Careful of Tax Traps Hiding in the Marital Estate

Family lawyers, be mindful of the tax traps when splitting the marital estate.

It's necessary to put all the assets on an "apples to apples" basis, or else one party may get stuck with a tax bill down the road.

For example, lets say you were to offset a cash account for $100k with a pre-tax retirement account for $100k.

At a 25% tax rate, the party taking the retirement account is taking on a $25k liability, while the party taking the cash has it free and clear.

Also be mindful of any property or securities that have appreciated significantly since purchase as a sale of those assets would be subject to capital gains taxes.

Always be sure to check for any "embedded gains" hiding in the marital estate!