Remembering Liquidity of Assets During Divorce

According to a recent post on Huffington Post, the main money mistake that divorcees make involves having a lack of consideration about the liquidity of assets. In most divorces, one spouse will end up with the primary residence and the other spouse will wind up with a commensurate amount of assets.

These assets are typically pulled from brokerage accounts, retirement accounts and savings accounts to equate with the value of the home. The tricky thing about these divisions is that if cash flow becomes complicated, one spouse may be end up with a paper asset that is hard to cash in, while the other will have easy access to cash.

Similar issues occur when one spouse is the owner of a business. The court may attempt to value the business, and leave on espouse with an asset that may have little to no market to convert cash. The business-owner ends up with only the business while the other spouse has a liquid remainder of the estate.

The spouse that gets stuck with the primary residence in a case may not consider what will happen if there is not a cash flow in the future and he or she has a part time paying the mortgage. This can leave this spouse in a very difficult situation, while the other spouse is enjoying the cash that he or she received at the division. We call this the "lack of liquidity."

When children are involved in a case, oftentimes the parents don't want to sell the family home because that is where the kids grew up. This may be a wise idea, but make sure to look at how taking the family home will influence your cash liquidity. A skilled and knowledgeable Los Angeles divorce attorney at Claery & Hammond can look over all of this for you if you want more information.