MIAMI, Florida. The recent volatility in the stock market has many investors concerned. The New York Times reports that the recent “correction” to the S&P 500 has eliminated all of 2018’s gains. If you own stocks, you’ve likely seen a reduction in the value of your portfolio. While many experts claim that there is no cause for alarm—at least not just yet, if you own stocks and are planning to get divorced, it is important to consider how recent market changes could impact your division of stocks and your divorce.
First, it is important to remember that there is a distinction between stocks that you purchased prior to your marriage (which would be considered separate property) and stocks you purchased during your marriage. Any investments made during your marriage can be subject to Florida’s equitable distribution laws. Under this law, any property or assets acquired during the marriage must be divided in an equitable manner. This doesn’t always mean that assets will be subject to a 50/50 division. Equitable division can also get complex if you comingled assets you purchased prior to your marriage. If you have questions about what’s yours and what is shared property and assets, consider speaking to Sandy B. Becher, PA, a divorce attorney in Miami, Florida today.
If you will be dividing stocks during your divorce, it is important to consider the tax implications of this division in addition to the value of the stocks. Tax burdens can significantly impact the value of the stocks in question. For example, if stocks have appreciated in value since you purchased them, when you sell them, you may be subject to capital gains taxes on the increased value, according to Forbes. If you are dividing an IRA, 401(k), or other retirement fund that is tax-deferred, you’ll also have to pay income taxes when you withdraw money from these funds. It is important that you understand the tax implications of the financial instruments you are dividing so that your division of property is fair and equitable. How long you plan to hold on to a stock, when you plan to retire, and the projected value of the stock in the future is something your financial advisor can also help you consider.
In a volatile stock season, individuals also need to be cautious about how they formulate their divorce agreement, according to Forbes. With stocks rising and falling daily, it can be difficult to pinpoint the value of your assets. If you and your ex want to divide half the value of your stocks, you’ll need to choose a day on which to make that valuation and stick to it. In a volatile market, it can sometimes be beneficial to word your divorce agreement in such a way that makes it clear that one party will either get a certain amount of money in value or a certain percentage. What kind of wording will be in your best interests? It depends on the market and it depends on your situation. If you have questions about how to best word your divorce agreement to protect your interests, consider speaking to Sandy B. Becher, PA, a qualified divorce attorney in Miami, Florida today.
Sandy B. Becher, P.A.
201 S. Biscayne Boulevard
Twenty Seventh Floor
Miami, FL 33131