Common Financial Issues in Divorce
25 Apr, 2022
During a divorce proceeding, there will be a variety of financial issues to navigate that a Bloomfield Hills divorce lawyer can help with. You’ve no doubt already worked out for yourself that all of the assets and debts will need to be divided. However, have you considered how your spending during the divorce might affect the settlement, support payments, or alimony? Have you considered who will claim “Head of Household” on their taxes? Were you thinking about buying a new house before the divorce is finalized?
Michigan Is an “Equitable Division” State
Michigan divides marital assets in a divorce based on what is fair rather than on what is fifty-fifty. Michigan courts evaluate these factors below in determining asset division for a divorce:
- How long the marriage lasted
- The standard of living with which the couple is accustomed
- Age and health of both spouses
- Earning power/work history/career training of both spouses
Start Financial Preparation Now
To protect your assets, one thing you can do is start gathering documentation now. Compile this type of documentation:
- Showing what property belongs to you
- Property you paid for or earned
- Business partnerships or business interests
- Bank statements showing account balances
- Retirement and stock market account balance sheets
A Few General Tips
If you know a divorce is imminent or it has just been filed, start thinking about some of these stickier issues that often get overlooked:
- Use your cash reserves or individual savings to pay down your personal debt before a judge or your ex reviews your finances to determine what assets and liabilities you have. Confer with your Bloomfield Hills divorce lawyer first to ensure you handle this correctly.
- Again, if you’re the spouse who moved out of the marital home, consult with your legal representation before buying a new residence during the divorce proceeding.
- If there is a retirement account, something called a QDRO must be created to legally have the account balance divided. If you don’t handle this correctly, you can be penalized by the IRS for withdrawing money early from the account.
- Claiming “Head of Household,” child tax credits, and dependents on your annual tax return is an asset worth thousands of dollars every year. Discuss how this will be handled with your ex. You can rotate year-to-year who gets the exemptions or use it as a negotiating tool to keep the house or other big-ticket property item.
How to Handle the Joint Bank Account
Do not go clean out a joint bank account and put the balance into an individual account in your name. During the settlement, behavior like this can result in a less favorable property division outcome for you. Discuss any financial moves with your attorney first.
Protect Your Assets with a Bloomfield Hills Divorce Lawyer
Robbins and Licavoli are experienced in handling complicated Michigan divorces of high net worth and everything in between. Contact us today to ensure the best possible outcome for your pocketbook during your divorce.