Dividing your property in a divorce is one of the most tedious processes. You have to ensure a fair division while also not totally demolishing your finances.
Fidelity explains that you have to consider all your investments as you divide property in your divorce. This includes not only traditional investments, such as stock, but also your home and any other properties.
Ideally, when it comes to retirement accounts, you and your spouse will have equal funds and not need to divide them. However, this rarely happens. There are complex and intricate rules about different retirement accounts and how you can split them. You may need to spend quite a bit of time getting the paperwork correct.
It is highly possible that a divorce could wipe out your retirement investments. This is especially true if your spouse does not have his or her own accounts. You will have to split them, which possibly could mean cashing them out early.
Your home is probably the largest investment you have. As such, it becomes a valuable bargaining tool in a divorce. If one of you keeps the home, then you will have to give up other assets to make up for the value of the home. At the same time, if you keep the home, you assume all responsibility. You will have to continue paying the mortgage and upkeep costs.
In many cases, the best option is to sell the home and split the proceeds. However, this can be tough if the market is not in good shape as it can take a long time to sell.
Traditional taxable investment accounts are also divisible in a divorce. You may lose out on them big time if you have to sell them to give your spouse half. Calculating the value is also tricky. It is not the current value so much as what you keep from them after paying taxes that will give you the divisible amount for divorce purposes. You will usually end up getting far less than the sales price for the investment accounts you divide.