Important financial aspects of divorce

On behalf of Stange Law Firm, PC posted in Family Law on Wednesday, November 7, 2018.

There are a number of financial elements Missouri couples need to keep in mind when they are ending their marriage. For example, since alimony payments for divorces finalized after the end of 2018 will no longer be tax-deductible by the payer or counted as taxable income by the recipient, some couples may want to try to wrap up their divorces quickly. However, people should not rush to meet this deadline since the cost of not taking enough time could be even higher.

Older people who are getting a divorce may be concerned about dividing their retirement accounts, and this can be a complex process. To divide a 401(k), they will need a qualified domestic relations order to avoid penalties, and the distribution needs to be rolled into a recipient’s IRA. Some couples may decide to skip this altogether and have one keep the retirement account while the other keeps the home, but in this case, it is important for the person keeping the home to make sure it is affordable.

People should make sure they have a plan for health care, and older couples may want to buy long-term care insurance before the divorce is final since it may be cheaper. When calculating the value of property, people should account for things such as whether taxes will need to be paid on an asset.

Unless a couple has a prenuptial agreement, they will need to negotiate property division when they are going through a divorce. In doing so, they should keep the above points in mind. However, there are situations in which couples are unable to resolve their differences through negotiation, mediation or collaborative law, and if this is the case, they might have to turn to litigation. For example, one person might suspect the other of hiding assets, or one person may simply refuse to cooperate.

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