For people beginning the divorce process this year, the process of dividing assets can be more complicated than it might normally be. The value of assets like retirement and investment accounts is fluctuating at sometimes dizzying rates, with even seasoned economic professionals unable to predict what will happen from one month to the next.
The state of the economy – locally, statewide and even nationally — can affect what real estate like homes and other properties are worth. It can also impact the value of businesses and commercial properties that couples may be dividing.
How best to deal with fluctuating asset values
It’s always necessary to determine the valuation date for marital assets. The valuation date can make a big difference in how much a spouse takes away from a marriage.
However, the value of some or all assets can increase or decrease significantly between the valuation date and the time the divorce is finalized. that date and the date of your final divorce decree. Some experts recommend that couples agree on what percentage of each asset each one will get rather than what dollar amount. This way, a large fluctuation in value won’t require a change in the agreement.
The effect of economic uncertainty on support orders
Economic uncertainty can also cause complications for couples who need to negotiate spousal and/or child support orders. Everything from potential increases in unemployment to the rising cost of living can make any support orders insufficient within a year.
Many couples include a Cost of Living Adjustment (COLA) clause in these support orders. This allows them to automatically be adjusted each year without having to return to court.
Certainly, where a couple divorces in a time of economic tumult or stability, circumstances can change at any time – whether due to outside forces or changes in one or both of their own lives. That’s one reason why it’s wise to craft property division, support and other agreements that are as forward thinking as possible.
It’s always smart for divorcing spouses to have their own financial, tax and other professionals to help them protect their rights and interests in addition, of course, to sound, experienced legal guidance. After all, who knows for certain what the future will bring?