What are some tax concerns when dividing assets?

No matter what time of year you get a divorce in Massachusetts, one thing to always keep in mind is the tax liability of any decision you make as part of your settlement. This is especially true in a high net worth divorce situation because you are most likely to have accounts that will face huge tax burdens if they are not handled properly. You should work closely with a tax professional to get the bottom line information about taxes for different accounts. You also should be aware of certain situations that could also bring about some tax liability.

Forbes explains that you need to consider past tax returns. If there is an outstanding tax liability on a joint account, that will not just go away because of a divorce. You need to figure out how that will be handled in your settlement. You also have to think about any tax assets. These carry over from year to year and can reduce your tax liability. Since your status will change after the divorce and put you in a higher tax bracket, it is always nice to have tax assets to reduce your taxes owed.

Beyond taxes, though, you want to think a lot about investments. When dividing them, you need to consider the economic value and not the face value. That is, think about the taxes and factor those into the value so you get the real amount of the account that you will actually get. This is especially important when dividing retirement accounts.

This information is for education and is not legal advice.

 

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