Since Florida is an equitable distribution state, many couples divide their assets in half, and their liabilities in half. *Mark and Tracy, however, had to get creative with their distribution. Mark wanted to keep their rental property in Asheville, NC. His dream was to retire there, and although retirement was a way off, he was willing to deal with the hassles and expense of maintaining the property until he was ready to move there himself. Tracy was thrilled to be rid of it. However, giving Mark the property skewed their distribution of assets and liabilities greatly in Mark’s favor. Because the value of the home remained high, Mark’s net worth was hundreds of thousands of dollars more than Tracy’s, even with him assuming the mortgage debt.
Using an interactive Asset and Liability Distribution worksheet provided by Divorce Docs, Mark and Tracy were easily able to see that in order to provide an equitable distribution, nearly all the other assets would need to be transferred to Tracy, and all of the debt would need to be assumed by Mark. He was willing to do this because his number one priority was to keep the house.
Assets, such as a 401k and IRA’s were moved into Tracy’s columns in the worksheet. In most cases, this might have been enough to make a couple’s net worth close to equal, but because the house in Asheville had a lot of equity, Mark’s net worth was still $60,000 higher than Tracy’s. The couple resolved their dilemma by deciding that Mark would pay Tracy $30,000 within 4 years to make up the difference. To protect Tracy, they wrote into their Marital Settlement Agreement that if the funds were not paid in full by the due date, the house would be sold and the proceeds divided 50/50. Both parties were satisfied with their decisions. Tracy enjoyed her freedom from rental property ownership, and Mark held onto his dream home. Divorce Docs was happy to provide a tool for them that automatically calculated any changes in net worth. They were able to see the results of different scenarios immediately without recalculating each time a change was suggested by the other.
This is what Divorce Docs does best: giving you the tools you need to make your own decisions that result in the best outcome for everyone involved.
*names and details have been changed to protect privacy
We are not attorneys, and do not provide legal advice.