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Keep taxes in mind when dividing assets

Going through a divorce can produce a sense of emotional turmoil in anyone. The course of your life is about to be altered to a degree that you may have never previously expected. And while ultimately the forthcoming changes are likely necessary and for the best, there are still plenty of reasons to be experiencing profound apprehension.

Often when a person divorces, financial security becomes a major concern. Even if you and your spouse have managed to accrue substantial wealth, you still must be very careful to make sure that you will have the assets and funds you need in the future. 

Since your final property settlement will form the foundation of your economic well-being, you want to find ways to maximize your share of the available assets. And one of the most important things you can do is investigate the tax implications attached to your assets and property.

For example, if you have a 401(k) plan that is eligible for division, you should understand that marginal income tax rates will be applied when you go to withdraw from that plan during retirement. On the other hand, if you have taxable accounts, they will ultimately be levied capital gains taxes, which are typically lower than the taxes assessed on a 401(k). The upshot is that a taxable account could actually be more valuable in the long run than the 401(k). Such distinctions should be clarified before you decide how you want those funds handled in your end of the settlement.

The manner in which you want to divide investments and retirement funds is just one aspect of asset division. You should be fully cognizant of what your estate is worth and how you can receive the most benefit from your settlement. But working out the details of a high net worth divorce can be a complex proposition. As such, you may want to consider soliciting the aid of an attorney who has experience working with clients such as yourself who are interested in retaining as much of their wealth as possible after divorce.

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