When people in Washington decide to end their marriage, the financial effects of divorce can be far more significant and long-lasting than the practical or emotional changes. This is one reason why divorce can often be a stressful time for people concerned about their finances. Many people may be unsure about how to handle issues with money moving forward into the future; by developing a plan, a divorcing spouse may feel more confident about their post-divorce financial outlook.
Understanding the assets and liabilities at stake is vital to this planning process. One of the most critical elements of achieving a property division settlement is establishing a correct valuation of the marital estate. Financial assets held by a couple include savings and investment accounts, stocks, cash, mutual funds, bonds and similar items. Retirement accounts are often the largest single asset held by a married couple. However, when dividing these assets, it is important to remember that they are not all equally valuable or equally liquid. Tax consequences can also play a major role; for example, $100,000 in an IRA is not equivalent to $100,000 in cash because the funds in the IRA will be taxed upon their distribution.
In addition, pension plans must be dealt with during the divorce. These may require a court order to divide them properly, and the order or divorce decree should spell out clearly the division of the plan. Questions about survivor's benefits should be handled as part of the divorce negotiations as well as beneficiary status on retirement accounts, insurance plans and other funds.
Divorce can be a difficult time emotionally and financially. By working with a family law attorney, a divorcing spouse may work to protect major assets and achieve a just settlement that deals equitably with property division, spousal support and other issues.