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Everyone is familiar with the astounding cost of celebrity divorce. Bank-breaking settlements like Rupert Murdoch’s $1.7 billion settlement paid to his second wife, divorced in 1999, make for great headlines. But most of us just don’t have those kinds of national GDP-sized assets, and with financial problems being one of the leading causes of divorce, many people are asking questions more like, “how do you divide debt in a divorce?”
Settlements, distribution of assets, and division of debts are one of the main reasons why a good attorney is so vital to divorce proceedings. Even in the case of the no-fault or mediated divorces that are becoming more common, a seasoned attorney acting as a third party can help make things more equitable for everyone involved.
While most state laws indicate that marriages with no prenuptial agreement lead to the 50/50 settlements like Mel and Robin Gibson’s $485 million split, the true cost of a divorce varies wildly for each couple based on factors like state laws, the complexity of property and assets, and child custody. For instance, in cases where one person is retaining the marriage home but not full custody of the children, it may be to their advantage to take on the full debt from the home to also enjoy the benefit from the mortgage. However, if they are keeping the home but also have primary custody, they may share the mortgage payments as part of child support. People often employ the help of professionals beyond attorneys, including experts in property and asset appraisal services ranging from real estate brokers to actuaries, bank employees and accountants that specialize in evaluating assets for retirement.
All of these professionals have skills that can help determine the true value of all shared physical assets, which enables more equitable distribution to each party. While it does cost something to employ experts for these appraisals, it will help with peace of mind in the long run.
One of the roles of property assessment and other financial experts in a divorce is to help make things as fair as possible. But that doesn’t necessarily mean equal distribution of property. Settlements are subject to capital gains tax, alimony/spousal support is treated as taxable income for the receiver (and is actually tax-deductible for the one paying alimony), and there are many other complexities involved with the financial and tax aspect of divorce settlements, alimony and child support payments. Whether you are handling your divorce through third-party mediation or a full-on legal battle, it is important to keep in mind the financial ins and outs that catch most laypeople unaware.