Taxes and Splitting Up Investment Assets During a Divorce

When a couple shares their investment accounts, those assets will likely need to be split up during the asset division process in a divorce. However, splitting up assets in an investment account is not as easy as looking at the value of the investments. Couples also have to consider the potential tax liabilities or tax write-offs attached to those investments.

Spouses must factor in the tax consequences associated with large assets that they plan to split in their divorces. For example, imagine you and your spouse own a house together, and the house has declined significantly in value from when you originally purchased it. However, you own a portfolio of stocks, and those stocks have increased considerably in value.

If you sell the house, you might be able to report a loss and get a tax break from this unprofitable sale. Meanwhile, if you sell the stocks in your investment portfolio, you’ll need to pay capital gains taxes on that sale.

As you can see, to calculate the true value of your stocks, it’s important to consider the tax liabilities attached to them. The same applies to other high-value assets that might have increased in value since their initial date of purchase. When the tax liabilities are known, then you can more equally and appropriately trade these investments during the asset division process.

During complex asset division proceedings in Nevada, some couples may benefit from hiring an accountant and tax expert to evaluate their assets before finalizing the dispensation of their marital estates. Although it’s not necessary in all cases, the use of such an expert can ensure that neither spouse gets surprised by unexpected tax consequences after it’s too late to make a change.