Dividing assets can be one of the most difficult parts of divorce. Between sentimentality and the need for financial stability in the wake of a divorce, there is a lot on the line in these situations.
To make things even more complicated, not all assets are equal in a divorce, as noted in this CNBC article. In other words, you may think you are making a fair deal as your divide your property and debts, but after all is said and done, you could learn that you left a lot of money on the table if you did not take into account a few important things about your property.
- Some assets cost a lot of money to maintain. If you want to keep your marital home, for instance, understand that there are costs associated with this. In addition to your mortgage, you will also have to cover utilities, pay property taxes and homeowners insurance, pay for maintenance of the home and furnish it. These expenses can be considerable, so it is wise to understand this if you are giving up cash or other property to keep the house.
- Assets can appreciate or depreciate over time. For example, a car and an art collection might seem like an even trade now, but consider that the car will likely depreciate over time while an art collection could appreciate. It is crucial to have assets like this appraised, as the current price tag may not be an accurate representation of its value.
- There could be tax implications of retaining certain assets. This is particularly true when it comes to transactions involving businesses and retirement accounts. Further, even though property transfers related to a divorce are generally tax free, future sales of the property or early distributions from a retirement account are likely taxable.
These elements complicate the process of dividing assets in a divorce, which can be very frustrating. However, overlooking or ignoring them can have considerable financial consequences.
Thankfully, you don’t have to figure out all these nuances and complexities alone. You can work with an attorney who has been through this process many times before who can help you secure a fair settlement that takes into account both your short- and long-term financial needs.