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Divorce Planning

If you are going through a divorce, you may be wondering what will happen to your assets and property. The good news is that in most states, you can keep the assets and property that you acquired before you got married.

However, your state law will set out how to divide your assets and property, and it will follow one of two routes: 

  1. In common law property states, the judge has discretion to listen to individual circumstances before dividing assets and property. Those factors include earning ability for each spouse, the duration of the marriage, and the amount that each spouse contributed to building the marital assets. Most states follow this format. The exceptions to this are the community property states of Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, which are community property states.
  2. In community property states, assets and debts incurred during the marriage are generally divided equally between spouses. This is true for both individual and joint accounts. So if you have a mortgage for a home that has appreciated in value, you may want to sell it before the divorce is finalized in order to take advantage of $500,000 in realized capital gains (this amount is cut in half for single (unmarried) filers).

One thing to consider is selling your home before the divorce is finalized. If your home has appreciated in value, you may be able to take advantage of capital gains tax rules. Consult with a tax advisor to see if this is right for you.

Keep in Mind

Retirement Assets
Another financial consideration during divorce is what to do with 401(k)s or pension plans. You may be entitled to a portion of your spouse's benefits if you obtain a Qualified Domestic Relations Order (QDRO).

If you have 401(k)s or other retirement accounts, a financial planner can help you determine whether it's better to:

  • Leave the money in his/her former employer's plan, if permitted.
  • Roll over the assets to his/her new employer's plan, if one is available and rollovers are permitted.
  • Roll over into an IRA; or
  • Cash out the account value.

They can also help you figure out how to best allocate your assets so that you're not paying more taxes than you have to.

Estate Planning
Review your will and beneficiary designations, as well as work with an estate planning attorney. They can help distribute your assets properly according to state law.

It's also important to review your pension, 401(k), and insurance policy beneficiaries. Under federal law, a spouse is required to be the sole beneficiary of these benefits unless they waive their rights. 

Planning for divorce can be overwhelming, but working with our team of Spokane Financial Advisors can help make this challenging process easier. We will provide guidance and support as you navigate this difficult time. 

Ready to take the next step? Schedule a FREE consultation with us. We want to learn about you and your unique situation and goals. Together we will develop a financial path that's tailored to your specific needs!

Ready to take the next step?

Schedule a FREE consultation with us. We want to learn about you and your unique situation and goals. Together we will develop a financial path that’s tailored to your specific needs!

Yes, I want to get my finances in order during my divorce


This information is not intended to be a substitute for specific individualized tax advice or legal service. We suggest that you discuss your specific issues with a qualified tax or legal advisor. Fulcrum Financial Group and LPL Financial do not provide tax or legal advice.