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Investments and property division in a divorce

| Nov 5, 2019 | Divorce

When North Carolina couples are going through a divorce, they may have investment accounts they need to divide. This can be a complex process, and they may want to work with legal and financial professionals, such as attorneys and financial planners.

A person who was not involved in the financial side of the marriage can be at a disadvantage during the divorce. If this is the case, that person should make sure to get information on all assets and how to access them. When deciding whether to sell assets and split the proceeds, people should keep in mind that this could incur taxes or penalties with some investments. For example, there could be penalties for leaving an annuity early and capital gains taxes on the sale of securities. In some cases, keeping an investment and dividing the shares may be the better solution.

Even dividing a retirement account can be complicated. For some, such as a 401(k), it is necessary to get a court order called a qualified domestic relations order. To avoid taxes on IRAs, it is necessary to get a divorce decree and a new IRA that the money can be rolled into. Some retirement accounts may still be taxed on withdrawal.

There are other assets that could cause complexities in property division. If one person has a business, the other spouse might be able to claim a portion of it even if that spouse never worked for it. Many divorcing couples share a home, and dividing this can be more difficult than it appears even if they agree that they will simply sell the house and split the proceeds. For example, if the house does not sell immediately, they must decide who will pay for its upkeep.