The divorce process is highly emotional and can be difficult. Even when you and your spouse agree on issues, there will likely be situations you must overcome before the divorce is finalized.
A common source of disagreements among divorcing couples is asset division. Unfortunately, if you don’t know your rights, you may make costly mistakes.
Mistake: Treating all assets equally
While some assets may seem like they have equal values, once taxes are determined, this isn’t usually the case. For example, getting $200 in cash is very different from having a stock that’s valued at $200. This is because there’s a tax impact when you sell the stock.
Remember that a profit made off any asset (the difference in what you paid and what you sell it for) is taxed as a long-or short-term capital gain. You must consider this for many assets, including retirement plans like a 401(k).
Mistake: Believing your spouse is upfront with all their assets
If you haven’t been involved in your family’s financial situation for the duration of your marriage, there’s a good chance that your spouse may try to hide assets to prevent you from getting what you are entitled to receive. It’s important to do your homework to see if you can find these or hire a forensic accountant to help with finding hidden assets.
Protecting your rights during asset division in a divorce
If you are going through a divorce, you must keep the above mistakes in mind. Knowing what you are legally entitled to will ensure you receive a fair divorce settlement. Legally, you are entitled to an equitable distribution of assets, so you need to keep this in mind.