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For many, there’s nothing more complicated in a divorce proceeding than finding a mutually acceptable division of the couple’s investment assets. This will be a major task in a Michigan divorce where there are substantial assets subject to property division. Some general guidelines were provided recently by an investment management consultant with experience in such cases.
Most of the property accumulated during the marriage is marital property subject to property division. Therefore, all assets must be revealed, valued and evaluated for prospective division and distribution. Tax considerations for higher-income couples can weigh heavily in that process: liquidating a tax-deferred account, for example, can result in a loss of up to half of its value through local, state and federal taxes.
Assets will therefore be best preserved in a divorce by not withdrawing money from tax-deferred retirement accounts. Also, high-income divorces sometimes require the retention of financial advisors to work in tandem with the client and the divorce attorney. Even with such assistance, a common obstacle is the emotional turmoil of the parties, which can block the reasonable compromises usually necessary to forge a property division agreement.
One popular way of dividing substantial stock holdings is to have the parties negotiate to separate the stocks between them without selling them – this avoids negative tax consequences. Another important factor that couples can often agree on is the splitting of assets based on the needs of their children. A property division that will support the college education of the children can be negotiated more easily.
An individual in Michigan with significant assets and high income who is contemplating a divorce should obtain necessary professional assistance. Each case will fall on its own facts and needs. The tax complexities and variable dynamics of a property division negotiation suggest strongly the need to associate with experienced professionals throughout the process. This should increase the prospects for achieving a fair and economically enduring settlement.
Source: Investors.com, “Financial Advisers Can Help Separate The Assets During Divorce,” Gary M. Stern, Jan. 25, 2013