Splitting Assets: What You Need to Know

Splitting assets can often feel like cutting into a cake—everyone wants the best slice. But how can you ensure that you’re satisfied with your portion when the time comes? With 70% of women encountering unexpected financial impacts during divorce, preparation is the key to success. This week, Jade and I sat down to demystify assets, highlighting important vocabulary and common pitfalls to help create a stable future post-divorce.

It is no secret that the division of assets is an emotionally charged time. I reference the film, War of the Roses, pointing to the tumultuous experience of the main characters attempting to divide the house. During our lives, we become attached to our material objects—making it difficult to part with them during divorce. This emotional weight adds a layer of complexity that can be eased with the right mindset and a CDFA®. 

The conversation then shifts to a critical but often overlooked aspect of divorce finances: distinctions between marital and separate property. On a simple level, marital property includes assets bought as a couple, including contributions to 401ks.  Separate property can be defined as assets brought into the marriage, such as inheritances. Through personal anecdotes, we highlight the common mistakes individuals make, such as failing to trace the origins of separate property before it becomes commingled with marital assets. We point out that this oversight can lead to unexpected tax burdens and stress the value of informed decision-making.

Another vital piece of vocabulary discussed is equitable and community property. In states that practice community property, assets are split 50/50 amongst the couple. For equitable community states, there is a vast gray area. Assets are split equitably—not equally. This wording places the needs of the spouse first, taking in factors such as retirement contributions, access to healthcare, and the earning power of each spouse. Understanding what state your divorce will proceed in can help in beginning your divorce.

Perhaps the most resonant message conveyed in the episode is the help that financial professionals can provide. Managing assets can be challenging, especially when it comes to property tracing. During a divorce, if a spouse can prove an asset was theirs before entering the marriage, it creates a potential for the return of the asset itself, plus any additional growth. A CDFA® can explain these processes, taking the burden away from you. 

Episode 4 of “Cover Your Assets” is all about becoming the CFO of your new life. While you may have taken the backseat before, there is no better time than now to plan for your financial future. 

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Divorce might be the end of one chapter, but it’s also a brand-new journey filled with hope and growth. Join us for practical tips for financial empowerment and insights to make this time a little less daunting.

Invite us on your journey at CoverYourAssetsDivorce.com.