In general, an efficient divorce proceeding finds its foundation in effective negotiation. While it is true that many couples face an argumentative proceeding, a great many couples have simply grown apart and seek to start a new life. Approaching potential disputes such as those centering on property and debt division from this perspective can be helpful.
In an effort to share the value of property, couples will need to follow a straightforward five-step process. This process is geared toward accurately calculating each party’s Net Family Property (NFP). Essentially, NFP refers to how much money each partner is worth at the end of a marriage. It is an important part of determining the division of assets and debts.
The five steps are the following:
- List and value all your assets and debts. This can be a challenging step as both partners must list all assets and debts as well as assign accurate values to each. Partners might choose to work with experts in these fields to ensure accurate valuations. Additionally, financial statement forms are available to assist in the organization of data.
- Learn what assets have special rules. Certain assets will likely have to follow complex rules regarding valuation and division. The matrimonial home, for example, is valued differently than any other type of asset. Gifts, inheritance, money received as a result of a personal injury or money received from a life insurance policy will all likely be tied to special rules through the process.
- Calculate each partner’s net family property. The information collected in the previous two steps is used to calculate each partner’s NFP. In short, the NFP is calculated by adding together all assets and subtracting all debts that you had at the end of the relationship or separation.
- Calculate the equalization payment. The married partner with the higher NFP owes the other partner half of the difference between the NFPs.
- Make an agreement or apply to court. At this point, if you and your partner can come to an understanding, you can write a separation agreement. This agreement will state how assets and debts will be divided and stipulate the details of the equalization payment. If an agreement cannot be reached, you can work with a family law professional or seek the court’s assistance and let a judge decide.
Many factors can ultimately have an impact on the course of your unique process. Selecting the right court, for example, adhering to a strict time limit or the presence of a marriage contract can influence the efficiency with which you proceed through the division of assets and debts.
It is important to work with skilled professionals who can provide the guidance you need throughout the process.