Tax and economic decisions need to be made with divorce | Lane & Lane, LLC
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Tax and economic decisions need to be made with divorce

Whenever a marriage dissolves, there are countless decisions that need to be made, regardless of the length of the marriage or the value of the assets. However, if there are certain assets, such as a house and retirement accounts, the decisions regarding how best to split those assets may be even more complicated. New Jersey couples may want to consider the financial realities of divorce and decide what may be the best option as they proceed with a divorce.

The family house may likely be the most valuable asset a couple has. Whoever vies for the house needs to understand the underlying costs of keeping a family home. Some of those costs include the taxes, mortgage, upkeep and also the utilities. One common recommendation is for a couple to sell the house and split any equity.

Other valuable assets can include stocks and mutual funds. Tax brackets play a role in capital gains when taxes are filed. A divorce can surely alter a person's tax bracket, and that party should be aware of the cost and the cash flow changes that may come about as a result of some of those holdings. There are also potential Social Security benefits that could affect a person's bottom line after a divorce.

The financial changes that can affect both parties after a divorce may impact taxes and retirement plans, and even where a person can afford to live once a family home is sold or given to the other spouse. Weighing the financial benefits and the pitfalls of a divorce can help both parties better prepare for those changes. Outlining all specific holdings and deciding together how to deal with debt and a family home may be the smoothest way for a divorce to proceed for a New Jersey couple.

Source: investmentnews.com, "Consider these tax consequences when splitting assets in a divorce", Liz Skinner, Dec. 30, 2014

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