What to consider when you’re considering divorce: real estate, estate planning, and assets

Jan 21

Deciding to pursue a divorce is one of life’s most challenging decisions, filled with emotional, logistical, and financial considerations. While the personal aspects often take center stage, it’s crucial not to overlook the practicalities that will shape your future. From dividing real estate to updating estate plans and assessing shared assets, navigating these details can feel overwhelming—but they’re essential to ensuring stability and security in the next chapter of your life.

In this post, we’ll break down key factors to consider as you approach divorce, offering insights to help you make informed decisions. Whether you’re just beginning to weigh your options or preparing to take the next step, understanding how to manage these important pieces can set you up for a smoother transition and a stronger foundation moving forward.

4 Essential Real Estate Considerations for Those Contemplating Divorce

1. Understand Property Ownership and Equity

What It Is: Determine how your property is owned (e.g., jointly or individually) and assess the equity you have in it. Equity is the difference between the property’s market value and the amount owed on the mortgage.
Why It’s Important: This will help you understand the financial implications of keeping or selling the property, and it’s crucial for dividing assets fairly.
Who Can Help: A real estate attorney or a financial advisor specializing in divorce.
How to Ask for Help:

Contact a real estate attorney and say: “I’m considering divorce and need help understanding the ownership structure of my home and the implications for asset division. Can you guide me through this?”
Ask questions like: “What does joint ownership mean in a divorce? How can I determine my home’s current equity?”

2. Evaluate Affordability Post-Divorce

What It Is: Analyze whether you or your spouse can afford to keep the property on a single income, including mortgage payments, taxes, insurance, and maintenance costs.
Why It’s Important: Ensuring financial stability post-divorce is crucial, and keeping a home that is unaffordable can lead to long-term financial strain.
Who Can Help: A mortgage lender or financial planner with expertise in divorce scenarios.
How to Ask for Help:

Reach out to a mortgage lender and say: “I’m evaluating the financial feasibility of keeping my home after a potential divorce. Can you provide an assessment of my options?”
Ask: “What would my refinancing options look like on my current income? What costs should I anticipate if I keep the property?”

3. Consider Market Value and Timing

What It Is: Assess the current market value of your home and determine whether it’s a good time to sell based on market conditions.
Why It’s Important: Selling the home may be necessary to divide assets, and understanding market conditions can maximize financial outcomes.
Who Can Help: A real estate agent or appraiser.
How to Ask for Help:

Consult a real estate agent and say: “I’m considering divorce and need to understand my home’s market value and the best timing for a potential sale. Can you provide insights?”
Ask: “What is my home currently worth? How long does it typically take to sell a property in this market?”

4. Explore the Emotional Impact of Selling or Keeping the Home

What It Is: Reflect on how keeping or selling the home will affect you and your family emotionally. The family home often carries sentimental value and represents stability.
Why It’s Important: Divorce is a major emotional transition, and making a clear decision about the home can help ease the adjustment for you and your family.
Who Can Help: A therapist or divorce coach.
How to Ask for Help:

Talk to a therapist and say: “I’m considering divorce and need guidance on processing the emotional aspects of potentially selling my home.”
Ask: “How can I weigh the emotional attachment to my home against the financial and practical considerations? How can I prepare myself and my children for a potential move?”

4 Essential Considerations for Your Estate Planning If You’re Considering Divorce

1. Review Your Beneficiary Designations

What It Is: Examine who is listed as a beneficiary on your life insurance policies, retirement accounts, and other financial instruments.
Why It’s Important: Divorce doesn’t automatically change these designations, and your spouse may still be entitled to these assets if they remain listed.
Who Can Help: An estate planning attorney or financial advisor.
How to Ask for Help:

Reach out to an estate planning attorney and say: “I’m considering divorce and need help reviewing my beneficiary designations to ensure they reflect my current intentions.”
Ask: “Which accounts and policies should I update, and what’s the process for changing beneficiaries?”

2. Update or Create a Will

What It Is: Ensure your will reflects your wishes regarding asset distribution and guardianship (if applicable).
Why It’s Important: A will created during marriage often includes your spouse as a primary beneficiary or executor, which may no longer align with your goals.
Who Can Help: An estate planning attorney.
How to Ask for Help:

Consult an attorney and say: “I’m planning for a possible divorce and want to ensure my will reflects my current wishes. Can you guide me through revising or creating one?”
Ask: “What changes should I make to my will during this process? How do I name a new executor or guardian?”

3. Establish Powers of Attorney

What It Is: Update your financial and medical powers of attorney, which designate who will make decisions on your behalf if you’re unable to do so.
Why It’s Important: If your spouse is currently listed, you may want to designate someone else to act in these roles during and after divorce.
Who Can Help: An estate planning attorney.
How to Ask for Help:

Engage an attorney and say: “I’m considering divorce and want to update my financial and medical powers of attorney to reflect a different decision-maker.”
Ask: “How do I choose a new power of attorney, and what steps are involved in updating these documents?”

4. Assess Trusts or Joint Accounts

What It Is: Evaluate any trusts or joint financial accounts you’ve established with your spouse, including family trusts or joint investment accounts.
Why It’s Important: These accounts may need to be restructured or dissolved to align with your post-divorce financial plan.
Who Can Help: A trust attorney or financial advisor.
How to Ask for Help:

Speak to a trust attorney and say: “I’m preparing for a possible divorce and need to review any trusts or joint accounts I have with my spouse to understand my options.”
Ask: “What happens to shared trusts or accounts in a divorce? How can I ensure my interests are protected in these arrangements?”

4 Essential Considerations for Your Assets If You’re Considering Divorce

1. Inventory All Assets

What It Is: Create a detailed list of all assets you and your spouse own, including bank accounts, investments, properties, vehicles, and personal items of significant value.
Why It’s Important: Understanding the full scope of your shared and individual assets is critical for equitable division and helps you protect your financial interests.
Who Can Help: A financial advisor or forensic accountant.
How to Ask for Help:

Reach out to a financial advisor and say: “I’m considering divorce and need help creating a complete inventory of our assets.”
Ask: “What tools or methods can I use to ensure I’ve accounted for everything? How do I identify hidden or overlooked assets?”

2. Determine Asset Classification: Marital vs. Separate

What It Is: Distinguish between marital assets (acquired during the marriage) and separate assets (owned before marriage or received as gifts/inheritance).
Why It’s Important: Only marital assets are typically subject to division during divorce, so proper classification protects your separate property.
Who Can Help: A divorce attorney or financial expert.
How to Ask for Help:

Consult a divorce attorney and say: “I’d like to understand which assets may be classified as marital or separate as I prepare for divorce.”
Ask: “How can I provide proof of ownership for my separate assets? What records or documents are required to support my claims?”

3. Evaluate Debt Responsibilities

What It Is: Assess any joint or individual debts, such as mortgages, credit card balances, student loans, or car loans, and understand who is responsible for each.
Why It’s Important: Debt is divided alongside assets in divorce, so knowing your liabilities helps you prepare for potential outcomes and avoid surprises.
Who Can Help: A financial advisor or credit counselor.
How to Ask for Help:

Contact a financial advisor and say: “I’m preparing for a potential divorce and need a clear picture of our shared and individual debts.”
Ask: “How will debt division work in a divorce? What steps can I take to protect myself from being held liable for my spouse’s debts?”

4. Assess Tax Implications

What It Is: Understand how dividing or selling assets during divorce could impact your tax obligations, such as capital gains taxes, property transfers, or retirement account penalties.
Why It’s Important: Proper planning can help you minimize financial losses and avoid unexpected tax bills.
Who Can Help: A tax advisor or CPA with experience in divorce.
How to Ask for Help:

Approach a tax advisor and say: “I’m considering divorce and want to understand how asset division might affect my tax obligations.”
Ask: “What tax implications should I consider for selling or transferring assets? How can I prepare for these during the divorce process?”