When someone decides to end their marriage, their finances are likely to change dramatically. People will often no longer be able to rely on joint income to pay bills, and assets will need to be divided. To help someone reduce their risks of financial problems following a divorce, it can be beneficial for people to understand their finances and determine their date of separation.
When dividing assets as part of the divorce process, it is important to do so properly to avoid costly tax consequences. For instance, it may be a good idea to have assets inside of a 401(k) plan rolled over from one spouse's account to the other. This is a non-taxable event and may be the easier way to transfer the money. If the spouse receiving the money wants to take it as cash, he or she could be liable for income tax and an early withdrawal penalty.
Texas law can play an important role in issues such as alimony during a divorce. In fact, jurisdiction is just one of the factors affecting a Texas couple's financial outcome after divorcing. It is important to have a good understanding of family finances prior to beginning the process. It is also critical to understand the values of various assets as they relate to taxes and other potential obligations.
When Texans are going through divorces, they often focus on such big issues as child custody, spousal support and child support matters. While they are trying to negotiate an agreement regarding the property division in their cases, they may want to explore the potential tax complications that may arise after their divorces are final.
For people who own real estate such as a vacation home, divorce can be particularly complicated. In Texas, community property consists of assets and debts acquired during the course of the marriage. If real estate was purchased in that time, or if the property was acquired before the marriage date but the value increased while the couple was married, then the value of property may be subject to division.
Some people in Texas may think of prenuptial agreements as something that only the very wealthy need, but increasingly, some lawyers are urging farming families to consider them. Without a prenuptial agreement, if a person who has inherited part of a family farm gets a divorce, their spouse may have the right to half of that person's share.
Money can be a common source of stress in a Texas marriage, and in many cases, disputes over finances can be contributing factors to a divorce. In some cases, the situation may be serious enough that bankruptcy is a consideration. If divorce is looming, the timing of a bankruptcy filing may depend on the financial situation of each party as well as the nature of the debts in question.
In Texas, when a couple gets divorced, they can come to an agreement outside of court about whether one spouse should receive alimony, and the court is likely to approve the arrangement.
Texas couples may be interested to learn that an Alaska plastic surgeon has been convicted of tax evasion after trying to hide millions of dollars in assets during his divorce. He faces up to 95 years in prison.
When a couple with high-value assets decides to divorce, each spouse has a lot to lose. Often one of the primary considerations is how the end of the marriage will affect retirement plans.