Some Assets Are Better Left Unsold
Liquidating Accounts Could Create Tax Implications
In a divorce, the first instinct of people might be to liquidate as many assets as possible in order to split the proceeds more simply. However, this is not necessarily the best course of options. One of the primary reasons for this is the tax implications that could stem from a large-scale liquidation of assets.
Peter Morris Law advises New York clients who are considering how to proceed with their divorce case and their assets. Attorneys at the law practice have experience in taxation as it relates to family law and tax issues.
Your Windfall Might Be Compromised
Issues that might come up by selling large amounts of assets or liquidating securities include:
- Capital gains tax. This could be triggered when assets appreciate in value over time.
- Innocent spouse exception. Couples with tax issues that are generated by one spouse without knowledge of the other might not be liable for back taxes.
- Changing tax brackets. People could find themselves owing more in taxes if they end up in a higher income bracket as a result of liquidating assets.
- Continuing to file jointly in order to reap the maximum tax advantages prior to divorce.
- Tax deductions or liabilities for the provision or receipt of spousal or child support.
- Real estate and other asset transfers incident to divorce and other tax exemptions.
A matrimonial lawyer can offer a comprehensive strategy for how to obtain the maximum value for the assets to be divided. It may be better to hold assets and transfer ownership of them, rather than liquidate them outright.