Like many who go through a divorce, you may feel the urgency to get the legal process over with you so you can begin to rebuild your life and redefine yourself. However, rushing the process may be detrimental to your financial health. Obtaining a fair divorce settlement or court order is critical if you hope to meet your goal of moving smoothly into your post-divorce life without financial setbacks.
Unfortunately, not many marital assets divide neatly down the middle. Some may have hidden liabilities, unreliable appraisals or corresponding debt. You would be wise to gain as much information as you can about your joint assets and your rights under the laws of Texas.
Investments and retirement plans
Some of your joint assets may carry tax ramifications you should consider since these will likely affect your bottom line. For example, if you and your spouse have investments in a traditional brokerage account, you will have to consider capital gains if you decide to sell the holdings to divide them. You may also have to account for any losses you used to offset investment gains and how these may affect the value of the investment when you liquidate.
The way in which you divide IRAs and 401(k)s may also incur taxes or penalties. Distributing funds from IRAs instead of transferring them, for example, can lead to heavy penalties and high taxes. In the same way, dividing a 401(k) by withdrawing funds counts as an early distribution, which means significant taxes and other penalties. To avoid this, you will need a Qualified Domestic Relations Order to legally authorize the division of the assets in the fund.
The practical assets
It is likely that you have more to divide than accounts and investments. You may already know what you want to do with the house, whether it is selling it outright or fighting to keep it. However, there are important factors to keep in mind, such as how much equity the home has and whether one of you is willing to buy the other’s share of the property. If you keep the home, be sure you can afford the mortgage and other expenses.
You may have similar questions to consider about your cars, artwork and other valuables, and your household items and furniture. Learning as much as you can about your property’s true worth will help you recognize a fair division of assets, and the assistance of a skilled legal advocate will help you work toward that goal.