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The types of assets accepted in property division is important

Along with the emotional toll of divorces on most Massachusetts people who decide to go their separate ways, the financial implications can be devastating if precautions are not taken. There is typically an immediate effect when one spouse moves out, creating a second household with all the associated expenses. While this can cause a setback, the worst may be to come if care is not taken during the process of property division.

Things to consider include the fact that a seemingly equal share of the assets may not be an equitable division. One spouse may be left with an asset that is not easily disposed of, causing problems when he or she has a cash flow problem. The tax implications can also play a significant role in the fairness of the allocated portion of assets. While a $100,000 retirement account may seem equal to the other spouse's $100,000 brokerage account, income tax will be payable on any withdrawals from a tax-deferred retirement account.

Further tax implications that could be overlooked are those that are payable on continuing income. While the party paying alimony can use it as a deductible expense, the spouse receiving alimony will have to declare it as an ordinary income that is taxable. However, child support is treated differently and will not be taxable.

The manner chosen to proceed with the divorce can also have a notable financial impact. Massachusetts couples who can sit down and negotiate settlements might save a lot of time and money. Although not suitable for all, many couples choose to utilize the services of a qualified divorce mediator to facilitate negotiations to help them deal with property division and other contentious matters. A divorce mediator may not provide legal advice, and each party may use the support and guidance of his or her own divorce attorney during mediation to protect his or her rights and provide valuable input.

Source: TIME, "Keep a Divorce From Killing Your Finances", Jill Schlesinger, Accessed on May 5. 2017

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