An equitable division doesn’t always mean equal
If you file for divorce in Georgia, the judge will decide which debts and property are considered to be marital and which ones are not. Then the judge will divide both in a way that is fair to both parties, but it isn’t an automatic 50/50 split.
To make the decision the judge will look at:
- What was the overall contribution to the marriage by each party
- What is each party’s earning potential
- How the parties conducted themselves during the marriage
- If alimony will be appropriate for the spouse with less income
Judges are free to divide the property in any way they see fit, even 95/5 if it’s appropriate. Since the distribution often comes down to how well you plead your case to the judge, you may want to contact an experienced divorce attorney to assist you.
What makes a property or debt marital?
In a divorce there are two types of property and debt:
- Marital property refers to property or debt that was accumulated by either of the parties during the course of the marriage.
- Separate property generally refers to any property owned by one of the parties before the marriage or property that was acquired by either party after the marriage through gift or inheritance.
In a divorce the marital property will be divided but the separate property is not affected. There are exceptions though. For instance, if you owned a home as separate property, but when you got married you deeded it into joint names, then it would likely have become marital property. It seems like a straightforward concept but the waters can get murky very quickly.
It is sometimes difficult to divide separate property from marital property because it is so easy to co-mingle assets.
A few examples of this would be:
- What if you contributed to a 401(k) both before and after marriage? It would then be a combination of separate and marital funds.
- What if you lived in a home and had equity but you got married and then as a couple, you continued to pay down the mortgage? The home would have a marital component and a separate component.
If you are unsure of what property is martial and what is separate, contact our legal team to set up an appointment. It is important for you to know what property is at risk before you enter into a divorce.
Does a property division trigger any tax consequences?
Generally, property division does not trigger tax consequences, but there are a few tax issues of which you need to be aware. If you are dividing retirement assets, including 401(k) and 403(b) accounts, IRAs, pensions, deferred compensation plans, and any other pre-tax retirement benefits, you may have to divide those assets using a Qualified Domestic Relations Order (QDRO). QDROs are special documents prepared by specially trained attorneys that allow you to divide those assets into separate plans for you and your spouse without paying taxes on the transfer. Be careful, though. If you attempt to transfer certain retirement benefits without a QDRO—or if you make an error in the QDRO—you or your spouse could end up paying taxes on the division. If you take cash out of these plans as part of the divorce, you or your spouse will pay income taxes on the distribution.
Educational savings plans such as 529 plans typically cannot be divided and must be held by one party for the benefit of the children. If you distribute money from these plans as part of the divorce, you or your spouse will also pay income taxes on this distribution.
What is the best way to handle property division?
Hire a professional. Property division is an incredibly complex subject and you should not even attempt it without expert assistance. Our team of attorneys is extremely familiar with family law and they know all the ins and outs of the process. We can answer any of your questions and guide you through from start to finish. Just call us at 770-641-8200 or send us an email to set up a consultation.