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What is the most complex issue during divorce?

Nothing about divorce is easy. It marks the beginning of a new normal for all involved. Even if it is ultimately for the better, the transition period comes with immense challenges.

These challenges can generally be divided into two buckets, financial and emotional. In the latter, navigating the ups and downs requires perseverance, patience and strength. In this blog post, however, we are going to focus on arguably the most complex piece on the financial side: property division.

The simple stuff

Property division, even with its more obvious hurdles, sounds relatively straightforward. The couple’s community property – just about all assets acquired during the marriage – must be split between each partner in a manner that is fair. A few big questions may immediately spring to mind.

How do we divide the family home? What about our vehicles? And what’s the process for splitting up a valuable piece of art? While those topics require some negotiation, there are generally reliable methods for finding a satisfactory resolution. It could involve “trading” assets, for example, or agreeing to sell something and split the revenue.

It’s the couples that have highly complex, valuable assets that face the toughest dilemmas.

Examples of complex assets

Consider this: A report from the Financial Times found pensions are often the second most valuable asset in a divorce. Dividing these funds is not just difficult, the story says, but represents “one of the most complex areas of financial planning” during a divorce. It requires untangling various threads, including what portion is community property, the long-term value of the funds and each party’s future financial needs.

This is just one of the complex assets we frequently see. Other examples of complex assets include:

  • Retirement accounts
  • Stocks and investment portfolios
  • A closely held business
  • Increases in a business’ value during a marriage
  • Other business interests
  • Real estate
  • Trusts

When discussing these types of assets, it is not just about determining its current worth in dollars. You have to gauge how much interest each party might have in the asset and how much it might be worth in the future. Then, those findings must be placed into context with overall property division discussions.

Are there solutions? Yes. But reaching them requires intense investigation and a thorough knowledge of the law.

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