One of the largest issues in a divorce is how your property will be divided. Depending upon the length of your marriage, there could be a significant number of assets to consider in that distribution, and they may hold substantial value. General property that is typically divided without a lot of argument is cars, household belongings, and personal belongings such as clothing. When you get down to the remaining property – cash and valuable assets – is when parties take a stand.
Equitable distribution of financial assets during divorce can be a tricky proposition, but at the end of the day, decisions need to be agreed upon in order to move forward unless you’re comfortable with a judge making the decision for you. Now, in an already difficult situation, coronavirus has thrown parties another curve ball. You’re being asked to divvy up money in a market that has essentially crashed and having no way of knowing whether, or to what extent, it will come back.
The cost of divorce during coronavirus
It stands to reason that the more complicated your divorce, the more expensive it is likely to be. Coronavirus has taken a toll on us emotionally, psychologically, and financially. Throwing a divorce into the mix at an already stressful time requires some strategic thinking and planning with a cool head in order to avoid further financial loss.
Financial aspects to consider when deciding how to proceed with a pandemic-time divorce:
- Length of time until a final trial. Trying a case is more costly than reaching a pre-trial settlement. It also lengthens the divorce process during which you may have more financial responsibilities. This is especially true now, as the courts in South Carolina are operating in an entirely different capacity.
- Retirement and investment accounts value. If you are to receive a portion of your spouse’s retirement, you may be giving up some of the value due to market fluctuations. Any outside investment may also be fluctuating.
- Real estate market and home value. If your marital home is to be sold, you could be losing money depending upon the market in your area and what your home appraises for if you need a quick sale. On the other hand, the real estate industry is starting to bounce back, which means you could sell for more if you and your spouse are able to wait a bit longer to sell the family home.
- Employment/career stability. Do you own your own business? Is your position essential to your employer? Is your field disaster-proof? If the answers are no, you could face unemployment, if you haven’t already. That would make maintaining separate households more difficult during divorce.
- Alimony and/or child support obligations. Often these financial obligations are ordered to be paid temporarily until your divorce is final, at which point they may be adjusted or eliminated depending upon the age of your child and the financial stability of your spouse. Failure to make these payments can land you back in court for contempt so you need to be comfortable with your financial position for the duration.
You need to think about whether collaborative divorce might be a better cost-effective option for handling your divorce if you decide that waiting for things to improve just isn’t an option.
Will QDROs be affected?
QDRO stands for Qualified Domestic Relations Order. They’re used to transfer assets from certain retirement accounts from the owner to someone who payment has been directed to, such as a former spouse as part of equitable distribution, child support, or alimony obligations.
You have two options under a QDRO to receive assets: cash payment or asset transfer. Choosing to take the cash payment would be financially imprudent right now. For example, if you are to receive 50% of your spouse’s retirement account valued at $500,000 at the time your agreement was reached, you would have received $250,000. If the value of the account has dropped to $200,000 because of the effect Covid-19 has had on the stock market, you would only receive $100,000. You will also have to pay tax on the cash payment leaving you with even less. If, however, your 50% share is transferred into your own retirement account, there is the potential to gain value as the market returns over time.
Dividing assets during a divorce is already a very tough task to undertake. Determining what a fair split should be after sharing a life together can be traumatic for some, but at least you feel a little more secure about your future. The goal of Holland Law, LLC is to support you through your divorce from taking the first to the last step.
If you need a highly experienced divorce attorney with vast QDRO knowledge to guarantee the proper division and transfer of your marital assets during a York, Lancaster, or Chester County divorce, schedule your consultation today with Tom Holland by calling 803-219-2630, or feel free to reach out to him through his contact page. Offices are conveniently located in Fort Mill on Gold Hill Road, or Rock Hill on Oakland Avenue.
Tom Holland previously served as the General Counsel for the Lancaster County Sheriff’s Office, the City Solicitor for the City of Lancaster, and as a Special Assistant United States Attorney for the Sixth Circuit Solicitor’s Office. He is a single father, and through his own divorce gained valuable insight he now uses to represent Fort Mill and Rock Hill, SC families with the best representation. Learn more about Tom Holland.