may have brought into the marriage.

The court will also take into consideration the sacrifices one spouse may have made for their spouse or whether one spouse was deemed wasteful with income or other assets within a 24-month period before or during a divorce petition. The courts will also review both marital and individual assets and the value of those assets in relation to the needs of the both parties. The courts will also review any prenuptial agreements that the couple may have signed. Florida residents may benefit from working with an experienced attorney in order to ensure that their property division settlement will provide them with a financially sound future.