People often underestimate the central role property division plays in a divorce. From determining who gets to keep the family pet, to deciding whether the couple should sell the marital home, property division cases have a huge impact on the lives of everyone involved in a divorce.
Getting a handle on common mistakes made during the property division process can allow you to avoid those pitfalls and set yourself up for success as you move past your divorce.
Common Property Division Mistakes (And How to Avoid Them)
Individuals engaged in the property division process frequently make mistakes that impact them for the rest of their life. If you're going through property division, make sure you avoid the following pitfalls:
- Underestimating immediate post-divorce costs. For many people, the period immediately following a divorce is incredibly financially draining. Some common post-divorce costs include:
- the down payment on a new house, or first month/last month rent for a new apartment;
- new furnishings for the living space (many people choose to discard items such as silverware to get a completely fresh start at the end of their divorce);
- taxes from the divorce (more on this later);
- a new car (many families share one vehicle, so at least one person will need a new car);
- any child-related costs (many parents choose to itemize expenses during a divorce to make child custody easier, so you might find yourself paying for your child's entire medical insurance policy).
You should start working now to figure out a realistic post-divorce budget. Preparing for post-divorce expenses ahead of time will help you get ahead of the curve and reduce the financial impact of the divorce when it does end.
- Saving taxes for later. For many people, tax season is already one of the least fun times of the year. When you're going through a divorce, it can be tempting to put aside the tax implications of your divorce for later. Don't. Figuring out how your taxes will look post-divorce can be a lifesaver financially. For example, the marital home usually plays a central role in divorces. Let's say you want the home—are you prepared to pay for the estate tax by yourself? Do you want it as an investment, or to live there for the rest of your life? If it's an investment, do you know if the home will appreciate in value over the coming years? Are you prepared for a housing market crash?
Taxes can also impact other assets, such as home offices, investment accounts, etc. You should work with a property division lawyer and a financial professional to fully understand your taxes post-divorce.
- Assuming the outcome of the case. Under Virginia law, the court must divide property "equitably." However, an equitable division does not mean the parties get to split property and assets 50/50. It just means the court tries to ensure that both parties maintain the same quality of life post-divorce that they enjoyed while married. Relying on a specific outcome for your case can come back to haunt you if you get less than expected from the court. Pursue a best-case scenario, but prepare for the worst.
- Not knowing your assets and liabilities. You need to draft a comprehensive list of every asset and liability you possess and submit it to the court during the property division process. Getting started early and making sure you have good copies of important documents like mortgages, income statements, student loans, benefits, investment and bank accounts, etc. is essential.
- Not knowing your partner's assets and liabilities (at least, within reason). Obviously, you shouldn't harass your soon-to-be-ex to try and decipher their assets or liabilities. However, you should try and think about what assets or liabilities you know they possess. If they hide assets during your property division case, you can use that information to receive a more favorable judgment or get the court to impose penalties on your spouse.
- Failing to consider the family pet. Pets are technically considered "assets" and, as such, are subject to the property division process. Because many families care dearly about their animals, deciding who gets to keep the family pet is often one of the more contentious parts of a divorce. Give some thought to how you want to handle the property division process with regard to your pet. Some couples even draft custody arrangements for their pets, exchanging custody of the animal every couple of weeks.
The more prepared you are entering the property division process, the easier it will be for you. At The Law Offices of Daniel J. Miller, we work with Virginia residents to help them navigate property division with confidence.
To learn more about our firm or schedule a consultation with our team, contact us online or via phone at (757) 517-2942.