A financial advisor highlights some financial issues to address in property division in divorce. Tax consequences can have a significant impact on the ultimate value of any asset to the recipient. Asset splitting calculations should factor in tax impacts and risks.
- retirement accounts – factor in tax treatment or impact of the transfer and, if allowed, subsequent withdrawals as well as protection from creditors
- insurance – protection of dependent spouse and children against the death or (more likely to occur) disability of the support-paying spouse and availability and cost of health insurance for the dependent spouse
- deductibility of legal fees – although divorce legal fees in general are not deductible, the portion of legal fees attributable to tax planning or tax counseling is deductible