People in Maryland may have seen a recent article which discussed the importance of thing about the tax implications of divorce, and in particular, paying close attention to which assets could trigger big time capital gains tax liabilities. When it comes to property division, every scenario is unique, which is why people need the help of an experienced divorce attorney to help them evaluate and sort out their marital property in the way that provides the most financial stability in the short and long term.
In a perfect world, every divorce would end with a simple property division process in which both parties walked away with equal amounts of cash and everyone is happy. However, in the real world, most couples don’t own most of their assets in cash, and generally have at least some of it tied up in investments, retirement accounts, real estate and other property, including automobiles.
Since one can’t split a house right down the middle, couples are faced with a very difficult choice. Do they let one spouse keep the house while the other moves away? If so, the spouse who stays in the home may have trouble paying the mortgage and upkeep of the house on a single income. If they sell the house under duress and with time working against them, will they get a fair price? Even if they do get a fair price, will they have to pay exorbitant capital gains taxes on the proceeds of the sale?
It is very important to keep these property division concerns in mind when negotiating with a spouse. If it comes down to litigation over property division, the court’s idea of a split might seem fair on its face, but could still end up costing one or both spouses dearly when one factors in the tax effect. An experienced divorce attorney can help people plan for property division in a way that minimizes the tax burden on a client.
Source: CNBC “Not always a rose: Avoiding thorny asset-liquidation issues in divorce,”Deborah Nason, June 14, 2014