Considerations for dividing investments during divorce

On Behalf of | Apr 7, 2023 | Divorce

Dividing investments during a divorce can be a complex process. Higher-asset divorces mean that spouses have many different accounts to consider.

There are several things you should keep in mind if you’re navigating a high-asset divorce. Taking these steps can better ensure that you receive the settlement that you should.

Determine how assets will be classified

Identify whether the investments are considered marital or separate property. Marital property typically includes assets acquired during the marriage, while separate property refers to assets that were owned by either spouse prior to the marriage or received by one spouse as a gift or inheritance. A couple’s division of investments approach will focus on the management of marital property.

Gather documentation

Collect all relevant documents related to your investments, such as account statements, purchase confirmations and tax records. This information will help to establish the value of the investments and provide a clear understanding of the nature of the assets to be divided.

Calculate value

Determine the current market value of the investments. This may require professional assistance from financial experts or appraisers, particularly for more complex investments like stocks, bonds or retirement accounts.

Consider tax implications

Be aware of the tax consequences of dividing investments. Some assets, like retirement accounts, may be subject to penalties or taxes upon withdrawal or transfer. In some cases, related tax burdens can be considerable, so this is a concern worthy of the attention of both parties.

Manage retirement accounts

Some retirement accounts require couples to have a qualified domestic relations order in place before they can split the value of a particular account. This document is very specific and must be approved by the court. It includes the account owner and the recipient, as well as the method of division. The plan administrator must approve the QDRO or it will need to be sent back to the court for revision.

Ultimately, dividing up considerable assets can take time. You should try to work out a property division agreement that’s in your best interests. Be realistic about what you can afford and how the long-term financial obligations of acquiring and/or losing particular assets will impact you. Seeking legal guidance can help you to achieve these consequential goals.