April 9, 2021
Divorce takes time, and in some ways we shouldn’t push it along too fast. Ideally the divorcing couple should engage in thoughtful discussion around such topics as the parenting plan, how to divide assets or who stays in the house. But there are some aspects of the process that can be time-consuming or just take an extended period to accomplish and it would help to get these going as early as possible.
Draft a QDRO:
It doesn’t take long to eyeball the list of assets and liabilities and discern whether a 401(k) or 403(b) is going to need to be divided. Often this is the largest financial asset the couple owns and in order to equalize the division it is necessary to break up this account. Drafting a QDRO involves some preliminary research, for instance to read the company plan document and determine whether the retirement plan protocol for QDROs uses a separate interest or shared interest (this knowledge can also be helpful further along in the divorce negotiations). Early discussions could also address details that will be included in the QDRO such as what happens if the participant dies before the account is paid out.
Talk to a mortgage broker:
If one spouse is going to stay in the marital home that person may have to refinance the mortgage. It is important to know whether that can be done as soon as the divorce is final, or in the case of a spouse with low income, whether a certain amount of months of support will be required before that person receives bank approval. Meeting with a mortgage lender early in the divorce process will clarify the timeline to refinance.
Get a home appraisal:
Have the home appraised so that a correct valuation is used when dividing the assets. Don’t rely on what the family next door sold their house for last year or other layman’s sources of data. Have a real estate agent provide a Current Market Analysis or home appraisal – maybe two if the couple want extra assurance. If this is done early in the negotiations it could save time having to go back and adjust the split later on.
Consider a home inspection:
In both cases, whether either spouse intends to remain in the home or whether it is to be sold, it helps to know of any big repairs or maintenance that may be needed in the near future. For instance, if the roof is 25 years old the couple may have to reduce their asking price if the house is to be sold, or the spouse staying in the house may want to include the cost of a new roof in his or her budget.
Business appraisal:
In our experience this is the number one area that clients skimp on. Business appraisals are not cheap, and they can take 3-6 months, but if the business has significant value then it would be wrong to rely on a simple estimate of its value. A great deal could be overlooked here. Since a full valuation takes several months, getting a head-start is important.
These are the type of issues that, after weeks or months of meetings and discussion may not only delay the process, but also be the source of new information that may change what had been agreed upon. And this can add frustration and disappointment to what may already be a stressful event.
