Dividing property in a divorce requires more than splitting everything down the middle. A high-net-worth divorce can have far-reaching financial consequences, including the tax implications of asset division in Syracuse. Understanding how taxes factor into property division in a divorce is critical to protecting your financial future.
New York follows equitable distribution laws. That means dividing marital property fairly; it may or may not mean dividing property equally. While the goal is fairness, an equitable distribution may result in unexpected tax obligations for one or both spouses. A divorce attorney from our firm may explain the tax ramifications and help structure an agreement that minimizes your liabilities.
Transfers made incident to a divorce are not recognized as gains or losses for federal tax purposes. Not all asset divisions are created equal, and the way property is divided may lead to differing tax burdens later on.
Assets that may appear equal in value may carry different tax consequences. Examples of these assets include:
When a retirement account is divided using a Qualified Domestic Relations Order, the recipient spouse may still be subject to income tax upon withdrawal, depending on the type of account. Similarly, if you take possession of an asset with a low basis (such as appreciated real estate or stock), you may incur capital gains taxes if you sell it.
Working with a Syracuse divorce attorney who understands the tax effects of dividing different asset types is essential to ensure you do not have a disproportionate burden after you finalize the divorce.
Prior to the federal Tax Cuts and Jobs Act of 2017, spousal maintenance (formerly known as alimony) was tax-deductible for the paying spouse and counted as income for the receiving spouse. This no longer applies to divorces finalized after January 1, 2019.
Now, spousal maintenance is neither tax-deductible for the person paying it nor treated as income for the person receiving it. This change may influence how you and your spouse approach property division.
Because parties often negotiate spousal maintenance in tandem with asset division, your attorney must understand how these components interact from both a financial and tax perspective. Our Syracuse attorneys work closely with financial planners and tax professionals to ensure all the implications of asset division are thoroughly considered.
In high-net-worth divorces in Syracuse, property division often involves complex financial holdings with various tax significance. These holdings may include:
These asset types require advanced valuation and a deep understanding of tax exposure. Even small mistakes can lead to unexpected liabilities that diminish your share of the marital estate. For instance, if a business is awarded to one spouse, the value may be subject to future capital gains or depreciation recapture taxes. All parties must consider these aspects during negotiations.
Our legal team collaborates with forensic accountants and tax advisors to assess the tax profile of each asset. This enables us to negotiate a settlement that reflects not only the present-day value of each asset but also its long-term financial impact.
When you are going through a divorce, it is easy to focus on the immediate outcome of who gets what. However, failing to consider the tax implications of asset division in Syracuse may lead to long-term consequences that affect your stability and financial well-being.
Our skilled divorce attorneys may be able to help you understand the complete picture of how property division would impact your taxes—now and in the future. At Colwell Law Group, we provide strategic advice and individualized attention to help you make informed decisions throughout the divorce process.
Colwell Law
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