Divorce can often be difficult. When high net worth people are involved, that can be even more true. Couples in Illinois who are ending their marriages need to be careful. It can be easy to fall into some costly mistakes when dividing assets. Avoiding common pitfalls isn’t hard, though, with some awareness and good advice.
Understanding value
During a divorce, one of the goals is to divide the property and assets as evenly and fairly as possible. Along with child custody, this can be one of the most fraught areas of family law. Sometimes, couples don’t understand valuation properly. This can leave them with additional expenses when all is said and done.
For example, if someone receives stocks in the divorce, their value will fluctuate with time. The recipient will also have to pay taxes on any capital gains. So in the long run, the trade-off may not be equal to the person who walked away with cash or a different asset.
Retirement accounts
Often, retirement accounts are one of the biggest things to be divided during a divorce. Typically, the division is ordered by the court. Still, prematurely withdrawing funds from an account like a 401(k) or 403(b) can also come with a large tax penalty. In some cases, it can be a better idea to arrange a trade-off. Sometimes, it can be better to negotiate letting go of the house and keeping your full retirement account.
In any divorce, it’s important to seek out an experienced lawyer. Your lawyer will also likely refer you to a financial planner or other professional. Making a plan for your financial future after the split is important, as is understanding what you’re likely to receive and how it will affect your taxes.