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Helton Law Firm, PLLC

Accurate valuation of assets during property division

During a divorce, people from Tennessee will need to divide any shared property. However, they should be aware of some common financial mistakes people make at this stage.

One of those mistakes may be keeping the home in exchange for a more liquid asset, such as a brokerage account of equal value. One disadvantage is that the home will cost more in upkeep and the person may not have accounted for this when weighing the value of the two assets. The other is that the upkeep might actually be impossible for the person to pay for on one income.

A similar error may occur if a person agrees to take a retirement account while the other person takes an asset like a checking account of equal value. While the person with the checking account may use the money at any time, a person who gets a 401(k) will have to pay taxes on withdrawals. These kinds of penalties and costs should be accounted for when assessing the value of assets. Furthermore, dividing a 401(k) without a court order known as a qualified domestic relations order can result in penalties.

Another consideration is life insurance for the person who is paying alimony and child support. Without this insurance, the person receiving support would lose access to this income if the payer dies.

People going through a divorce may want to discuss how best to proceed with property division with an attorney. There are a number of reasons people might make poor financial choices at this stage of a divorce. One may be because the person simply does not know any better, but some reasons can be emotional. A person might want to keep the family home without thinking of the costs or may agree to a spouse's unreasonable demands in order to hurry the process along.

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