Divvying assets may be one of the more complex elements of a divorce. Many people believe that a 50/50 split suffices; however, how can you determine a fair split? Not all assets have equal value and in high-asset cases, the couple may be surprised by the value of different items or properties.
Understanding the impact the family home, retirement accounts and other assets have on dividing property can help prepare couples for the process.
Looking at similarly priced assets
Just because an asset has comparable prices do not mean the assets have the same value. For example, $50 worth of stock does not equal $50 cash. When you sell the stock, you have to factor in taxes. When it comes to most assets, taxes become a significant factor in the worth of the property. Two assets may have similar costs right now, but taxes in the future may affect their value. When splitting property, couples have to consider the complexities of taxes and other costs associated with the value of an item.
Considering the family home and other property
The value of a house does not necessarily equal the asset’s value. For instance, if a couple sells the home while still married, they may receive a higher exclusion. However, if a couple splits up and one person takes the property, he or she has full responsibility for capital gains taxes when selling the home. Likewise, when couples purchase properties decades ago, they may have different tax laws.
In more complex cases, divorcing couples may require help from financial advisors’ help with tax and debt issues. In high-asset cases, the substance and processes of the proceedings may change from standard divorce cases.