Divorce is a financially complex process for couples of all income levels. Due to recent changes in tax laws, the financial aspects of a divorce are more complicated than ever before. It is crucial to make smart choices regarding marital assets based on one’s best financial future. Part of this includes thinking about tax implications.
One smart step is to go ahead and sell the family home, if you and your spouse can agree. This is not an easy choice, especially for parents who may want to keep the home for the sake of the children. However, selling the home can give both parties more financial flexibility in a time of adjustment, reduced income and new expenses. Tennessee couples negotiating over spousal support may want to consider using a grantor trust, in which the paying spouse will set aside money for the lesser-earning spouse, but without some of the tax burden.
The number of dependents in a family can make a significant difference in taxes. Recent changes in tax laws have changed how exemptions work, and where a child lives primarily is often the deciding factor in which parent gets the tax credit. Spouses navigating divorce proceedings may want to take the time to look at the big picture of their tax situation before making important choices that will impact the future. We recommend speaking with a tax professional about the implications of divorce on your specific tax situation.
When a person approaches a divorce with a practical perspective, it can reduce the chance of unnecessary and complex disputes over marital assets. It may help to first seek a complete evaluation of an individual’s case to understand the options available. Smart tax strategies can help a person secure a divorce settlement that allows him or her to have a strong post-divorce future.