So you and your spouse have finally agreed on one thing: a divorce. Now that you have agreed to have as amicable a divorce as possible, it is important that you understand some basics about your combined finances that are about to be separated. In order to pay as few taxes and fees as possible on any capital gains or financial accounts the two may have, it is important to investigate your finances. In order to protect your assets, certain financial decisions can be agreed on in order to maximize the return on investments.
Since both you and your spouse agree, first look to your cash flow as individuals. One may have more incoming cash flow, so the other may need to sell assets in order to match the assets of the other spouse. Think of the opportune time to sell these types of assets since you could be taxed after the fact if you do it after the divorce instead of while you are still married. This way you can avoid paying additional fees on the sale of asset accounts.
Often, a divorcing couple will decide to sell a home in order to split the equity fairly. However, there is a better time to sell and a worse time to sell. After a divorce, if you make a capital gain on the home you owned together you will each have to pay taxes on that gain as a separate filer; however, if you were still married, you could take advantage of filing a joint return. Each state is different on the percentages and amount owed in taxes, but as a rule of thumb, it costs more after the divorce.
If your spouse and yourself have agreed on an amicable divorce, think smarter, not harder. It is always recommended to consult professionals in financial planning and divorce law while prepping for divorce. Read up on tax laws in Texas and do some digging into your finances. This could make a world of difference in the taxes you may pay.
Source: The Daily Mail, “Money and divorce, what you should know,” Oct. 3, 2014