You have experience handling valuable assets, but you have no background in dividing all those assets in a divorce. What pitfalls should you watch out for?
CNBC provides tips for avoiding mishaps in the property division phase of ending a marriage. Take steps to safeguard the work you put into securing your assets.
Take care of retirement accounts
For retirement accounts included in your divorce settlement, educate yourself on how much you must pay in taxes for giving money in those accounts to your soon-to-be-ex-spouse. Besides tax withholdings, ask a financial professional experienced with high-asset divorces about early withdrawal penalties. For the benefit of both parties, legal documents created for dividing retirement accounts may need to list a specific percentage rather than a dollar amount.
Recognize equally unequal assets
Think twice about dividing seemingly equal assets. Depending on what assets you have currently, you may already know that $1,000 and stock worth $1,000 do not have the same value. You must consider short- and long-term capital gain and taxes when dividing stocks in a divorce.
Double-check that you may take on ownership of the marital home alone
If you want the marital home as part of the divorce, get the full picture of how much it costs to become the sole owner responsible for the real estate property. True, you may have a lot of assets on your own, but how may your financial health change because of your divorce? If you do not yet own your marital home, you may have a hard time qualifying for a mortgage alone, and you may pay more in capital gain taxes than you realize if you later sell the home by yourself.
Familiarize yourself with areas of vulnerability in high-asset property division. What looks enticing on the surface may be a bad deal upon deeper inspection.