Start Your Divorce Today - Premium Divorce Online

Topic Options
#771940 - 06/08/16 02:35 PM Valuing assets
smadan0522 Offline

recently joined

Registered: 09/08/15
Posts: 2
Hi, my ex and I are trying to work out our equitable distribution. Here are our major assets.

60k in Home Equity
40K in her IRA's
76K in My 401k
20K in My IRA's

I'd like to give her the home equity so she can stay in the house. In exchange, I would take a larger share of the retirement. Are there any standard formulas to evaluate Home Equity vs 401k vs IRA?

It costs money to sell a home. So I don't think 60k in home equity is really worth 60k. I feel IRA's are fairly equal to their face value because they have already been taxed, but you cant get them until 65. 401k's are pretax, and you cant reasonably get them until 65. Are there any factors that can be applied to these amounts to get them to be 'equal'?

My thought is maybe home equity would be equal to Equity - 5% of home value. For example 60k in equity- (300k value * 5% = 15000) 45,000.

IRA would be worth 100% of face value.

401k would be work 80% of face value to factor in taxes you pay upon withdrawal.

Does this make sense?

#771941 - 06/08/16 07:22 PM Re: Valuing assets [Re: smadan0522]
MinnesotaMom Online   content

old hand

Registered: 01/05/11
Posts: 879
The court will not figure in home selling costs unless you actually sell, so it has a value of $60k.

Your total value to split is $196K, as long as all of the retirements were earned during the marriage. Split, that's $98K each.

She keeps the house and all equity and transfers $2K from her IRA to yours. You keep all of your retirements.

#771942 - 06/09/16 02:52 PM Re: Valuing assets [Re: MinnesotaMom]
TJMH Offline


Registered: 07/17/15
Posts: 349
I'm not sure that's the right way to look at it. IRAs and 401Ks are pre-tax (will be taxed on withdrawal) so they're not dollar-for-dollar equivalent with already-taxed cash (home equity).

The cleanest way to do it would be to separate the two categories--so you would transfer $28K in IRA/401K money to her (which can be done without tax or penalty if it's required in your divorce judgment)so that you each wind up with $68K in retirement accounts, and split the equity in the home equally. If you want to sell it's simple, you just agree to split the proceeds after closing costs. The way I did it (since we were agreed that I wanted to keep the house) was to refinance and pull out enough cash to pay my ex her share of equity (appraised value minus old mortgage balance, and we agreed to split the refinancing cost). Refinance was necessary anyway to get her off the mortgage.

If you want to mix the two so that she doesn't have to pay you any of the equity, I'd suggest that a couple of hours of work by an accountant would get you a solid answer that would probably be worth the relatively minor cost. But keep in mind that she'll still probably need to refinance to get you off the mortgage (as well as get a quitclaim from you if you're on the title), which means she'll have to qualify for a loan on her own.

Edited by TJMH (06/09/16 03:00 PM)

#771943 - 06/10/16 05:39 AM Re: Valuing assets [Re: TJMH]
MinnesotaMom Online   content

old hand

Registered: 01/05/11
Posts: 879
The problem is they aren't going to sell the house. If they equally split the retirement money, his ex will owe him $30K in home equity, which means she will withdraw from her retirement with taxes and penalties, borrow the money from her retirements, refinance the home which will incur significant costs, or have to sell because she may not have the ability to borrow the amount needed.

The way I presented it has no costs and his ex keeps the house (and more than likely a place for the kids to live). Plus, the OP stated he had a desire for his ex to stay in the home and he keep more retirement money.


Moderator:  dsAdmin 

Resources & Tools
Start Your Divorce Online Start Your Divorce
Several Options to Get Started Today.
Divorce Tools Online Divorce Tools
Keeping it Simple to Get the Job Done.
Divorce Downloads Download Center
Instantly Download Books, Guides & Forms.
Divorce and Custody Books Discount Books
Over 100 of the Best Divorce & Custody Books.
Negotiate Online Negotiate Online
Settle your Divorce and Save.
Custody and Support Tracking Custody Scheduling
Make Sure You Document Everything.

Easily Connect With a Lawyer or Mediator
Have Divorce Professionals from Your Area Contact You!
Enter Your Zip Code: