Dividing Assets in Divorce What is Considered Fair

Divorce is a challenging time, and dividing assets is often one of the most emotionally charged and complex aspects of the process. Whether it’s property, savings, business interests, or personal belongings, figuring out what’s “fair” can feel overwhelming. This blog aims to provide clarity on how assets are divided during a divorce and offers some settlement solutions to make the process smoother.

Understanding Fairness in Asset Division

Fairness doesn’t always mean a 50/50 split. What’s considered fair often depends on several factors, including state laws, individual contributions, and future needs. Here are two main methods typically used to divide marital assets:

1. Community Property Division

Some states follow community property laws, where all assets acquired during the marriage are considered joint property. These states aim for a 50/50 split of marital assets, with some allowances for exceptions, like inheritances. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

2. Equitable Distribution

Most states follow equitable distribution, which prioritizes fairness over equality. Courts consider various factors, like each spouse’s financial situation, earning capacity, and contributions (financial and non-financial, like caregiving) to determine an equitable division. When making their decision, they aim to ensure that both parties are able to maintain a similar standard of living post-divorce. However, equitable distribution doesn’t necessarily mean equal distribution – one spouse may receive a larger share if the court deems it fair based on the circumstances.

Steps to Dividing Assets

Identify Marital vs. Separate Property

The first step is categorizing assets as either marital or separate. Marital property generally includes anything acquired during the marriage, while separate property refers to items owned before the marriage or received as gifts or inheritance.

Valuing Assets

Assigning an accurate value to assets is crucial. This includes property, investments, business valuations, retirement accounts, and more. Professional appraisers or financial experts may be needed to determine fair market value.

Negotiating the Division

This step often involves input from both parties, their attorneys, and sometimes mediators. The key is to find a solution that both parties feel is fair, with emphasis on long-term financial stability.

Settlement Solutions for Fair Asset Division

Mediation

Mediation can be a cost-effective and less adversarial way to divide assets. A neutral mediator helps both parties communicate openly to reach a mutually agreeable settlement. Mediation often results in a more amicable final agreement.

Collaborative Divorce

This approach involves both parties working together (and with their attorneys) to negotiate an outcome without going to court. It’s a good option for those looking to preserve civility and control over the outcome.

Arbitration

With arbitration, a neutral arbitrator is brought in to make binding decisions about dividing assets. This is quicker than litigation but still provides structure. It also allows couples to keep their issues private and avoid courtroom drama. There is typically a small fee involved, but it can be worth the cost for those seeking a quicker and more private resolution.

Using Financial Experts

Consulting a financial expert can provide clarity on the long-term implications of asset division. Whether it’s valuing a business or projecting retirement needs, financial analysis ensures both parties make informed decisions.

Final Thoughts on Fair Asset Division

Dividing assets during a divorce is never easy, but understanding the process and being open to settlement solutions can make it less stressful. Remember, fairness is subjective, and what’s most important is finding a solution that secures both parties’ futures.