How to Divide Assets and Debts in a Divorce

When a relationship ends, one of the most common steps that couples struggle with is the division of property and debts. Generally speaking, each partner keeps what they brought into the marriage, but everything – both assets and debts – accumulated during the marriage splits equally. But this simple rule doesn’t mean this division is always simple.

Here are a few steps to take if you are in the process of dividing assets and debts between yourself and your ex.

List and value all your assets and debts

You first need to list all your property and debts and put a dollar figure on them, including your home, vehicles, other properties you may own, bank accounts, investments, and so forth.

When you look at the list of your assets and liabilities on paper, it will be easier to determine the way forward for the division.

Learn which assets have special rules

Before you can start dividing property, it is essential to note that some assets have special rules. The matrimonial home is a big one. For example, even though one partner may have owned the house before the marriage, the home’s entire value must still be divided equally. Another exception to the typical rules is gifts and inheritances. So, if a parent leaves an inheritance to one partner, that partner keeps 100% of that inheritance.

Calculate each partner’s net family property

The next step is to calculate your net family property (NFP). The NFP is what you are worth (assets minus debts) on the day of the separation minus what you were worth on the day you got married. Remember that some assets have unique rules and might not be included in this calculation. If the number calculated turns out to be negative, then the NFP should be considered zero.

Calculate the equalization payment

Now that you have calculated the NFP for both partners, the partner with the higher NFP must make an equalization payment to the partner with the lower NFP, which should equal half the difference between the two. So, for example, if one partner has an NFP of $80,000 and the other partner has an NFP of $30,000, that is a difference of $50,000, and the partner with the higher NFP must make a payment of half that amount – $25,000.

Make an agreement or apply to court

Finally, you need to make a separation agreement that says how you will divide the assets. This agreement will also usually include details about the equalization payment. If you and your ex agree, you may decide to divide debts and assets in another way or even not at all. If you cannot agree, you will need a lawyer, or you may ask the court to decide. If you are unsure which court to apply to, you may ask your family lawyer or call the local courthouse to find out.

Contact Levy Zavet Lawyers

Dividing debts and assets in a divorce can be complex, and it is best done with the help of an experienced family lawyer. To make an appointment, contact us today.