Successful investment portfolios are often a rich tapestry that can include stocks, bonds, and real estate, each carrying different values and risks. As a result, dividing these assets during a divorce can be particularly challenging.
The goal for property division should be to create a fair split while keeping future financial goals in mind. Unique approaches to the process may be necessary to make dividing investments easier and more equitable.
Understanding the value of assets
The first step is to evaluate each asset’s worth. Stocks and bonds fluctuate in value, so use the most recent financial statements to determine their current market price. Working with a trusted advisor can help you determine reasonable formulas for expected returns.
Real estate often requires an appraisal to get an accurate value. Include any investment-related accounts, such as retirement plans or mutual funds, when assessing total assets.
Tax implications also affect value. For example, some investments might have capital gains taxes after a sale. Consider these potential costs to understand the true worth of each asset and to make informed decisions.
Dividing investments based on priorities
Once you know the value of assets, decide how to split them based on each party’s financial priorities. One way is to allocate entire assets to one person instead of splitting everything evenly. For instance, one person might keep the real estate while the other takes a greater share of stocks or bonds.
You can also divide portfolios by risk. If one person prefers conservative investments, assign them assets like bonds or stable real estate properties. If the other person is comfortable with higher risks, they might take stocks or growth-focused funds.
Another option is creating equal income streams. Divide assets so both parties receive a similar return, ensuring ongoing financial stability. For example, calculate the annual income from rental properties, interest, or dividends when deciding who gets what.
Splitting investments fairly can protect both parties’ financial futures in a divorce. Creative approaches may be necessary to ensure you can move forward with confidence and financial security from an equitable split.