The process of ending a marriage can certainly be complicated on an emotional level, but it can also be complex financially. Unfortunately, ill-informed financial decisions during divorce can have negative long-term implications. Here are a couple of tips for making wise financial moves during a divorce in Arizona.
As a general rule of thumb, transferring property between two divorcing individuals doesn’t typically have tax consequences. However, repositioning certain assets to generate cash flow in the future likely will have tax implications. For this reason, it is important to consider not only the values of assets but also their tax implications long term.
As an example, let’s say that two divorcing individuals have a Roth IRA and a traditional IRA. Both of these IRAs have $100,000 in them. However, that does not mean that both of them are equal. The money in the traditional account has not been taxed yet and thus will be taxed heavily in the future. Meanwhile, the Roth account has already been taxed, so the person who walks away from the divorce with this account will actually end up better off financially.
Navigating the financial ins and outs of a divorce can understandably be challenging and overwhelming. However, a divorce attorney in Arizona can provide the direction needed to make smart property division decisions involving retirement accounts, real estate, heirlooms and other potentially valuable assets. The attorney’s chief goal is to make sure that the client’s best interests are protected financially in both the short and long terms.