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Half of all marriages end up in divorce and it happens in the best of families and to the nicest people. The reasons are many, the experience is gut-wrenching and the outcomes are usually unpleasant. When a couple decides to go their separate way, it can be a nasty business - especially when it comes to money. Inevitably, both parties are going to walk away poorer. Statistically, both men and women face all kinds of financial strains after a divorce. One of the things that can make life easy on both parties is to part amicably with a simple divorce settlement and that’s easier done when you don’t fight over money with divorce lawyers. Here's a summary of all the major areas you need to concern yourself with.
Keep in mind that you’re dealing with a family member. That’s right - just because you’re divorced - doesn’t mean you can’t still deal with each other like close relatives - especially when kids are involved in the package deal.
If you’re middle class, fair minded, and you keep good financial records - you should be able to sort out an amicable financial deal in an afternoon. If you can’t manage that feat, you’ll end up having to invite third parties to get an unfair slice of family fortune. They call them lawyers and you’ll have to pay two of them and they charge an arm and a leg. They’re not your relatives and they’re not your friends and their mission in life is to prolong your agony and escalate the hostilities. If you think being a hard-ass is going to teach your spouse a lesson, you'll be in for a rude awakening when you get the legal bill. If you can't come to an agreement, you may want to try divorce mediation.
Once you agree on the wisdom of a civil divorce, dividing up savings and retirement accounts is the easy part. Although, you should get advice on company pensions and social security and you can usually figure those on your own or by making a few calls to the social security administration and your employer.
If you’re going to sell the house, don’t let the real estate agent know you’re getting a divorce. He’s not a marriage counselor. If you’re still married on paper, sell it as a loving couple would. You don’t want to make it look like a distressed sale, buyer's will act like sharks smelling blood in the water and you might as well knock 10% off your sales price.
If one of you is going to keep the house, go to a real estate lawyer - not a divorce lawyer - and have him write up a quit claim deed. The paper work is actually pretty straightforward and it shouldn’t cost more than a few hundred dollars. Be aware that a quit claim deed does not apply to the loan obligation. That will require a stipulation in the divorce decree to absolve the party giving up his or her stake in the house from any of financial obligations to pay the mortgage. Given the current interest rate environment, it’s not a bad idea to refinance the house after you have the quit claim deed in hand. Refinancing is also a good way to give the spouse signing the quit claim deed their share of the equity. That’s the cleanest way to do it. You don’t want creditors chasing you for a debt on a house you no longer own.
Once that’s sorted out, make sure you change everything to the name of the spouse that is keeping the house. That list would include the banks holding your mortgage and your equity line of credit, the insurance company, utilities, the state and local taxing authorities. And don’t forget to come to a written understanding of who gets to deduct the taxes and interest on the house for the year you get a divorce.
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