Counting The Eggs: Tallying All The Assets In A Divorce
You depend on your clients to list all assets that need to be divided in a divorce, but unfortunately the lists you receive are sometimes incomplete. Often it's not that the person was trying to be dishonest. Instead the client will say, "Was I supposed to include that?" In order to complete the NY Statement of Net Worth accurately you may need to remind your client of assets that typically get left out.
Security Deposits - Security deposits or earnest money tend to get forgotten about until the funds are returned. Clients should take time to consider any rentals or other transactions that might have required a deposit.
Loans To Others - That money lent to a brother-in-law to help him when he was out of work was a personal favor, but it is also an asset that may need to be divided. People often don't realize that the money owed to them on a personal loan is just as much an asset as a tangible item.
Life Insurance - Term life insurance has no surrender value so can be ignored, but whole life does have value. That doesn't mean the policy holder has any intent to cash the policy in, but the value must be accounted for in the NY divorce software.
Pensions - A 401k, IRA or other defined contribution retirement plan is obviously an asset since there is an account with a balance in it. Defined benefit retirement plans, known more commonly as pensions, are much rarer than they were a generation ago but some organizations still offer them. Clients may not realize that these plans have a present value and must be included in a property settlement.
Gifts Between Spouses - Couples are often surprised that gifts given to each other are usually considered joint rather than personal property. One important exception is the engagement ring. Since this gift was given before the marriage, it is a pre-marital asset that belongs to the recipient.
Pre-Marital Property - A house, especially a vacation home, owned before the marriage is usually considered a pre-marital so won't be divided in the divorce. However, if the spouse has been added to the title, or if the spouse has made significant monetary contributions to property improvement, then the house may go on the settlement table. Of course even if the title is in one person's name, the mortgage might be in both, which can create an odd situation where one owns the asset yet both own the liability.
Remind your clients that it is better to report too much than too little, at least when reporting to you. Once you have all the information, you can determine which items are joint property to be divided and which are personal property to be kept. Only then can you complete the NY net worth statement accurately. You don't want to be surprised during negotiations by assets you didn't know existed. EzSupport-NY can account for all these assets and many more, and you can easily update the client's records as new items come to light.
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