In many complex divorce cases, the issue of how property and assets will be divided is one that needs to be considered and negotiated very carefully. Tax considerations in a high-asset divorce, such as capital gains and gift taxes, can end up eating a large portion of your settlement if the division is not done correctly.
Even if the gain or loss does not take place immediately following the divorce, the impact will be felt in the future when the asset or property is disposed of.
All real estate, as well as any funds in bank accounts, retirement funds and stocks are all included in the marital estate. Each of these items is added up to come up with the total worth of the estate. However, it is important to not look at each of these items at face value when trying to determine how these assets should be divided.
Here is a good example of how capital gains can affect the actual worth of an asset: An investment account that is worth $500,000 is part of the marital estate. However, the original value of that account was $100,000. That leaves a gain of $400,000 that capital gains tax will have to be paid on. The marital home is also worth $500,000. There was a down payment of $250,000 put down on the property when it was originally purchased. The gain on the house is $250,000 that capital gains tax will need to be paid on. Even though both items are worth $500,000, the spouse who gets the house will pay less in capital gains tax than the spouse who gets the investment account.
It is important to note that transferring property to an ex-spouse as part of the divorce settlement does not create either a gain or loss and is not taxable.
If you are involved in a complex litigation involving tax considerations in a high-asset divorce, it is important to have a knowledgeable Fairfield County divorce attorney representing you in what can be very contentious and complicated negotiations.