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Intangible assets, taxes important to consider during divorce

When going through the process of dissolving a New Jersey marriage, the parties may naturally focus first on how to divide their major assets. For instance, they might concentrate on how to address tangible items, such as the family home or furniture. They may also focus on how to split cash balances. However, intangible assets are also important to address early on in divorce proceedings.

Intangible assets that are essential to negotiate include deferred compensation, restricted stock, retirement plans and stock options. If these assets were acquired while the parties were married, they may be deemed marital property and therefore are subject to equitable distribution. However, these types of assets are often placed on the back burner either because they are often complex and the necessary steps for dividing them are usually complicated.

With each having the right legal guidance, they can tackle the division of these assets with more confidence, focusing not only on the process of dividing the assets but also on the tax consequences of their decisions. One spouse may suggest that both parties keep different types of retirement investments. However, what may appear to be a wise move now may not be beneficial tax wise in the future.

If the parties are able to see eye to eye, they may find divorce mediation or direct negotiations advantageous. Using alternative dispute resolution as opposed to formal litigation in a New Jersey courtroom, they can work toward a resolution that satisfies both parties. Otherwise, a judge will have to get involved and make the final decisions for them regarding how to divide their property.

Source: Forbes, "Divorcing Women: Don't Lose Out On Funds You're Entitled To", Jeff Landers, Dec. 7, 2016

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