Tax consequences….Think a 50/50 property settlement is fair? Take the example of a divorce settlement in which the husband gets the principal residence valued at $250,000 and the wife will get rental property in South Carolina valued at $250,000. The rental is fully depreciated. Sounds fair right? WRONG! The current value of both may be equal but the tax consequences upon sale are very different. The tax burden on the rental will likely be far greater and expensive than selling the home or principal residence. Obtaining the right team of professionals to guide and review your settlement prior to signing on the dotted line is key. Lawyers know the law, however, not all of them know the financial implications of splitting property settlements.
Spend some time exploring your budget and your post divorce financial needs. Get a good budget spreadsheet and go through your checkbook and credit cards to determine what your post financial requirements will be and have your future plan in place before you finalize your divorce. Divorce is a major life transition that brings forth a great deal of emotion and stress, and may hinder one from thinking logically and hence in the best interest of oneself and family. Working with a Certified Financial Planner may sound expensive, but the consequences of not having this professional advice could cost you literally thousands of dollars in your post-divorce life. Sometimes saving a few dollars could cost you many more by not identifying the blind spots that are truly hidden. Remember: to be empowered, you have to have knowledge.
Neither LPL Financial nor its representatives or employees provide legal or tax advice. If legal or tax advice or other expert assistance is required, the service of a currently practicing professional should be sought.