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Divorce: Dealing with commingled assets

On Behalf of | Jul 19, 2021 | Family Law

Spouses undergoing divorce often focus on custody and support issues. But property division can have long-term consequences for your financial well-being. Untangling and addressing the ownership of assets may be complicated and have important family law consequences.

Home and mortgages

The couple’s home is typically their largest asset. If it sold, there may be a large taxable capital gain on the property.

One spouse may need to remove themself from the mortgage. Banks usually require a new loan in the name of the spouse who gets the home. Qualifying for this loan may be difficult for a spouse with less income.

Avoid removing your name from the title before the release of liability. You may also be responsible for maintenance fees or property taxes if your name remains on the title.

If you receive the house, you may still be held liable for any injuries or damage. Acquiring umbrella insurance coverage is a reasonable precaution.

Joint accounts

You should open individual or trust accounts after divorce. Close joint accounts and credit cards so you are not responsible for debt that you did not acquire.

Beneficiaries should be updated on IRAs and work retirement savings accounts, along with trusts, to assure that their assets do not go to a former spouse or other unintended beneficiary. A court may have to issue a qualified domestic relations order for retirement accounts to divide this asset among the spouses.

Individual transfer on death accounts should have a named recipient. Trusts for minor children may be appropriate.


Inventory your insurance coverage to assure that your home, personal property, valuables vehicle and other assets are covered. Be sure you are not carrying unnecessary insurance for property you no longer own, or which decreased in value.

Update your beneficiaries on your life insurance policies. Consider obtaining term life insurance coverage on the spouse who is paying child or spousal support and name the support recipients as beneficiaries. These policies should remain in effect until support payments are no longer required.


A spouse’s filing status will be their marriage status at year’s end. This can increase taxes or add tax liability because of possible underreporting or the loss of marital tax breaks.

Other issues include which spouse will receive the deductions for mortgage and property taxes. Both spouses cannot list the children as dependents.

Retirement assets should also be carefully reviewed during division because they do not have the same value as after-tax-assets. IRA and retirement accounts may be taxed.

Attorneys can assist you with developing options and preparing for negotiations. Lawyers may help assure that you seek a fair and reasonable decree.