Getting divorced is never easy. Apart from the emotional upheaval of leaving your partner and rebuilding a separate life, you are forced to make decisions affecting your financial future. Understanding the tax implications of asset division in Frederick could help you make informed decisions and arrive at a resolution that best protects your interests.
Our knowledgeable property division attorneys at Rolle & DeLorenzo have extensive experience constructing tax strategies that could help you with asset dispersion.
In a divorce, each spouse generally keeps their separate property, which is property they acquired before the marriage or that they received through gifts or inheritance. However, courts divide marital property, which is property the couple acquired jointly throughout the marriage. Maryland courts operate with the principle of equitable distribution in divorce proceedings. This means that instead of giving each spouse a 50 percent share of joint marital property, courts try to divide the assets equitably between the parties.
When determining how much to award each spouse, courts look at factors such as:
For instance, if one spouse stayed home to raise children during the marriage, they could be entitled to a share of the money saved by the spouse who worked outside the home. Our skilled Frederick lawyers will help you understand the tax ramifications of how a court might divide your marital assets.
In a divorce, one spouse often needs to sell or transfer their shares in an asset to the other spouse.
If one spouse decides to remain in the family house after the divorce, they might have to buy out the other’s interest in the property. Although the initial transfer would likely not be subject to a capital gains tax, an eventual sale would be if the house has increased in value since the couple acquired it. The spouse who retains the house would be responsible for this tax bill. When negotiating the division of your home, our Frederick attorneys will help you understand the potential tax implications so you might better protect yourself.
In addition to jointly owning a home, many couples possess complex and diverse assets, including investment properties, retirement savings, and business interests. In order to fairly divide these assets, you need to have a clear understanding of their values and take into account the tax basis and potential liabilities of a sale. Inaccurately handling or incorrectly valuing a complex asset, such as an interest in a family-owned business, could result in unexpected tax obligations. For instance, a couple could incur a large tax burden and other penalties if they do not obtain a Qualified Domestic Relations Order when dividing a retirement account, such as a 401(k). Our legal team understands how to value all types of assets and could help protect you from excessive tax liabilities.
If you are in the process of divorcing, you need to understand the tax implications of asset division in Frederick. Working alongside our knowledgeable and experienced counsel could help you avoid falling into unexpected tax liabilities and traps. Contact us today to consult with our seasoned legal team at Rolle & DeLorenzo.
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