No matter how well you and your spouse are managing the preparations for your divorce, it is wise not to expect that you will resolve every issue without a grumble. Your divorce may not be contentious, but there are common elements of a marriage breakup that lend themselves to disputes, especially when the couple has substantial assets to divide.
While you may not expect your negotiations to deteriorate, you cannot predict how things will play out if you do not take steps to manage common financial time bombs. Failing to deal with these issues early in your divorce process may leave you battling over them in court.
Assets and liabilities
You and your spouse must divide your debt as well as your assets. The best option is to pay off and close as many credit accounts as possible before you even file for divorce. Entering divorce when your spouse has access to your credit accounts is risky. If you are unable to pay them off, the court will divide them. However, even if the court gives your spouse responsibility for certain joint debts, you are legally liable for any accounts that have your name on them.
It may seem simple and straightforward when dividing investments, retirement accounts and other financial assets. While some may be more liquid, others may come with serious penalties and tax implications if you draw from them. When you move into your post-divorce life, you want to make sure you have the funds to support yourself while you adjust.
Home, sweet mortgage
Perhaps the most emotional factor you will divide is your Colorado home, and it may also be one of the most complex financial issues for you and your spouse. It is not merely a matter of deciding who moves out. If you still have a mortgage, you will have to resolve that as well.
It is not as easy as taking one spouse off the mortgage. Because a bank is more likely to receive payment when two payors are on the loan, lenders are not quick to remove one name from a mortgage. Therefore, your most viable options for dividing your home mortgage include the following:
- Selling the house and dividing the profits
- Refinancing the house and buying out the other spouse’s half
- Remaining co-owners of the house and sharing its responsibilities
Of course, the last option is fraught with risk, and you would do well to seek legal advice about how to protect yourself. In fact, throughout your divorce proceedings, the guidance of an attorney may provide a more positive outcome.