Mistakes Men Make With Property After Divorce

In a community property state, couples may be required to divide up their assets during a marital split. Divorce property men are often willing to relinquish often include the family home in exchange for a more liberal agreement regarding child custody and visitation.

Settling Property During Divorce

Sometimes men are pressured into an unfair property settlement when their partner is pressuring them. They often fear that the wife will withhold visitation or make it difficult for them to see their kids. When there is no formal order regarding visitation or custody in place yet, this scenario happens every day throughout the U.S. To avoid giving away the store, you need to get prepared and understand the value of your assets.

Selling the family home—Men who have decided to separate from their wives often do so when they have an affair and wish to live with their new girlfriend. Some men will agree to allow their spouse and minor children to stay until the children reach a certain age. Any type of agreement should specifically define how the equity is to be determined and how it will be split when the home is finally sold.

Family business—If you and your spouse started a business together and equally contributed to its success, your partner may be entitled to half its’ value. When determining the value of the business, an appraiser will take many factors into account. Once you agree to pay your partner half this sum in the settlement, you are bound by law to do so. But what happens if an act of nature causes the business to flounder or go under? You need to make sure there are stipulations provided in your agreement that take unforeseen events into consideration.

Dividing Property and the Tax Implications

Many people don’t stop to think about how Uncle Sam’s outstretched hand will affect them financially following their divorce. Here are some tax issues to think about before signing your settlement:

• Capital Gains—If the family home has been sold as a condition of the proceedings, you may wind up paying huge capital gains taxes. This refers to the fair market value of an asset, minus the cost of it. For example, if you paid $100,000 for your house and then sold it for $200,000, the IRS would consider half of it a capital gain.

• Single vs. Head of Household Status—You may be able to save considerable tax dollars when filing as head of household if your divorce became final after 12/31 of that year. Consulting with a tax attorney prior to divorce can end up saving you a bundle.

• Retirement Accounts—The portion of your retirement plan that is considered marital property might be required to be divided with your soon to be ex-spouse. This is often done via a qualified domestic relations order (QDRO), which gives your wife a percentage of your retirement plan. She can then rollover these funds into an individual retirement account without paying any taxes. However, if this money is split without a QDRO, the IRS will treat this as a taxable distribution to you.

How a Family Law Attorney Can Help

Men are often motivated by getting on with their lives and putting the past behind them. In an effort to do this, they may be willing to relinquish assets to their spouse in exchange for their freedom. Women can be very manipulative and may promise to give their husbands more visitation time for valuable assets. Before you agree to any type of settlement, you should consult with an experienced family law attorney for advice.