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How Are Financial Investments Divided in a Divorce?

Under Indiana law, spouses who choose to file for divorce must divide their marital property in a just and reasonable manner. Any assets you or your spouse own, including real estate, life insurance, retirement assets, and stock and investment portfolios, is a form of marital property — even if you acquired the property before your marriage. Financial investments can pose complex challenges during the property division process, and Indiana courts must follow the standard of equitable distribution when dividing these assets.

Dividing Financial Investments in an Indiana Divorce

All marital property is subject to division during an Indiana divorce. This includes any financial investments you or your spouse hold, including pensions, stock portfolios, and retirement accounts. Courts must follow a standard of equitable distribution, which usually means that each spouse will receive an equal share of their marital assets. For example, if you own 100 shares of stock in a company, you will receive 50 shares and your spouse will receive the other 50.

However, the court may determine an unequal split is more equitable based on a number of factors, such as each spouse’s income and contributions to the property, the presence of children, and any conduct that threatens or may threaten the value of certain assets. For example, if you have a high-value stock portfolio but your spouse has a criminal history of fraud, the court may award a lower percentage of this asset to your spouse due to this economic misconduct.

Unlike real estate or antique valuables, dividing investments can become complex since these assets are intangible. You do not have to sell any of your investments during a divorce, but the court will need to put measures in place to ensure it can carry out the terms of your divorce agreement. For example, if you have a retirement account and the court awards half of it to your former spouse, the court will place a Qualified Domestic Order (QDRO) to transfer the assets. This prevents you from having to cash out your account, avoiding a tax penalty.

How to Prepare Your Finances for Divorce

Divorce can be a very stressful and emotional process. You will need to manage a number of responsibilities during the proceeding, from discussing how to care for your children and who receives which properties to preparing your finances and assets for division. All of these activities will require careful financial management.

You can prepare for this process by following a series of careful steps.

  • Gather all of your financial records, including tax returns, investment accounts, bank statements, pay stubs, and information about your properties, benefits, and other assets.
  • Take a careful inventory of your assets, including when you acquired them and whose name each piece of property is in.
  • Obtain a recent copy of your credit report and monitor it closely. Make a note of any outstanding debts you owe.
  • Contact an Indiana divorce lawyer as soon as you decide to file for divorce or receive notice that your spouse wants a divorce.

Whether you are entering negotiations with your former spouse or asking a judge to create a divorce agreement, you need an advocate on your side. Contacting an attorney is one of the most important actions you can take to protect your investments during a divorce.

Your lawyer will understand the intricacies of Indiana property division laws, and can help you understand what to expect, how to prepare, and the financial impact of proposed agreements. Your attorney can also negotiate or petition the court if a division decision is inequitable. Before you enter divorce proceedings, speak to a lawyer who can represent your best interests during this process.