Separating Assets and Debts in Divorce

September 27, 2022

When you are contemplating divorce, one of the largest pieces of the process is figuring out how to separate your assets and debts. This part can be stressful and overwhelming but with the right support and an experienced divorce attorney helping you, it can be easily broken down into manageable steps.

Identifying the goods.

The first step is identifying all assets and debts in general. Oftentimes, one spouse in a marriage takes care of the finances, leaving the other in the dark (not always intentionally). While it can be frustrating, and maybe embarrassing, to be the spouse in the dark, it’s important to acknowledge this if it’s true. There are many options to make sure we can identify all of your debts and assets, including issuing discovery requests and questions to your spouse or subpoenas directly to financial institutions. The discovery process in Nebraska allows for both spouses and their attorneys to have access to any relevant information necessary to identify assets and debts. This process can be time consuming, but it cannot be overlooked. If one asset or debt is missed in this process, it can create headaches and other unnecessary interruptions in the process down the road.

Organizing the information.

Making a list of assets and debts can lead to a smoother settlement discussion between the attorneys or spouses. Once we have a list of all of the assets and debts, we can start separating them into different categories. First, we identify assets and debts as either marital or non-marital. Some assets, such as inheritance or assets you owned prior to the marriage, may not be considered marital and should be removed from any distribution of the marital estate. If one spouse received an inheritance during the marriage, whether it is considered non-marital, will depend on what happened to the inheritance when it was received. If it was ‘commingled’ with other assets, it may not be considered separate assets. If it is ’traceable’ as a separate asset, meaning the money or asset was kept separate from other marital assets, it will likely be separated from the rest of the assets and awarded separately to the spouse who inherited it.

Retirement assets.

Not all assets and debts are treated the same. Retirement accounts are often allocated separately from non-retirement assets because of their tax implications. Retirement accounts can be transferred between spouses in a divorce without tax implications when they are transferred properly. Some spouses may decide they want to start a new relationship with an independent financial planner to discuss their new future and how they want to invest any new retirement funds. Starting a conversation with a new financial planner during the divorce process can be helpful to assist in transitioning retirement funds properly.

Real estate.

Dealing with a home in a divorce can be stressful, not only because it literally contains your livelihood but also because you may not have a choice whether you keep it or sell it, depending on your financial circumstances. If you have equity in your home, usually you and your spouse are entitled to half of the equity in the home. If one spouse wants to keep the house, the house may need to be refinanced in order to remove equity in the home and remove the other spouse’s name from the mortgage. It is important to talk with a mortgage lender early on to determine if refinancing is an option for one spouse. With fluctuating markets and new budgets for the divorcing spouses, refinancing and keeping the home may not be feasible and the house may need to be sold with the proceeds divided between the spouses.


Debts are treated the same as assets and spouses are “awarded” debts just the same as assets. Gathering all of your debt information, usually through a credit report, can be vital to ensure that we can address any outstanding debts. Some debts may just be assigned to one spouse in a divorce and some can be refinanced. Usually this depends on the amount of debt and the length of financing. Shorter term loans (like vehicle loans) may not be required to be refinanced as opposed to longer term loans (like a mortgage). Credit card debt often depends on whose name is on the card and how it is allocated may depend on how it fits into the ‘big picture’ calculation of assets and debts. Sometimes credit card debt is paid off with house proceeds, for example, if a house is sold during the divorce process.

Experts at your side.

It is important to talk with an experienced divorce attorney about your assets and debts before starting the divorce process. We recommend that people who own real estate or have retirement accounts always talk to an attorney before proceeding with a divorce. One mistake can cause immense issues down the road that may not be repairable later. There may be things you can do before filing for divorce to protect yourself. Your attorney may also refer you to other professionals like a financial planner, CPA or a mortgage lender.

This article should not be construed as legal advice. Situations are unique from one another and it is impossible to provide legal advice for every situation without knowing the individual facts.

If you need help with a divorce case, contact Hightower Reff Law today.

related content

Divorce Mediation 101

Divorce Mediation 101

During a divorce proceeding, if you are not able to reach a settlement with the opposing party on all aspects of your case, the judge assigned to your case will be required to resolve any remaining disputes at trial. While judges in Nebraska often give thoughtful and...

read more