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The perils of a DIY divorce settlement

When couples in Texas divorce, finances are often a significant concern. Even if the split is amicable, dividing assets such as real estate, savings, investments and retirement accounts, can be a daunting task.

In some cases, a couple may opt to handle asset division on their own, splitting accounts and debts down the middle or according to a percentage that seems fair. Often, the decision to take a DIY approach is based on a genuine concern for the emotional well-being of both spouses and their children. The couple may fear that bringing third parties into negotiations will only heighten tensions and escalate conflict.

While taking this approach is often grounded in good intentions, negotiating a divorce settlement without professional advice can be problematic. This is because it can be difficult to assess the true value of some assets. In addition, tax codes can be complicated, and a spouse may unwittingly take on an unfair tax burden after accepting a share of an asset. This is particularly true in situations where one spouse makes significantly more than another.

These concerns can apply equally to low and high-asset divorce. There are ways, however, that a couple can protect their assets from taxes. An attorney can draft a qualified domestic relations order (QDRO) that becomes part of the divorce settlement. This allows funds to be transferred between the individual spouses' retirement accounts without withdrawal penalties.

Individuals considering divorce might benefit from speaking with a divorce lawyer. The attorney may be able to review a client's circumstances and finances and make recommendations regarding asset division, child custody and support issues.

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