Both parties have access to liquid assets. These assets will be divided easily. The separation of assets may not be straightforward. This happens in instances where there is a mix of liquid and non-liquid assets. For instance, when you liquidate a 401(k), its face value might not be accurate. Because taxes will be paid when a 401K is liquidated, its value may be reduced. Early withdrawal fees can apply. You have to ask yourself, how can I strategically divide my assets?
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The term “fair” may not always imply an equal distribution of assets when liquidating a combination of liquid and non-liquid assets. Your lawyer can suggest methods for dividing assets strategically. Simply take your 401(k) and divide the less-valuable proportion. Swap out your ex-spouse’s portion of the assets for another of your asset. In the absence of such, you can assume a liability to exchange the share for a more liquid asset.
The equitable distribution doctrine governs how all marital assets are divided during a divorce. This is the foundation of Michigan’s property division. The goal is for the court to decide what division of all assets the couple jointly owns. It will decide based on what is fair to both spouses and equitable in the eyes of the law. The court takes stock of what assets the marriage has accumulated. The court decides whether they should be categorized as separate (non-marital) or marital property.
What do you divide and distribute in property division?
Understanding Michigan’s laws on property division is crucial if you intend to file for divorce. In general, American states fall into one of two categories: “community property” states or “equitable distribution” states. Michigan falls under the latter category. It is crucial to learn more about what that entails for the distribution of marital assets and liabilities in the state as well as what you should anticipate.
Both assets and debts from the marriage will be divided when the court distributes marital property. Both assets and debts may be regarded as marital property.
The majority of assets obtained after the date of marriage are regarded as marital property. Assets acquired before the date of marriage are categorized as separate property. There are exceptions to this categorization so talk to your attorney about them.
Debts from extramarital affairs, gambling, and restitution in court cases are often not regarded as marital debt. Student loans obtained during a marriage used only for one spouse’s education are regarded as separate debts. However, if they were used to support the family, student debts may be regarded as marital debt. The person who receives a piece of property typically takes on the debt attached to it. The person who can afford to fulfill the obligation linked with the property may continue to own it.
There are properties expressly excluded from the marital estate through a legally binding prenuptial agreement. Those assets will not be divided upon divorce. Property acquired by one spouse during the marriage by inheritance or gift, a present that was not given by the other spouse, and was not acquired using marital assets will not be divided at divorce.
What are the challenges of dividing separate and marital properties?
Some types of property will be harder to value than other types of property, especially in divorces involving high net worth or business assets. To acquire an accurate value of a particular asset or a group of assets, it could be required to collaborate with an appraiser or to take extra measures.
Not all property may easily be categorized as separate or marital property. It might be challenging for the court to determine which portion of the property should be classed as separate and which as marital when separate and marital assets are combined in some way, a practice known as commingling.
The court must be aware of the property’s value. The court requires precise valuations. This is done to make sure that assets can be distributed fairly and equally. With some things, like a bank account, that is fairly easy. Seek advice from an expert, such as a business or real estate appraiser when it comes to real property.
Evaluating retirement accounts may be particularly challenging. More so if they are divided before their pay-out period. The court needs to determine the account’s current value. This requires the assistance of an actuary. Seek expertise but be prepared to pay more for their opinion and recommendations.
The judge overseeing your divorce cannot tell your creditors what to do with your debts. The judge has no jurisdiction over your creditors. You owe money to your creditors. The judge will assign each debt to either you or your spouse through the divorce judgment. Your creditors will still view debts in your name as joint debt.
Make sure you draw a list of any debt that is in both of your names. You can have the judge enforce the order to pay. This is in the event the individual ordered to pay the debt doesn’t. File a motion requesting the judge to order your spouse to pay you back. You need this motion in case you wind up paying a debt that was assigned to your spouse.
Not all resources or obligations are created equal. While some may be post-tax, others may be pre-tax. Others have rather static values, while some may fluctuate often. Just because something seems fair on the surface doesn’t imply it actually is.
How can you strategically divide assets in a divorce?
You can determine which assets are worth “fighting” for and which are not after you have a clear understanding of what a just division of the value of your marital assets looks like. Clarifying your priorities is crucial whether your divorce is expected to be amicable or whether a court will be asked to support your or your spouse’s claims. Few people leave a divorce situation with their ideal situation in hand. You can concentrate your efforts and improve your chances of obtaining the items that are most valuable to you by deciding which ones are.
Get your divorce over in the most effective manner possible. You’re not getting everything you want in the divorce. Accept that and embrace it. Have a broader perspective. Pay attention to what is most important.
[a] How your assets are divided up and who is responsible for paying off your obligations. Including how you’ll run the household.
[b] If either of you will pay alimony or spousal support, how much, for how long, and how will that work?
[c] Child support responsibilities and child custody agreements. An agenda for parenting. If you and your partner share custody of underage or dependent children, this is crucial.
If your family is typical, your marriage house may be your only significant asset. The ex-spouses may decide to sell the marital house after the divorce is finalized. It’s possible that one of the parties has moved. Knowledge of the house sale will be helpful in the divorce settlement procedure. You can stipulate that it needs to be listed and stay up for sale for at least 30 days following the divorce. Some people even go so far as to detail the precise offers that are welcome.
Ensure that you list all the parties’ retirement assets. Specify who will receive each item or how the assets will be divided. Verify how many retirement funds, such as 401(k)s and pensions, are divided. In your case, appreciate the importance of a qualified domestic relations order or QDRO. Include a sentence outlining who is in charge of paying the finished QDRO. If you split an IRA distribution, you may roll it over. You should specify a timeframe for when this should take place.
If you think the net present value of retirement assets is less after taxes, let go and take what you already have. Talk to your attorney about the valuation of these assets and what these assets truly mean to you.
There are various things you may take to protect yourself while going through a divorce. Understanding your rights is essential before anything else. What you have a right to. You can then decide on the terms of your divorce after having more information.
Realistic expectations are also critical. On how your divorce will proceed, be realistic. It’s unlikely that the divorce will go exactly as you hope. Concentrate your efforts on your main priorities. Be prepared to give up something else to accept the limitations of what you can have.
Talk to each other and find a solution to your most pressing issues before filing for divorce. If you can come to a consensus and overcome these issues, the court will see your divorce as uncontested.
Link the other components of your vision to these fundamentals. Much like your joy. Your mental tranquility or your own personal development.
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