The state has an equitable distribution law that requires a fair division of property, but people often disagree about what “fair” looks like. Many people set specific goals that include retaining certain assets. For many married couples, the home where they live together is the most valuable shared property they have and will, therefore, be the focal point of their divorce negotiations. Although only one spouse can potentially keep the home, both should receive a fair portion of its value. The following should be considered if one spouse aims to keep the home instead of working with their ex to sell it and benefit from that sale.

Income

Not everyone can afford house payments after a divorce in Georgia. People need to look at their income, potentially including the income that they will receive via child support, to establish whether or not they can afford homeownership after a Georgia divorce. The mortgage payment may go up due to not having a co-borrower and needing to provide a spouse with their share of equity. People need to consider that refinancing the mortgage after the divorce will likely increase the principal balance that they owe, which will in turn increase the monthly payments.

Solid credit

People can usually qualify for more financing when married than they can on their own. The terms will also be better when there are two incomes for lenders to consider. Particularly if someone has a mediocre credit score, they may have a hard time obtaining a mortgage after a divorce. Being unable to finance can be a major hurdle for those who would like to continue living in the marital home on their own or with their children after a divorce.

Sustainability

Owning a house isn’t just about making payments every month. It also requires regular time investments to maintain and improve the property. Some people have jobs that are so demanding that they cannot commit to lawn maintenance and other home care necessities. Others may lack the physical ability to engage in those tasks because of their age or health challenges.

For many people, moving into a smaller home after a divorce or accepting a share of the home equity as a nest egg for rebuilding their lives is a better option than fighting to keep their marital home. Whatever your goal may be with regard to your marital home, if you’re getting a divorce, know that considering your situation thoughtfully – and seeking legal guidance accordingly – can help to ensure that you start your single life off on the right foot.

A Qualified Domestic Relations Order (QDRO) is a legal document used in divorce agreements. This document highlights who is entitled to receive a portion of an account owner’s retirement plan assets.

The significance of QDROs in property division

Retirement accounts are usually among the most valuable assets in a marriage. Without a QDRO in place, the division of these accounts could result in substantial tax implications and penalties for both parties involved.

A QDRO may be essential because it enables a retirement plan administrator to share the retirement funds between the divorcing spouses without compelling them to incur early withdrawal penalties or tax liabilities. This legal order establishes each spouse’s right to a portion of the retirement account. This helps ensure that the division adheres to the guidelines established by the Employee Retirement Income Security Act (ERISA).

The process of obtaining a QDRO

First, the divorce agreement must clearly state how the retirement accounts will be divided. It is essential to seek legal counsel to help ensure the QDRO is properly drafted and approved by the court.

The QDRO must be specific and should include important details, such as:

• The names and addresses of the plan participant
• Alternate payee (the former spouse who will receive a share of the retirement benefits)
• The specific percentage or amount that each party is entitled to receive

Once the QDRO is prepared, it must be submitted to a retirement plan administrator for review and approval. The plan administrator will try to ensure that the QDRO meets the requirements and provisions of the retirement plan before it is implemented.

Tax implications of QDROs

Both parties should understand the potential tax implications of QDROs. When retirement funds are transferred from one spouse to another through a QDRO, the recipient spouse may still be liable for income taxes upon withdrawal.

To avoid immediate tax consequences, the recipient spouse may opt to roll over the funds into an Individual Retirement Account (IRA). This allows the funds to continue growing tax-deferred until the recipient chooses to make withdrawals in the future.

These plans can help to ensure a fair distribution of marital assets but they’re not always straightforward, so it’s generally a good idea for couples to seek legal guidance before committing to this course of action.

Property division is one of the most major aspects of a divorce. Your property includes all of your marital property and debts.

Defining marital property and debts

Marital property is property you and your spouse acquired during your marriage, with some exceptions, such as inheritances or gifts, while separate property is property you owned before your marriage. Separate property can become marital property if it mixes with marital property or funds.

The same is true for marital debts, which are debts that you and your spouse took on during your marriage. Any debt you had before your marriage that did not mix with any marital funds remains your debt and is not divided in your divorce.

States take different approaches to property division. Georgia is an equitable distribution state. This means that your marital property is divided fairly.

In equitable distribution states, it is important to recognize that equitable does not mean equal. To achieve a fair or equitable outcome, a court examines several different factors.

Equitable distribution factors

Some of these factors include the length of your marriage, your income and earning capacity, how much each of you contributed financially to the marriage and your economic situation post-divorce.

For example, if your marital property is split equally, but you find out your spouse is due to receive a significant inheritance two weeks after your divorce, you could use this as a factor to support you receiving a higher share of the marital property.

Two other factors that can make a significant difference in the outcome of your property division are the conduct of spouses toward each other during the marriage and evidence that a spouse has wasted or hidden assets.

Therefore, if your spouse was a habitual cheater or engaged in domestic violence against you, evidence of this conduct is something the court would consider when making an equitable distribution decision.

Why you should not hide or destroy assets

It is never a wise idea to try to hide or destroy marital assets. Sometimes, spouses hide or get rid of assets as an act of revenge, because they do not want the other spouse to receive them. They may also hide an asset to lower the amount of assets in their division column, hoping to receive more.

This is a bad idea. There are many ways courts and investigators can uncover evidence of hidden or destroyed assets, and courts can penalize spouses who do this. The most common penalty is giving additional assets to the other spouse.

Who gets the house?

The marital home is often one of the largest assets in a divorce. A court uses the equitable distribution approach when deciding which spouse gets the marital home.

One of the factors in this situation involves which parent has primary custody of any children involved. If no children are involved, the court may examine factors such as which spouse can more easily afford the home. If neither spouse can afford it, the court can order the home to be sold.

This provides a basic overview of what equitable distribution means in a divorce. Just as every marriage is unique, so is every divorce. An experienced divorce attorney can evaluate your situation and represent your best interests.

Three main options

There are several different options that may help divorcing couples as they prepare for the property division process and dividing their home throughout this process. The main options for dividing a home during the divorce process include:

• Sell the house and split the proceeds. Selling the house and splitting the proceeds can be the cleanest and simplest way to divide the equity the couple shares in the home. Once the mortgage debt is retired, and the couple pays the taxes and other expenses related to the sale, they can split the remaining money between them.
• One spouse keeps the home. One spouse may want to keep the home. The simplest way for one spouse to hang on to the home in the divorce is to refinance the home which will remove the other spouse from the mortgage loan. It can also free up cash for one spouse to buy out the other.
• Both spouses keep the home. Both former spouses may decide to keep the house on a temporary basis. This is usually done for one of the spouses to remain in the home while the children grow up. The divorcing spouses will need to create a plan to share expenses related to the house.

Dividing the home can be a difficult process for all involved. By understanding the different options available, the divorcing couple can be better prepared for when the time comes.

One spouse buys another out

In this scenario, one spouse will keep the timeshare after paying the other an agreed-upon amount or half of its total determined value. Figuring out the cash value of half of the timeshare can be tricky. An attorney may help you figure this out.

A buyout often works when one spouse values the timeshare more than the other spouse. For example, if your timeshare is located at the beach and your spouse prefers vacationing in the mountains, you may be more apt to keep it.

Sell your timeshare

If neither party wants to return to the timeshare, it may be wise to sell it and split any profits. Divorce attorneys may assist with questions you have regarding the sale and distribution of money from your timeshare.

Because timeshares are often bought for happy vacation times, both spouses may not want the reminder of their former lives. Timeshares can often be sold through real estate brokers and sometimes through your timeshare company. Your attorney may also be able to assist with a sale if you have already found a buyer.

Share the timeshare

Sharing the timeshare is an option if neither spouse is willing to let it go. You will both share the maintenance and other associated costs. Keep in mind that you will need to remain in touch with your ex-spouse in order to figure out scheduling and other such parameters.

Sharing the timeshare can work out for amicable divorces. However, you must consider some emotional issues that may arise down the road, especially if your children are involved. Will you be okay with your ex-spouse taking a new partner and the children to the timeshare and vice-versa? This is just one issue to address before deciding to share your timeshare.

Pensions and 401(k) plans in a divorce

Understandably, these are two of the retirement accounts most commonly asked about when it comes to marital property division. This topic can be quite complex due to the number of possible factors involved. For example, because 401(k)s and pensions often have restrictions regarding when access is permissible, officially dividing these assets may not be possible until both parties reach retirement age. The division of these accounts requires a Qualified Domestic Relations Order (QDRO) separate from the divorce decree.

Dividing IRA assets

Although it may seem more difficult, splitting IRA assets is actually much more straightforward. Contributions made to an IRA during a marriage are marital assets suitable for division. The best route to take is to go through a trustee-to-trustee transfer. This is actually a good option for most people as it provides those under 59 ½ years of age the ability to transfer funds without the 10% early distribution penalty.

In a divorce, taxes and retirement accounts can be complicated matters to handle on your own. That is why it’s important to have the right legal team behind you throughout the entire process. Legal representation could give you peace of mind that you’re getting what you deserve without unnecessary tax penalties.

How businesses are divided in a divorce

The first step in the process is to calculate the value of the business, which will generally involve the use of a business evaluation. During this process, an expert will use one of a few different methods. At a basic level, the valuation will be based on the assets of the company, the income generated by it or a market analysis.

After the value of the business is determined, the divorcing couple and their attorneys will need to determine whether any portion of the business is non-marital. This could be due to one spouse starting the business before the marriage. Then, the divorcing couple will need to determine whether one spouse will continue to run the business, whether they will continue running it together or if another option makes the most sense. If one keeps it for themselves, that spouse will likely need to buy out the other one, which can be done in a variety of ways as well.

They are many people in Georgia who own businesses. In a divorce, determining how to most effectively divide a business can be one of the most difficult parts of the legal process. An experienced attorney can help guide business owners from the start to protect their interests.

Dividing retirement accounts

There are several pitfalls to avoid when dividing retirement accounts. People who have not reached the age of 59 1/2 and those who will receive money from retirement accounts need to make sure that the distributions are made with qualified domestic relations orders. If a QDRO is not used, the IRS can impose early withdrawal penalties on the account holder who withdraws the money. Taxes may also be imposed for accounts for which the contributions were made on a pre-tax basis.

People who have Roth IRAs and traditional IRAs should also be aware of how these accounts are taxed. Contributions to traditional IRAs are not taxed until they are distributed. Contributions to Roth IRAs are taxed at the time that the contributions are made. This means that someone taking a traditional IRA will have to pay taxes when the distributions are made, but a person taking a Roth IRA will not be taxed on the distributions.

Dependency exemption and child tax credits

The Tax Cuts and Jobs Act removed the dependency exemption in 2018, but the exemption is scheduled to return in 2026. This allows a person to claim a child and exempt $4,000 from his or her income. The parent claiming the dependency exemption is also the parent who can claim certain child tax credits, including the additional child tax credit, the child care credit, and the earned income credit. Parents should be careful about their agreements for those who will be allowed to claim the children.

Getting divorced can result in tax consequences that could cost thousands of dollars. People may want to consult with experienced divorce and family law attorneys for help with determining how their property should be divided to minimize the taxes that they might be forced to pay.

Influence of marriage on business valuation

Your business or professional practice could be wholly or partially subject to property division. Owning a business prior to the marriage might insulate it somewhat from a complete division of value, but an increase in the business’s value during the marriage places that segment of value within the marital estate. Contributing marital assets to the business or having your spouse work at the business likely increases its footprint within the marital estate. Any contributions that your spouse made to the business will likely grant that person a share of value in the divorce settlement.

Extent of credit card debt liability

Credit card debts that originated during your marriage generally leave you responsible for at least 50 percent of the debt. Creditors for accounts bearing both of your names could even attempt to impose full responsibility for payment on you.

The law may limit your responsibility for certain debts when evidence shows that the liability would be unfair to you. For example, credit card expenses related to a spouse’s activities during an affair could convince a judge to shift that responsibility fully onto the spouse who made the purchases. However, if those expenses were charged on a joint account, you might want to explore your legal options for dealing with a creditor who wants to hold you responsible anyway.

Qualified legal representation

Advice and representation from a family law attorney knowledgeable about high-asset divorce might help you attain a fair divorce settlement. Ideally, your attorney will have access to resources like a forensic accountant so that you can negotiate or litigate the settlement on the basis of accurate financial disclosures.

If you want to divorce your ex because of how bad they are with money, you will likely find yourself worrying about what obligations you have related to their debt. After all, the state of Georgia uses an equitable distribution standard which means that you both share in the responsibility for marital debts.

While you may want to make sure you get your fair share of marital assets, you may be much less enthusiastic about the potential for paying off your ex’s student loans or credit card debt. Exploring how Georgia handles significant debt can help you better understand what will likely occur as your divorce moves forward.

As with assets, some debts are marital while others are separate

When it comes to determining if an asset or debt is part of your marital estate or separate property, the easiest approach is typically to look at when you acquired the assets or incurred the debt. Even if your name is the only name on your retirement account or your spouse’s name is the only name on the credit card, chances are good that you both have an ownership interest or obligation.

Deposits made during your marriage, even if only one spouse made them, will typically be subject to division. Debts incurred during the marriage, even if it was only one spouse spending the money, will also often be subject to division. Debts that you owed prior to marriage often remain separate.

The courts will also look at the circumstances under which you accrued the debt. If one spouse can make the claim that the other did not disclose important financial information to the other, the courts may not hold the one who was unaware responsible for those debts. However, if you turned a blind eye to your spouse going on shopping sprees, the courts may expect you to help repay some of that debt.

Even student loans can wind up divided in a divorce

If your spouse finished or went back to school while you were married, you may wind up sharing in the responsibility for the repayment of their student loans. Can they make the claim to the courts that the intention was to improve the financial circumstances of the family or the earning potential of one spouse?

If so, it is possible that the courts will consider student loans accrued during the marriage as marital debt that both spouses need to help repay. Of course, equitable division focuses on what is fair and just, not just on what is even. Special and unique circumstances can influence how the courts divide your debts and assets, including medical conditions or earning potential.