Over the course of your marriage, you and your spouse can accumulate significant financial resources. You have to divide many of these assets when you divorce.
Your financial assets consist of much more than your checking and savings accounts. Fidelity says that you also need a plan to divide your investment accounts. Additionally, you have to consider your retirement accounts, your life insurance and your Social Security benefits. If you have children, you may have set up a 529 plan for each of them. You have to divide these accounts as well.
Understand the methods of division
There are several ways you could allocate these assets. You could sell your investments and split the money between you. Conversely, you could choose which of you will keep each investment and fill out paperwork so that each of you becomes the sole owner of your share.
Dividing your children’s college funds can be more difficult. Federal financial aid programs typically evaluate the assets of both parents, and this includes 529 plans. You may want to consider how your children’s financial aid options could change depending on which one of you owns these plans.
Consider the tax implications
According to CNBC, you also have to evaluate the potential taxes for each asset. You might have to pay capital gains tax when you sell investments. The length of time you had the investment determines the amount of this tax. This can greatly affect the value of the investments you receive. You may choose to divide your investments so that you each have the same amount. However, if one of you has to pay more taxes on these investments, the division might not be equitable.
Splitting some assets can be as simple as filling out paperwork. However, it can take more time and thought to divide your finances when you have to consider how the value of an asset will change in the future. You may need to seek guidance so that the distribution is fair and equal.