Splitting Assets in Divorce: 7 Questions to Ask Yourself

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splitting assets in divorce

Are you worried about splitting assets in a divorce? Worrying over financial decisions is normal on an average day, but when going through a divorce, it can be paralyzing. Unfortunately, the fear around these issues is completely warranted. You only have one chance to get it right, and your divorce could quite possibly be the largest financial transaction of your life - not to mention that you are likely overwhelmed by emotions related to all the changes in your life.

One way to handle your financial fears is to take control of your situation. Did you know that you don't have to divide your assets 50-50 right down the middle when you get a divorce? You may not even want to! How do you split assets in a divorce if it's not simply 50-50?

(Note: Scroll to the bottom of the post for a compilation of resources about splitting assets in a divorce.)

Take control of how to split assets in your divorce by avoiding litigation

One way to have greater control over how assets are split in a divorce is to consider alternatives to the traditional litigation process. An important benefit of processes such as mediation and collaborative divorce is the opportunity to be more creative in your settlement agreement.

As a Certified Divorce Financial Analyst (CDFA), one of the key items I work with parties on is how to equitably divide assets when negotiating their divorce settlement.

The first thing you should do is create a detailed list of assets that will need to be discussed. If you don't completely understand the pros and cons of each asset, meet with your CDFA to discuss. Once you know what you are working with, consider which will best help you reach your financial goals.

7 questions to ask yourself when splitting assets in a divorce:

  • Do I need liquidity?

    • What does that even mean? Do you need access to cash in the next year or two? It is imperative that you go through the whole budgeting process before you start looking at how to split assets in your divorce. Keep in mind how much cash you may need for large upcoming expenses such as home repairs or a new car. Certain assets, such as a house or other real estate property, may take time to sell and would not be your best option if you need cash now. In fact, if possible, I would discourage you from looking at negotiating real estate to meet your cash needs at all.
  • What are my future income needs?

    • "Future income needs" is pretty broad. What do I mean by "future?" Future needs could include income you need in the next year or even in a more distant retirement plan. It should all be considered when negotiating how to divide assets in your divorce. The mistake I often see clients make is focusing so much on their short-term income needs that they give up retirement income. In other words, don't give up that monthly pension benefit just because you can't access the money now. That benefit could be extremely beneficial to you in the future.
  • What is the after-tax value of the asset?

    • I frequently see individuals (and even their attorneys), who show me spreadsheets that detail various account values, and that is the only number that they are looking at. When comparing assets, it's critical to have the cost basis of each asset and to consider the tax impact on tax-deferred assets such as pre-tax 401-K accounts and/or traditional IRAs. Without this information, there is no way to make an apples-to-apples comparison. One way to maximize the after-tax value of your marital estate is to award more of the tax-deferred assets to the lower-income spouse. This will reduce the future tax burden and create more after-tax assets for both parties.
  • How comfortable am I with risk?

    • I could write a whole blog post on this topic alone. For that matter, there are whole books on the topic. The important point here is that all assets are not created equal and each has its own relevant risks associated with it. This includes cash! Of course, not all risk is created equal either. Some of the risk factors are detailed in other topics here. As a financial expert, I take time to get to know my clients to determine their comfort with risk. Make sure to take time to consider all of the risks of each asset.
  • What kind of returns does the asset generate?

    • How will each of your assets grow and/or generate income? This goes along with the risk issue since an increase in return potential generally means an increase in risk. Are you taking more of the savings and investment accounts and giving up your ownership in the family business? Consider how this will impact your financial future.
  • How much experience do I have making investment decisions?

    • Certain assets require greater oversight. Do you want to take on the responsibility of managing investments that your spouse has handled in the past? If not, do you feel comfortable working with a financial advisor?
  • What is my life expectancy?

    • According to the Social Security Administration, the average life expectancy of a 65-year-old man is 84.3 years and the average life expectancy of a 65-year-old woman is 86.6 years. How long do you need your assets to last? If you think you may have a good long life ahead of you, it's important to plan for it. For example, are you considering a pension as one of the assets you're dividing? The lifetime income could be a critical component of your financial plan. Alternatively, your medical history may lead you to believe that the pension may be significantly more valuable to your soon-to-be-ex.

Divide the assets in your divorce in a way that aligns with your financial goals

There is no one "right way" to split assets in divorce. The key is to start by thinking about your overall financial goals. From there, you can identify what you want and what you will need moving forward and go from there.

If you are not sure where to start, contact us. We are committed to providing financial education so you will make wise financial decisions during your divorce. Remember, you only have one chance to get your divorce settlement right. You do not have to do this alone.


A Compilation of Resources on Divide Assets in a Divorce

As a divorce financial advisor, I work with clients daily on how to split their assets when divorcing. I have compiled numerous resources to help you learn more about splitting assets in a divorce. 

Here are a variety of topics to consider. Below the list are numerous resources available on each of the topics related to splitting assets in a divorce.

List of Resources About Splitting Assets in Divorce

How to prepare for a divorce

We offer an entire course on the topic of preparing for divorce. Here's a link to the course. Additional resources are listed below.

Who keeps the house in a divorce?

Splitting assets in a divorce

Handling retirement accounts in a divorce

Debt, credit, and divorce

Life insurance and divorce

Recovering financially after a divorce


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