There are so many things to keep track of in a divorce that it can be easy to forget what’s important. It seems like each area has its potential issues and problems that estate planners have to address. Take asset division, for example. If you forget to consider capital gains tax liabilities on a valuable piece of property, you could be in serious trouble.
To keep you organized with your asset division proceedings, we’ve shared a checklist.
Don’t forget this list during your property division
This checklist isn’t complete, by any means, but it’s an excellent way to double check that you haven’t forgotten the most important issues to address during your asset division:
Equity in home: Your home may have a great deal of equity invested into it. Regardless of who plans to keep the home, the value of the equity in the home needs to be factored into the equation.
Other real estate property: Do you own other real estate in addition to your home?
Home furnishings: You’ll need to decide who keeps the couch, the bed, the dining room table and all your other home furnishings.
Business assets: Do you or your spouse own a personal business? This business could be divisible in your asset division process.
Professional practices: Are you a doctor, a psychologist or have another professional practice? You’ll need to include these, too, but they’re handled differently than another business.
Professional degrees: If you or your spouse completed a professional degree while you were married, this could affect your asset division process.
IRAs and 401(k)s: Your retirement benefits and savings accounts, which will probably be in your or your spouse’s individual names, will be divisible if they were grown and saved during the course of your marriage.
Motor vehicles, motorcycles and recreational vehicles: It doesn’t matter who drove the vehicle. If it was acquired during your marriage, you’ll need to divide it.
Personal property: It’s important to determine which property you owned or accumulated prior to your marriage as it could be immune to the asset division process.
Homemaker compensation: Did you or your spouse contribute to the family as a homemaker? This could affect asset division.
Hidden assets: It’s unfortunate when this happens, but sometimes one spouse will conceal assets during a divorce. Did this happen in your case?
Investment accounts: Non-retirement investment accounts that contain funds accumulated during marriage will be divisible.
Debts: Debts accumulated during marriage will also need to be divided. However, a spouse who was reckless with debt might be asked to assume ownership of a larger share of the debt.
Tax liabilities: Determine any and all current or future tax liabilities associated with the property.
Liquidity: How difficult or easy will the different property be to sell?
Protect your asset division rights
The three most important aspects of asset division are (1) make a list of all divisible property, (2) know the value of each asset and/or liability and (3) know the value of all the assets, including the tax liabilities, to determine how to divide them fairly. An in depth understanding of Pennsylvania tax law will help you navigate these issues carefully.