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Untangling your finances during divorce

On Behalf of | Apr 26, 2022 | Divorce |

Property division in a divorce can be complicated because of Ohio law and a couple commingling money and assets during their marriage. Some methods, however, can make this easier.

Ohio law

Ohio law governs property and asset division in a divorce. Ohio is a marital property state where property acquired during the marriage and until the divorce action or legal separation is marital property that is subject to equitable distribution. This does not mean an equal split but requires a fair distribution.

Generally, spouses can keep property that they had before marriage or inherited. These assets may be divided during divorce if they were commingled with marital property, such as the purchase of their home.

Bank and credit accounts

Compile a list of all bank accounts. Determine which of these are joint accounts.

Obtain a credit report and determine whether the accounts are individually or jointly owned or whether there are authorized users.

If your spouse agrees, try to close the joint bank and credit accounts, pay off the credit accounts or agree to pay them off later. If this is not possible, you have no choice but to wait until divorce before that account is closed or divided.

You can immediately remove your spouse as an authorized user on any card that is in your name.

In any event, begin creating your own financial identity. Open bank and credit accounts in your own name.

Investment and retirement accounts

These are more complicated than credit and loans. Actual values can differ from perceived values because investments have different risks, taxes, and fees.

Liquidation may be the best option. But there may be transfer and withdrawal fees. Experts recommend selling the investments first, so the spouses share capital gains’ tax liability.

Certain requirements govern different types of retirement assets. These usually have rules governing their division in a divorce. A court may have to issue a qualified domestic relations order to divide employer-sponsored plans such as 401(k)s and 403(b)s. The transfer incident to divorce process covers IRAs.

Home

Banks do not allow removal of a spouse from a joint mortgage. To obtain sole ownership, a spouse must refinance the mortgage in their own name.  Refinancing may be difficult for spouses in low-paying jobs or who paid for a mortgage that was financed by both spouses when they were married.

Another option is to sell the home and divide the proceeds. Keeping the home jointly is another option that is more difficult because this requires cooperation, and you will have a financial responsibility with a former spouse who may not keep up with their share of mortgage payments.

Attorneys can assist a spouse with identifying, untangling, and valuing assets and representing their interests during negotiations and court proceedings. They can help them seek a fair and reasonable property division.