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Things to consider when splitting investment accounts during a divorce

On Behalf of | Apr 19, 2021 | Property Distribution

Some people living in New Jersey have already learned the hard way how financial conflicts can impact a marriage. But these conflicts will often not end with a divorce filing. The weeks and months leading up to a divorce becoming final often include the division of investment accounts shared during the marriage. Divorcing spouses need to understand a few things about these accounts and how they pertain to divorce.

Marital property

Investment accounts opened during a marriage are marital property. Each spouse possesses the rights to a portion of the marital property accumulated during the marriage. But divorcees should know that investment accounts they opened before getting married are not subject to marital property distribution.

Equitable distribution

Equitable distribution regulations apply to investment accounts determined to be marital property. But divorcees should know the word equitable is not a direct synonym for equal. Several factors become relevant for determining what percentage of investment accounts will go to each spouse.

Tax implications

Divorcees should consider the tax implications for any decision made regarding the division of investment accounts. For example, selling off securities to solve a property division conflict can trigger unwanted tax liability. These liabilities can become a big problem for one or both of the divorcing spouses.

Retirement accounts

Retirement accounts are marital property and become subject to the asset division process when a divorce happens. Many divorcing couples include specific language in a divorce agreement regarding the division of retirement accounts. Dividing retirement accounts can become more complicated than other investment accounts because different rules and tax responsibilities can apply depending on the type of retirement account divorcees divide.

Individuals involved with a divorce will need to pay close attention to the equitable division of marital property to protect their financial future. A divorce attorney may be able to answer questions about marital property division.