Merging your financial life with your spouse seemed easy — and even fun. But untangling your bank accounts, credit reports, mortgage, credit cards, and more can be difficult.
First, consider speaking to a divorce financial analyst about how to divide your assets. North Carolina is an Equitable Distribution state. That doesn’t necessarily mean the division is equal, but it should be fair. The courts will examine both incomes, the length of the marriage and more. In most cases, it’s best to decide out of court who will get what.
It’s important to make a list of everything you own both jointly and separately, including vehicles, property, accounts, stocks, bonds, CDs, retirement accounts, valuable collectibles, and furniture. You can then go through the list item by item.
Here are some notes on the big accounts you’ll need to address.
Bank Accounts – Generally the couple will split the accounts based on a percentage they deem fair. Consider opening new accounts in your individual names to prepare for this, but keep the joint account as long as you need to for bill paying.
Mortgage – Divorce isn’t just splitting up what’s his and hers. You’ll also divide your debts. As far as a mortgage lender is concerned, you as a couple are liable for the mortgage unless you sell the house or refinance in one name. Selling the house may be best, though if you’re underwater you will have to either pay off the difference on the loan or opt for a short sale, which can affect both your credit scores. Refinancing is fine, as long as one spouse is willing and able to handle the monthly payment individually.
Another reason to sell: If your house has increased in value, you can sell it together and avoid taxes on up to $500,000 of profits. But if you later sell it alone, you may only be able to avoid taxes on up to $250,000 of profit.
Vehicles – A judge may not grant a car to the title owner. Who gets what depends greatly on the vehicle’s value. So it’s best if the two of you decide who gets which car, motorcycle, RV, or boat.
Retirement – This is a tricky one. If both spouses work and have retirement accounts, most assume ownership belongs to the individual. But when splitting the assets, retirement benefits may be considered marital property and the other spouse may be entitled to some of it. Women who work part-time or don’t work outside the home often rely on a spouse’s 401(k). It’s best to discuss such accounts with an attorney.