How to Minimize the Value of Your Must-Have Divorce Assets
Uncontested Divorce Mediation
Posted February 17, 2021
Splitting up assets in a divorce is about more than who “gets” the house or car. Often, spouses get caught up in the idea of maintaining the pre-marriage lifestyle or getting stuff that makes their ex jealous of the split. Television drama divorces lead us to make these assumptions but in reality, “getting the house” is usually a bigger burden than it’s worth on a single income and spouses can find themselves weighed down with the majority of the physical divorce assets.
The 50/50 Split: Physical vs Financial Divorce Assets
In most divorces, the split of marital (acquired after marriage) assets is about 50/50. The spouse who keeps the most high-value physical assets also gives up an equal portion of the financial assets. Keeping the house subtracts its equity from your share of the 50/50 monetary split. Keeping the car, likewise, subtracts the amount that the car’s loan is paid off. Keeping the furniture subtracts a few hundred dollars per piece, and even an extensive personal wardrobe can be calculated in your divorce asset value split
The financial assets are the bank accounts, savings, stocks, and retirement funds. Yes, your retirement funds can be split to balance divorce finances. These are used to ensure each spouse receives about 50% of the total divorce assets. In divorces where one spouse keeps the house and physical possessions of the marriage, the other spouse will keep an equally valued portion of the marital money.
Minimizing for Negotiation Leverage
What this comes down to is leverage in negotiations. The person with the lower-value list of must-haves also attains the greatest room to negotiate. You can choose who gets the nice couch and even potentially avoid disturbing your respective retirement accounts. A minimal must-have list allows you to simplify the financial split – using whatever account divisions are most convenient instead of dividing each bundle. The less you’re negotiating to defend, the more you can ask for in non-material terms as well — by putting your ex’s priorities on the table without losing ground.
Both amicable and conflict divorces can be conducted more smoothly when one or both spouses has minimized their list of must-have assets.
Strategies to Reduce the Monetary Value of Your Must-Haves
1. Remove High-Value Items with No Sentimental Value
- Fancy Clothing
The first and best way to reduce your must-haves list is to reassess what you consider necessary. Your pre-marital assets and any personal gifts from a third party are all automatically yours. They are not included in the 50/50. After that, consider each asset with two values: monetary and sentimental. Consider using a list and/or colored post-it notes to mark items as you consider them.
Cut out everything that has no real sentimental value and a high monetary value. For example, expensive furniture you wouldn’t miss can become great “ballast” when dividing assets in a fair divorce negotiation. Throw in the solid chestnut dresser for an extra few hundred dollars in financial balance, and get a light-weight modern dresser as part of your post-divorce refresh. Tools and appliances also make great margin value items. They can be replaced but together add up in marital value.
Take a look at your closet. Often, spouses are surprised when their “personal clothes” are assayed at a significant chunk of marital assets. How many work and fancy dress clothes don’t you need or care about? How many high-value garments or accessories could you casually sell without regret? Take these off your must-have list, but keep your everyday closet and favorite sentimental dress items.
2. Identify the Most Sentimental Items
Now think only in sentimental value. Consider what you would miss most and the items that hold the most memories for you. Weigh this with their potential value to your ex, and how much you really want to hold on to certain memories. Sometimes, it’s helpful to process your feelings about a piece of furniture or artwork, then sell it to someone with a fresh appreciation – or to your ex who’s had a different experience.
Identify what you absolutely want to keep, and things you’d only let go if your ex negotiated hard enough. These high-in sentiment must-haves are often of lower value in total than the big-ticket assets.
3. Mark Assets of Sentimental Value to Your Ex
Now mark anything that has a higher value to your ex than to you, but are officially marital assets. Be courteous about also separating out pre-marital and personal gifts. This will make your claim on personal items stronger as well. Consider these to be items your ex is sure to negotiate for. By assessing the value, you can get an idea of how to fairly weigh their half of the 50/50 and predict their choices in negotiation.
By being ready to offer these items, and already knowing their value, you can gain leverage for balancing items that you want.
4. Determine the Most Practical Way to Split the Financial Accounts
Take a look at both spouse’s financial accounts. Your income, savings, stocks, and retirement funds are all included in the 50/50 split. Ideally, your retirement and long-term stocks and bonds can stay put. This will avoid incurring early-access penalties related to these accounts.
From there, consider the accounts that are easy to split and those that will be a hassle. Consider accounts already in separate names. If necessary, perform an audit or investigation to ensure all accounts are included.
When you have a clear view of the financial accounts, you can create a balance that breaks up the fewest long-term accounts.
5. Seriously Assess the Property & Loan Situation
Couples often consider house and car as full-value assets. In truth, the balance of equity and debt go into consideration. Leaving one spouse with the house also leaves them with the mortgage. Only the marital equity is a positive value. A fully owned car may be, overall, more valuable than a partially owned home.
Consider this when deciding if you want to keep marital property. Homes, cars, boats, land, and even businesses must be balanced with their equity and existing debt.
6. Devise 3 Divorce Asset Plans
- Minimal Assets
- Practical Assets
- Lavish Assets
Finally, you can explore a thought experiment. Follow through on how to balance the items considered must-have. What would your life, bills, and routine be like if you kept the house, furniture, car, and paid your ex to leave? What would happen if you left or sold everything to depart with nothing but clothes, computers, and a stack of cash? What about with your current list of must-haves and negotiable assets?
This method is great for gaining perspective and doubles as practice for planning your post-divorce lifestyle.
Planning for a divorce negotiation is all about priorities. The best way to gain leverage is to have a short, practical list of must-haves, a ready-list of terms your ex will ask for, knowing the real value of your marital assets – both monetarily and sentimentally. For more divorce advice or professional divorce mediation services, contact us today.
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