The Effects of Uneven Distribution of Assets in a Divorce | Get Financial Freedom Tips | Transform Your Financial Future


Tuesday, November 1, 2011

The Effects of Uneven Distribution of Assets in a Divorce

The Effects of Uneven Distribution of Assets in a Divorce
The perfect answer to any divorce is a 50/50 split of the marital assets, but any divorce lawyer will tell you it doesn't always happen even for those couples that live in community property states. However, in those states without community property laws, there are many different reasons that may determine how the court will distribute the marital assets with the most important one being the future earning capacity of each party in the divorce. When all the mitigating factors are calculated into the formula, it often leaves one person with more of the marital assets than the other one, an action that can often cause dissension among the couple. Certainly everyone wants to receive his or her fair share of the marital assets and wealth; there are many different reasons why this may not happen.

The credit issues that often accompany divorce quite often result because of an uneven asset split; one party in the divorce doesn't have enough funds from the divorce settlement to pay those obligations in a timely fashion. Some of the effects an uneven distribution of assets can cause include but is not limited to the following :

• Improper valuation of assets and liabilities

• Inaccurate assessment of tax liability

• For couples in business together an uneven split of marital assets can also reflect negatively on the business

• Improper valuation of liquid cash assets available for alimony and child support

• Produces an inaccurate credit report that may make one party look more credit worth than the other

Even the best divorce settlements do not always include an even split of assets, but you want to avoid situations that provide more tax advantages for one person while severely penalizing the other. You want to keep in mind that an uneven split of substantial proportions can provide tax relief for one person and a tax burden for the other. This could also lead to the one with the higher portion of the assets being able to build a comfortable lifestyle while the other lives in poverty. Your divorce lawyer can help you work out an arrangement that is fair and equitable for everyone—never try to take it all no matter how angry you may be because it just may come back to slap you in the face.

The important factor in a fair divorce settlement is to allow each party in the divorce action to build a new life. While most people think the wife has the lower earning capacity and should receive the largest portion of the assets, this is not always the case in the 21st century where we can see female lawyers, doctors, scientists and much more. The effects of divorce can play havoc with the male head of household just as easily as the female; professional women today are often earning more money than their husbands. The needs of the custodial parent are also important; when there are two professional people, it is important to factor in the costs of day care and other needs that may have previously been take care of by the non-custodial parent.

1 comment:

  1. Divorce is something which no body wants but it happens sometimes due to financial crises and the problems that arises then will be hard to manage. Thanks for your advice :)