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Avoiding financial setbacks that can come with divorce

There are generally a lot of emotions in play at the end of a marriage. Often, in their haste to reach an agreement and finalize the process, divorcing couples in Sarasota, and throughout Florida, will choose to liquidate all of their assets and split the profits. While there are benefits to this method for settling a divorce, issues can arise down the road that may have long-term implications without careful planning.

According to a recent news report, one of the most important things for a couple to consider when dividing property and assets in a divorce are the potential financial implications. Not all couples share the same types of assets and not all assets can be valued in the same way, which can lead to issues including large, unexpected tax bills. A 401 (k) that is worth $500,000, for example, could be subject to taxes of almost one-third, while a home that has equity of the same amount will often have a gain exclusion.

Experts reportedly suggest that through collaborative negotiations, versus litigation, couples can give the appropriate considerations to each asset, such as how a transaction is taxed, operating losses and carryovers. Based on the news report, the best option for couples is to transfer the majority of assets between them, and only liquidate those that would be difficult to keep or could lead to more challenging financial issues, such as not being able to qualify for a mortgage or car loan without the other spouse.

If you are considering filing for divorce, or if your spouse has already filed, you may wish to consult with a family law attorney. A lawyer can look out for your interests and advise you of your options, as well as negotiate on your behalf to help reach the best possible resolution.

Source: CNBC, “Not always a rose: Avoiding thorny asset-liquidation issues in divorce,” Deborah Nason, June 14, 2014

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