When you promised to “love, honor, and cherish” your spouse, divorce was probably the last thing on your mind. But not all marriages last. In fact, the average length of a marriage in Georgia is 10 years.
When a marriage ends, it takes an emotional toll on both spouses. It also takes a financial toll, especially if you don’t fully understand your legal rights.
Nowhere is that more evident than during property settlement conversations and resolution. To help you understand the process, we’ve listed five things you should know before you agree to a division of property.
1. What Is Property?
You may think the answer is obvious, but property often encompasses much more than a piece of land and a house. Your property involves all your assets including the home you share with your spouse, your cars, retirement and investment accounts, real estate, and all the things in your home.
When married couples begin to discuss divorce settlement agreements, they should list all of the things they own, either jointly or independently. They should include anything they owned prior to the marriage, like a vacation home they inherited or an investment account they funded.
The more divorcing couples can agree to, the more they can save in legal costs. The average divorce costs about $22,000, including about $17,000 in attorney fees.
2. Yours, Mine, or Ours?
Most states, including Georgia, distinguish between property you own together and property owned by only one of you when you file for divorce.
There are nuances to this, but basically, anything you owned before you got married is yours. Anything you purchased after you got married is shared property.
There are some exceptions to this. One of them can be a retirement account.
For example, you may have started a 401(k) through your employer after you got married. However, since only your income funded the account, you will probably be allowed to keep the full amount.
The same can be true with gifts. If your parents give you a parcel of land as part of your inheritance, you will likely be able to keep it, even if you received the land after you got married.
It can get tricky, however, if you combine separate property with shared assets.
Here’s another example. If your parents leave you money as your inheritance, and you and your spouse buy a vacation home together, that may be considered joint property.
3. Who Gets What in a Property Settlement?
Whether you’re the one initiating the divorce, or it’s your husband, this can be one of the biggest negotiations that happen during property settlement agreements. There are a number of reasons for that.
It’s painful to consider losing something that was an important part of your life, like your home or a parcel of land you dreamed about building a cabin on one day. Dividing up china and furniture is not exactly what you dreamed about on your wedding day.
The laws also vary from state to state, so it’s critically important to understand how property may be divided where you live. For example, in some states, the property is considered either jointly held (community) or separate.
Nine states currently operate as “community property states.” In these states, the shared property is split 50/50. Those states are:
- New Mexico
For divorce in Georgia, where we practice, the property is divided between divorcing spouses according to something called “equitable distribution.” This means all the property you accumulated during your marriage is divided fairly but not necessarily equally.
If you and your spouse are agreeable on the terms of your divorce, you may be able to have an amicable divorce. This can save you THOUSANDS in divorce costs.
4. How Does Equitable Distribution Work?
When you file for divorce, it’s a little more difficult to divide property this way. In states with community property laws, you simply split everything in half between the divorcing spouses.
Equitable distribution can require patience and a willingness to negotiate.
What does that look like? Let’s use an example.
You and your husband own two homes. One is your primary residence, and the second is a vacation home. The primary residence is worth more than the vacation home.
Under equitable distribution, if you are awarded the primary residence, you may be ordered to pay your husband a sum of money to offset the difference.
So it’s more than a simple division of property. It’s an attempt to ensure that the property division is fair (equitable) to both people.
One of the first things your attorney will ask you to do before beginning a property settlement negotiation is to write down everything you and your spouse own. Be prepared to get very specific.
You should include:
- Real estate
- Retirement accounts
- Investment accounts
- Checking and savings accounts
- Home goods
Ideally, you will create three lists.
The first will be everything you own separately. The second will be everything your spouse owns separately. The third will be a list of everything you own jointly.
5. What Is It All Worth?
This is a much more significant issue under equitable distribution because the ultimate goal is to achieve an agreement that is fair to both parties. It’s relatively simple to determine the value of a set of china and decide that you each get a set.
It can get much more complicated when it comes to items of greater value, like your home. In all likelihood, you will need to determine the real value of the home at the time of the divorce through a third party.
This may mean paying for an appraisal of the home, evaluating comps in your neighborhood, or hiring a real estate attorney to guide you through the process.
If you are keeping the home, your spouse will likely be entitled to compensation for their portion of its value. If you and your spouse decide to sell the home, then you each will receive a portion of the proceeds from the sale.
Ultimately, the judge will have to sign off on your property settlement agreement. The judge will consider a number of factors in determining if the agreement is fair. Those factors include things like the spouse’s income, how long the marriage lasted, and the tax implications.
Determining a fair property is complicated and can take months. It isn’t something you should attempt on your own.
We invite you to contact our office for a free, confidential consultation where we can learn more about your needs and how we can help.