Get Your Fair Share in a Divorce
Image(s): FreeDigitalPhotos.net
June 29, 2010 - 3:01 pm
MP Dunleavey
For worse, not better: Divorce is rarely kind to women. But you knew that already.
But women - even wealthy women like Tipper Gore - face special risks when a long-standing marriage falls apart.
"The biggest assets later in life are usually the couple's home and retirement accounts," says Jeffrey Landers, a certified divorce financial analyst in New York.
After years of saving and building household wealth together, how do you a) get your fair share now and b) protect your future security?
Yours, mine, ours
The first thing is to get clear on marital property laws in your state (covered here).
Most states have equitable distribution laws, which means that there is a "fair and equitable" distribution of assets. Alas, says Landers, that doesn't mean your share will be fair.
For today, we'll focus on the true value of household assets. Retirement, a complicated calculation all its own, is next week.
Landers gives the example of an investment account worth $500,000 versus a house that's worth $500,000. They're not worth the same.
"The house has certain expenses: property taxes, fuel costs, maintenance," Landers says. "And if you sell the home, you could get hit with a big capital gains tax bill."
If you make $400,000 on the sale of your home, after subtracting the $250,000 capital gains exclusion for a single person, you would have to pay tax on $150,000. "At next year’s capital gains rate of 20%, that’s a $30,000 tax bill," Landers says.
Bottom line
You may not relate to Tipper Gore, but like millions of women, she invested decades of her life in her marriage and family. Know your financial rights so that you can recoup what you invested.
Image(s): FreeDigitalPhotos.net
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