The Economics of a Divorce

Divorce in California is often very emotional. Even if you want the split, you may still be sad to see your marriage dissolving, to see the end of what was once such a happy union. You may feel emotional about certain assets, like the first house the two of you bought together—which could also be the home where you raised your children.

When you think of the value of these things, you don’t necessarily think of the monetary value alone. They mean more to you because of your memories and your connections. This is the emotional side of the property division process.

However, to make sure that things are fair, you often have to try to be as objective as possible. You have to look at the dollar signs and understand what you deserve and what your spouse deserves.

For example, if your spouse has a much larger retirement account than you do—perhaps it is worth $500,000, while your own is worth just $50,000—then you must split those assets in a way that benefits both of you. To keep the most money, your spouse may offer to let you have the things you feel most connected to. However, you don’t want to accept something—like a $200,000 home—that is technically worth less than what you deserve, just because you have that emotional attachment.

As you work through the high asset divorce, try to think objectively at every stage in the process, and make sure you know your rights and exactly what you deserve to get out of the divorce if the agreement is to be fair.

Source: PBS, “Are you getting a fair divorce? The economist’s take,” Laurence Kotlikoff, June 19, 2015

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