Protecting Your Family's Future
 

Breaking Up Finances in a Divorce

When your marriage ends, one of the most difficult and perplexing tasks can be dividing up (and protecting) assets. Here are some of the most common mistakes people make financially in the middle of a divorce:

Failing to Consider Tax Implications When Dividing Property

One of the ways in which people commonly don’t end up getting a fair deal has to do with the potential tax consequences of owning certain property. Experts say it’s important to determine whether the dollars you are receiving are pre-tax or post-tax dollars. For example, if you take assets in an IRA in exchange for allowing your ex to keep the house, you will incur a tax obligation when you take distributions. However, your ex may incur no tax consequence upon the sale of the house, provided the net gain on the sale is below that allowed under the Internal Revenue Code.

Failing to Divide All Financial Accounts

There’s no benefit to keeping any joint accounts with your ex. In addition to bank accounts, you need to change credit cards, investment accounts and any debts/loans, including your mortgage. It’s also critical to change the beneficiary on life insurance policies, annuities, retirement accounts and investment portfolios.

Allowing Emotions to Control Financial Decisions

When it comes to dividing assets, you have to resist the urge to put any emotional attachment on a piece of property. If you do, you’ll likely pay a price for it. Don’t try to establish your own value for a house, or for personal property. Always get a professional to appraise marital assets at fair market value.

Failing to Account for All Assets and Income

In the rush to be done with a divorce, parties often fail to obtain a thorough accounting of assets and liabilities. It’s a good way to get the short end of the stick in a divorce property settlement—one in six people in a recent study admitted to hiding a bank account from a spouse.

Contact Us

At the office of Linda Stewart Law, PLLC, in Baytown, we bring more than 8 years of experience to clients in south Texas. To learn how we can help, call our office at (281) 420-8020 or contact us online. We offer an initial consultation at a reduced fee of $50. We accept credit cards and will set up a payment plan, if appropriate. Our offices are open Monday through Thursday, from 9 a.m. until 5 p.m., and until noon on Fridays. Evening and weekend appointments can be arranged upon request.

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