As we have discussed previously on this blog, ending a marriage is not an easy time.. Divorce can have a tremendous impact on one’s finances for years and even decades to come. Most often, this impact is caused by property division, alimony and child support, which is why it is critical that Pennsylvanians fully understand the legalities involved with these issues before addressing them. Those who fail to do so could be at risk of being taken advantage of during settlement negotiations.
When it comes to property division, one issue that individuals need to carefully consider is taxes. For example, retirement accounts that are subject to property division may be difficult to disperse upon divorce if they are distributed without a qualified domestic relations order. This court order very clearly lays out the procedure by which the retirement funds are to be divided in the future.
In short, this order will allow the funds to be split amongst the parties as if they were still married. IRAs are usually considered separate property, but they may be subject to division if one party contributes to the IRA of another.
Similarly, capital gains taxes can eat into one’s post-divorce finances if not handled properly. Those who find themselves needing to divide the value of stocks and bonds may be hit with capital gains taxes, and the proceeds from the sale of a marital home may be taxable if not reinvested within a certain period of time.
These issues help illustrate just how thoroughly an individual needs to consider his or her position in property division matters. Although there may be sentimental attachment to some assets, such as a family home, choosing to buy out the other party to keep it may not be the best financial move. Qualified legal professionals stand ready to help Pennsylvanians better assess their situation so that they can make the decisions they feel further their interests as they relate to a successful post-divorce life.
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