Tax Considerations in the Division of Marital Estate

In April, 2015 blog, I listed some areas where a forensic accountant might be hired in spousal divorce.  Today, I will explore another of those areas: tax considerations in the division of the marital estate.

Before assets on a marital balance sheet are divided, one must consider that $100 of one asset may carry with it tax consequences upon liquidation – and therefore may not be as valuable as $100 of cash.  For example, stocks carried in investment accounts likely have unrealized gains and losses that result in tax consequences upon sale.  These tax consequences may be short- or long-term depending on the holding period, and the resulting consequence can produce a gain or a loss depending on the difference between purchase price and sale price.

Another illustrative example involves assets held in retirement accounts. Some retirement assets will not be taxed at retirement and others will be taxed at retirement.  Additionally, many retirement assets carry additional early-withdrawal penalties if liquidated before retirement.  In some cases a Qualified Domestic Relation Order (QDRO) is required.

One additional item on a marital balance sheet that may need to be dealt with is any tax loss carry-forward.  Of course, there are numerous other examples that, if applicable, must be recognized, understood, and quantified prior to making decisions regarding equitable division of the marital estate.

As in my previous blog posts: it is paramount to comprehensively understand the facts and analyze the appropriate data when dealing in the complicated arena of spousal divorce.

Please contact me at bpetrie@claruspartners.com or (614) 545-9100, if you have complex financial issues that need be understood and presented simply and cleanly.  At Clarus, we bring clarity to complex financial issues so you can make solid, well-informed financial decisions.

I am not an attorney and do not purport to be giving legal advice.  If you are seeking legal advice, please consult your attorney.

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