Divorce is not cheap, even if it is amicable and uncontested. It is easy to get so wrapped up in the process that you lose sight of the assets that can end up costing you more than they are worth.
While it is challenging to look at what is normally a very emotional time with an eye on the bottom line, it is essential to try. According to US News and World Report, you should make sure to understand how taxes may affect certain assets, and not get too attached to your home.
A fair split becomes unfair with the involvement of Uncle Sam
When you and your ex are splitting up wealth, make sure that you are not only getting the assets that the government will apply tax on. A good example of this is with 401(k) retirement accounts. If one spouse gets a 500,000 401(k) retirement account and the other gets 500,000 from assets in a checking account, this may on paper seem fair.
However, the spouse with the 401(k) account will need to pay taxes if they withdraw that money. The spouse with the liquid assets will not. Keep in mind taxes and not just dollar value when you are dividing your assets.
Emotions regarding your home can cost you
Many people wish to keep their house in the divorce, and many get what they wish. However, keep in mind that you may not be able to keep up with the mortgage payments and upkeep once your spouse’s income is gone.
Many arguments in divorce center around money. Understanding the value of your assets can help you make wise decisions throughout the divorce process.
