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Liquidating Your Assets During Divorce

LadyJusticeRings

Couples who decide to get divorced in Florida are required to divide all of their marital property, or property that was acquired by either spouse during the marriage. In some cases, this involves one spouse retaining ownership of certain assets, while giving up ownership of others. It is also not uncommon, however, for divorcing parties to decide to liquidate their assets and then divide the funds that they receive in exchange. While this can simplify the property division process in some ways, it can also make it more difficult, so if you and your spouse are planning on filing for divorce and you have questions about the pros and cons of liquidating your assets, please contact our dedicated property division legal team for assistance.

What it Means to Liquidate Your Assets

 Liquidating one’s assets during divorce essentially means that the parties in question have agreed to sell all of their property, divide the funds they receive in exchange, and then use those funds to transition to post-divorce life. While this may sound simple in theory, it can actually be a complicated process, especially when it comes to intangible assets. A couple who had a 401(k) account, for instance, and who decided to get divorced, could be tempted to liquidate the account in order to pay expenses, make a lump sum payment to one of the parties, or to share the funds. Unfortunately, taking this step can lead to an expensive tax bill the following year in addition to a penalty for those who are under the age of 59 and one-half years old, as these individuals are required to pay a ten percent penalty to the IRS for withdrawing early. Couples who choose to transfer property to each other instead of liquidating their assets, on the other hand, will avoid incurring these penalties and tax payments.

What You Should do if You Decide to Liquidate Your Assets

 Liquidating assets is not always a bad thing. In fact, it can be quite successful for couples who do not own significant property or who choose to liquidate only one or two assets. For instance, selling the family home and splitting the proceeds is a good way to ensure that both parties receive a fair share of the asset, while also giving individuals a fresh start. However, those who do choose to liquidate one or more asset should consider a few different factors before actually doing so. Divorcing couples who have decided to sell their marital home, for example, should learn as much about that asset as possible, including how much the home cost, the value of any improvements made by the couple to the home during the marriage, and what the capital gain would be if the home were sold. Having one’s assets appraised is also an important step that divorcing couples should make, as the results can help guide them when deciding whether or not to sell an asset.

There are also a few things that Florida couples should avoid during the property division process, including selling an asset before assessing its market value and failing to account for capital gains exclusions and other tax obligations.

Contact an Experienced Florida Property Division Attorney

 Please call 954-945-7591 today to speak with dedicated Fort Lauderdale property division lawyer Sandra Bonfiglio, P.A. about whether liquidating your assets is in your family’s best interest.

https://www.sandrabonfiglio.com/listing-your-assets-debts/

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