Understanding How Asset Division Works & Useful Calculators
Latrice Knighton is a member of the Sterling Law Offices partner team and an award-winning divorce attorney, life coach, and speaker. She helps clients resolve their problems by using legal techniques and smart tactics learned through decades of experience as well as helping clients by offering the best practical advice.
Know your finances and having a goal is important, and knowing how or what needs to split during a divorce is equally as important.
In the beginning, choosing what assets and debt to split between your spouse when divorcing can seem like a monumental task. However, when going over asset division with an attorney at the first meeting it will seem like a walk in the park through the use of the many available worksheets.
The main goal of these worksheets are to set the foundation so there is a clear picture on how to allocate your assets. This is accomplished by allowing people to see all their different assets in groups on a single page. As a result, these worksheets look at the potential division of assets and the tax implications that go along with them.
How does this document stay relevant throughout the whole divorce process to ensure accurate values?
The property division spreadsheet is a working document. That means that you'll always be able to go back and update the information as it needs be throughout the divorce process.
How does the document assist in making a fair distribution of property?
With this worksheet, there is consideration of both party's goals and interests to see if there is a reasonable way to divide the assets in a manner that can meet both party’s needs.
Why is property separated in groups?
The different groups are purposeful so we are able to talk about how they work in a divorce. We're then able to see how they’re titled, what accounts exist, what value they have, what they have been used for in the past and how they will be used in the future, and should they be closed followed by new ones being opened? There are many viable reasons to why property has sever different groups.
What types of grouping are there?
- Cash and Deposit Accounts
- Qualified Assets (Retirement)
- Life Insurance
- Real Estate
- Business Interests
- Vehicles/Recreational Vehicles
- Personal/Household Items
Debt is grouped in separately as it allows us to look at different ways to eliminate debt by seeing what assets could be used to pay them down and what the costs and tax implications are of doing this.
How does the (Tax Calc) income spreadsheet help with asset distribution? (06:32)
This spreadsheet helps determine the after tax income that we're trying to compare and see if there is a need for financial support or a transfer of income from one side to another. In its basic form it is a side-by-side tax return, it helps us calculate parties that used to file joint but now as separate individuals. This shows how they would be taxed and money left over after taxes. This spreadsheet is also used to calculate child support payment amounts.
What is the usefulness of the Maintenance Buyout Calculator? (11:55)
This allows you to see the value of that future stream of income and determine if you want to buy out or do a partial buy out on alimony.
What does the wage stub calculator do? (15:15)
It allows you to see the per month calculation because we like to look at income as a per month basis.
What does the Temporary Support calculator do? (17:51)
The temporary support calculator used to divide up income during a pre-divorce period. It nails down a month to month income and helps divide that income to what seems fair to both parties. It also factors current tax withholdings not future withholdings.
What does the Coverture Fraction calculator do? (19:59)
The coverture fraction calculator is often used when trying to determine a premarital or marital component of a retirement or other type of asset.
Use of the Alimony Recapture calculator? (21:42)
This calculator quantifies any tax consequences of any maintenance or alimony agreement.
Use of the “Loan-mortization” calculator? (22:41)
This calculator is used in the discussion around property. It takes a look at the cost or monthly payment based on a loan amount. It establishes some sort of property buy-out or property buy-out over time.
References: Financial Know-How and Its Importance