Best divorce strategy: Think financially-act legally

 By Joqtan_Anicama

Make your financial concerns the centerpiece of your divorce, and work within the framework of the law. That is the most powerful position you can take. If you think financially and act legally, you will be able to anticipate risks and assess your needs, before a financial disaster hits.

No one wants to negotiate for an asset in a divorce and then be unable to sell it because they’d owe too much in taxes. Why should you go through the nightmare of settlement negotiations only to end up losing everything you fought for six months after the divorce is over?

The legal system is not designed to help you with your finances once the divorce is granted. For example, you may legally and fairly split the benefits of a pension plan in a divorce settlement, but when the time comes to retire, you may have less income than you need to live on. The court cannot anticipate or resolve that problem for you.

Further, the implications of future taxes on property are not taken into account in settlement agreements in most states. Generally, only existing-or impending-taxes can be factored into a division of assets. Anything beyond these taxes is considered speculation-and speculation is not normally welcome in the courtroom. For example, if, as part of the divorce settlement, you and your spouse will sell $40,000 of stock at a profit, the taxes owed on the profit will be factored into the settlement and could be split between you. If you keep the stocks and your spouse gets another asset of the same value, the court will not grant you more at the time of the settlement to cover whatever amount of taxes you may owe in the future.

In short, you cannot leave complex, multifaceted money questions about your future to the one-dimensional perspective of divorce law.

Remember: The legal process of divorce is something you will live through-but the financial reality is what you will have to live with for the rest of your life.

In a divorce, it’s not what you get that counts-it’s what you keep.



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