On behalf of Stange Law Firm, PC posted in divorce on Wednesday, September 27, 2017.
Missouri couples who are getting a divorce will need to divide shared property, but there are common errors many make at this stage. For example, a person might decide to keep the home while the other person keeps an asset that has an equal value such as a brokerage or checking account. However, the upkeep of the house is likely to be much more costly than maintaining a more liquid asset. Furthermore, a person might even find that it is not possible to maintain the house on just one income.
Another error is not understanding the tax implications of certain types of property division. For example, one person may take a retirement account while the other takes a checking account of equal worth. The issue here is that the person with the retirement account cannot take out cash without penalties until reaching a certain age. It is also important to understand when there are rules around dividing a retirement account. In order to split a 401(k) without penalties, a person will need a qualified domestic relations order and must roll the distribution into an individual retirement account within a certain time frame.
If one person pays alimony or child support, the ex-spouse should take out a life insurance policy on that person. This helps protect against the loss of those payments.
In a high-asset divorce, property division may be even more complex. For example, one or both people may own a business. It might be necessary to decide whether to sell the business or if one will be a shareholder or co-owner of the other’s business even after the divorce. It might be necessary to divide investments, multiple properties and collections. A person considering a divorce may want to first talk to an attorney about finances and possible outcomes of property division.