If divorce is on the horizon, dividing your marital assets will likely be a significant part of your negotiations. Whether you have relatively uncomplicated assets like a home and some retirement and investment accounts, or you have more complex assets, dividing them at a time when the economy and the stock market are in tumult adds an unwanted layer of complication to the process.
Certainly, significant fluctuations in stock and bond values affect what these particular assets are worth – individually and together. Other economic factors, like added tariffs that affect the cost of just about all consumer goods, can influence the valuation of vehicles and other items of value. The general state of the economy –particularly locally – can determine how much your family home and any other properties are worth.
Navigating asset valuation
Determining what valuation date to use on your assets can make a big difference in whether the division you agree on is fair. The legal separation date is a common valuation date. However, financial professionals often recommend different valuation dates for different kinds of assets.
Either way, what if the value of some or all your assets changes markedly between that date and the date of your final divorce decree? One thing that can make things a bit clearer may be to agree not to buy or sell any of these liquid assets, like investments, during the divorce process unless both parties agree. It may be wise to get a court order limiting the dissipation of assets by either party.
Some financial and legal professionals recommend using percentages rather than dollar amounts when dividing assets that are subject to significant value fluctuations. This can help make fluctuations in value less relevant.
Negotiating fair support orders
The cost of living will also affect things like child and spousal support. Including a Cost of Living Adjustment (COLA) clause in these support orders can help prevent orders from becoming unworkable within a year.
No one can predict what our economy will look like even a few months from now, let alone farther into the future. That’s why it can be worth the added expense to have your own financial professional(s) – particularly if you’re dividing significant and/or complex assets. This can help you more effectively work with your legal team toward the best possible settlement for facing turbulent economic times as you move forward.