The majority of couples consider their savings and investments as joint assets. If you want to go back from ‘our’ to ‘mine,’ you’ll have to split these as well, which may be a lengthy process.
So in this article, Advocate Viraj Patil from “ParthaSaarathi” which is one of the best legal consultancy and dispute resolution firm, will discuss about how you can easily divide your assets after divorce. Advocate Viraj Patil is the co-founder of the law firm & is also known as one of the best advocate in Navi Mumbai.
According to him, there are a few things you can do to help the transition go more smoothly. The first step should be to find out what each person’s share is based on their individual contributions. When it comes to splitting the savings, cash should not be an issue. Jointly owned bank accounts may be closed and the balance split accordingly. Some savings, on the other hand, take more effort to divide.
Liquidating and exchanging assets in the form of bonds, mutual funds, and fixed deposits is an easy way to divide savings. Premature liquidation, on the other hand, can result in a loss of returns.
Equitable Distribution
In the long term, stock market investments have the highest returns. Exiting immediately if your equity portfolio is priced at less than the purchase price due to weak market conditions is not in the best interest.
Demat accounts, like bank savings accounts, may be kept both separately and jointly. Off-market transactions allow you to move shares from one account to another. You cannot, however, change the account holders’ names or convert a joint demat account to a single-holder account. Opening individual accounts and transferring the shares into them is the only alternative. If the destination account is not similar, you will have to pay fees for these transactions (held by the same persons).
Without the lender’s permission, shares that have been pledged cannot be transferred. Transferring shares as a gift to demat accounts owned by certain relatives (spouses, children, parents, siblings, and other lineal descendants) is tax-free. In most cases, the
revenue from these stocks is balanced with the donor’s income for tax purposes. If the move is part of a separation arrangement, however, there is no clubbing.
Mutual Funds
You may have also invested in mutual funds. In tax-advantaged assets, you will also need to remember the lock-in era. Surrendering funds, such as unitlinked insurance policies, before the five-year period expires can result in surrender fees. Even then, you won’t get your money until the lock-in phase is over. Before the three-year lock-in period, contributions or units in equitylinked savings schemes cannot be withdrawn or transferred.
Exiting tax-saving investments before the deadline would result in the loss of any tax benefits you may have earned. Financial planners recommend drafting an agreement determining each spouse’s payment obligations and claim on the maturity proceeds based on
these considerations. A deal like this would ensure that both parties continue to profit from long-term financial planning.
Demat accounts can also be used to hold mutual fund units. If the units in one account are not locked in, you can move them to another account. If you don’t want to sell your mutual fund units, you can get them converted to electronic form and then share them with your partner.
Others
You may have invested money in provident funds, term deposits, and gold in addition to equities and mutual funds. Since you won’t be able to access the provident fund funds, you’ll have to leave them out of the divorce settlement or offset them with other investments.
While jewelry is considered the wife’s property, she is free to share it equally. Pure investment assets like gold coins, e-gold, and exchange-traded funds, or ETFs, would need to be proportionately divided. Since E-gold and ETFs are kept in demat accounts, they are easier to sell.
Bank fixed deposits may be redeemed before their maturity date, but there could be a penalty if you do so. When a term deposit is prematurely closed, banks give a lower rate. Depending on the
amount of money you’ll lose if you redeem early, you may want to leave the account alone. You may have the division of certain accounts recorded in the divorce agreement in this situation.
