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The financial impact of a divorce

| Sep 11, 2019 | Family Law |

A divorce can be a significant source of stress for Alabama residents who are going through one. However, it may easier to deal with it by thoroughly preparing for the end of a relationship as soon as possible. First, individuals will want to make sure that there is a plan in place for dealing with a marital property. This means deciding who will keep the property and who will pay for its upkeep until it is sold.

If the house is to be sold, a couple should decide how to split the proceeds or pay off any balance that remains after the sale. It is also important to consider the tax treatment of any assets or alimony payments received during or after a marriage ends. The Tax Cuts and Jobs Act removed the need for recipients to claim it as income. It also removed the ability for a payer to take a tax deduction on his or her federal return.

Individuals should also understand that assets in a retirement account could be subject to taxes as well. Therefore, their actual value could be less than the amount currently in the account. Finally, individuals should obtain tax returns from the past several years to better understand their financial position as it relates to negotiating a fair divorce settlement.

In a divorce settlement, an individual may be entitled to alimony. These payments may help people obtain the money needed to support themselves after a marriage ends. People can learn more about applicable divorce legal issues from their family law attorney.