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Understanding values of assets essential during divorce

The process of dissolving a marriage in Florida can be challenging, not just emotionally but also financially. Unfortunately, a single mistake made during the financial decision-making process can have negative long-term consequences. A common financial mistake made during divorce is assuming that two assets with the same face value are actually equal.

The reality is that different assets have different tax consequences. A retirement asset is usually a before-tax asset. In other words, before people can access these types of assets, they must pay tax on the distributions they receive. In fact, in some situations, they might also be required to pay penalties on their distributions along with income tax.

For instance, one spouse may decide to keep her $100,000 in retirement assets. Meanwhile, the other spouse may keep the $100,000 available in a money-market account. Although these assets might seem equal on the surface, they are not. When the first spouse retires in two years, she will have to pay tax on her retirement account distributions. This means that if the tax rate is 25 percent, she will end up having only $75,000 versus her spouse's $100,000 money-market funds.

The pressure to make the right financial decisions during divorce can no doubt be overwhelming. However, a family law attorney in Florida can help divorcing individuals to make prudent choices when dividing assets such as retirement funds, stocks and even the family home. The attorney's ultimate goal is to make sure that the client's financial best interests are protected long term in the Sunshine State.

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