Video Summary:

Dividing a complex marital estate requires careful consideration of tax implications and the true value of different assets. Not all assets are equal—a $500,000 home and a $500,000 retirement account may seem similar in value, but the 401(k) or IRA will be taxed upon withdrawal, reducing its actual worth. To ensure fairness, attorneys use a balance sheet to assess each asset’s liabilities, tax obligations, and long-term financial impact. A knowledgeable attorney can help navigate these complexities to ensure assets are divided equitably and strategically.

Video Transcript:

When helping a client divide a complex marital estate, it is crucial to account for tax implications on different assets.

One of the simplest examples is a 401(k) or IRA. When an individual starts withdrawing funds—typically at age 72—those withdrawals are subject to taxation. In contrast, a home valued at the same amount is not taxed in the same way.

For instance, if one spouse receives a $500,000 home and the other receives a $500,000 retirement account, their values may seem equal, but they are not truly comparable. The retirement account will be taxed upon withdrawal, while the home’s value remains intact.

To ensure fair division, attorneys create a balance sheet that factors in:

• Tax liabilities on retirement funds

• Market value and liquidity of assets

• Other financial obligations tied to each asset

For retirement plans, I typically apply a 20% tax penalty estimate when calculating their actual post-tax value. This approach ensures a more accurate and equitable asset division.

Having an experienced divorce attorney is essential when handling complex financial assets, ensuring that what you receive in the settlement aligns with your long-term financial well-being.