How to settle joint liabilities before divorce?

Please advice what all financial aspects to be taken care while planning for adivorce

Many people tend to neglect or forget about joint financial upholding at the time of divorce, which often ends up in dispute, loss and troubles later. So taking a little time in sorting the joint financial liabilities is the key for a peaceful future.

Here is a quick checklist for you to see if you have skipped any:

• Settle Joint Accounts - Either you can approach the bank together or alone. A mutual consent application signed by both is mandatory for settlements.

• Settling Joint Home Loans- The couple must inform the bank about any changes in your life in case of a joint home loan. If there is change of ownership involved, bank must be given a notice of the decision with immediate effect. Banks usually do not interfere if there is no change of ownership and EMIs are being regularly paid on time. In case the either the husband or wife do not wish to remain a co borrower or co-applicant for the home loan, the banks will have the full authority to entertain or reject any change in home loan ownership requests.

• Equity/Demat Accounts- The holdings of any joint demat account could be sold as per the current market value and profit or loss distributed equally amongst both members. There is also the option of transferring all account holding instruments held in the demat account to a totally new account of either the husband or wife.

• Close Joint Bank Lockers- It is recommended to make a detailed list of all belongings of the locker to avoid any disputes. Bank authorities need individual assent of both holders to close the locker.

• Changing Nominee Name in Insurances, MFs and all other miscellaneous investments

Hi Viraj,

In India, a woman is not entitled to any property in her husband’s name unless she is a co-owner. According to law, at the time of dissolution of the marriage, the wife does not have any consequential right to property or any other marital assets unless they are registered jointly under both names. It is common practice for spouses to open joint accounts to pool funds after marriage. This can become a disadvantage during a divorce, especially if you contributed more. Your partner will have equal share in the account. So, it is always advisable to have individual accounts. It will be best for you to deposit money that will be used for shared expenses in a joint account. This way, a court order can restrict the bank from releasing the money until the case is settled.

What happens in case of other assets? If a couple owns shares, bonds, Mutual Funds and other such investments, they will be shared equally if the investments are jointly owned. If not, they will be shared in the proportion in which they are held. This goes for all investments. Any gifts, including dowry or streedhan (jewellery or cash given to the girl during her marriage) that belong to a woman, will be lawfully hers. What happens to inherited jewellery? All heirlooms or jewellery that were inherited, will go to the rightful owner whose family owned it before them.
But, most importantly, what happens to that couch and teak dining table? All consumer durables, furniture and other household items that were purchased during your marital life are common assets. These will be divided based on court orders.
There are many cases where the couple would want to settle matters before they go to court so that there is less drama and the process remains smooth. Pre-litigation mediation is what you should look at, if you want to do this. This is a process by which you resolve your disputes on mutually acceptable terms before going to court.

BB Expert

List of all financial aspects that you should take care of while planning for divorce:

  1. Immediately inform your bank in case of an existing loan. If a couple mutually decided to share the burden even after divorce then bank will not interfere.

  2. If you have a joint account, mutual consent of both the parties is required to settle cash in the account.

  3. You can mutually decide on settling credit card liabilities and other dues as a part of an agreement.

  4. In the case of investments, you can stop them immediately or wait until maturity and share the amount.

  5. In case of a co-owned house by both the parties, husband can sell the house and give the share to his wife or give her share amount in cash.

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