What Happens to Investment Accounts in a High-Asset Divorce?

 Posted on March 30, 2021 in Uncategorized

When spouses need to divide their marital property as part of the divorce process, certain types of assets are more difficult to distribute than others. Cash held in checking and savings accounts is usually the most simple, as it has a clear value and can be easily accessed. On the other hand, businesses, homes, and other real estate property can be some of the most difficult, due to the importance of determining fair market value and finding a buyer or somehow allocating the property between the two spouses. Investment accounts tend to lie somewhere in between, and there are important considerations that both spouses should keep in mind in order to minimize losses.

Considerations for Dividing Investment Accounts

Investments are an important means of wealth preservation and growth for many couples, and the division of these assets can have major implications for both spouses’ short-term and long-term financial goals. In order to protect your finances as much as possible in your divorce, you may need to consider all of the following:

• Uncovering hidden investments - All investment accounts containing marital assets must be included in the division of marital property, but in some cases, one spouse may have made investments that the other is unaware of. If you suspect your spouse is hiding assets, hiring a forensic accountant and taking advantage of the discovery period in the divorce process can help you find them and prevent you from leaving the divorce at a disadvantage.

• Addressing fluctuating values - Some kinds of investment accounts, like money market and mutual funds, may remain relatively stable over time, but even minor fluctuations can have a significant impact on the equitable distribution of the marital estate. Higher risk accounts like those containing stock investments may be even more volatile, and in the case of employee stock options, it can be very difficult to determine the present value. Rather than attempting to divide investments based on their financial value, it may be possible to work with your account manager to divide the number of shares equitably between you and your spouse. This may also help you avoid having to sell shares at a loss during a market downturn.

• Minimizing capital gains taxes - Equitably dividing shares rather than selling them can also help you avoid incurring capital gains taxes. If your divorce agreement does require you to liquidate investments that have increased in value after you have held them for more than a year, you may need to plan for the expense of capital gains taxes according to the tax bracket you fall within.

Contact an Arlington Heights High-Asset Divorce Attorney

Dividing investments of any kind in a divorce may lead to unexpected complications, but with a knowledgeable Rolling Meadows property division lawyer on your side, you can develop an effective strategy to protect your interests. For a free consultation, contact Cosley Law Office today at 847-253-3100.

Sources:

https://www.fidelity.com/life-events/navigating-finances-during-divorce/what-you-need-to-know-about-splitting-assets

https://www.finra.org/investors/insights/6-tips-managing-your-investments-through-divorce