Individuals in Colorado who are contemplating divorce may be interested in the story of a couple seeking an amicable separation. In a recent article, a financial advisor discussed certain elements of property division that the couple should keep in mind during proceedings. Topics included difficult-to-divide assets and tax considerations.
Certain assets require special treatment when they become involved in the process of property division. One example is a couple's home. In many cases, one spouse simply transfers his or her interest in the home to the other party in exchange for other assets. This transfer has the benefit of being tax free, but if the new single owner decides to sell the property after the divorce, that person will only be given a $250,000 capital gains exclusion. That exclusion would have been doubled if the home were sold while the couple had joint ownership.
The capital gains taxes also affect other assets, which should make the division of tax burdens a central focus for an equitable divorce agreement. Capital gains tax exposure can vary between assets, so a couple may need to keep track of both the nominal value of an asset and the amount that asset will be taxed in the future during negotiations.
Even when a separation is amicable, a divorce can be complicated, especially if both parties own a large amount of assets. However, professional help can make the process a little bit easier. An attorney representing a client who is involved in divorce proceedings could help that person understand his or her rights and obligations under state law and might represent that client's interests in negotiations with the other party.
Source: Nerd Wallet, "Divorce: Making Sense of the Confusion", J. Kevin Stophel, June 03, 2014