In a high asset divorce in New Jersey, which can include a divorce from bed and board, one of the most important considerations a Marlton resident must take in to account are the tax implications of the divorce and, specifically, the ensuing division of property.
While this blog has touched on the tax consequences of divorce-related topics like alimony and child support, taxes are also important to consider when it comes to dividing property.
The settlement agreement or divorce decree itself, which will set out the terms of how a couple with a lot of wealth will divide property, usually will not have significant income tax consequences because divorce judgments are, in general, not taxable events. However, this does not mean a person can give taxes no further thought.
For instance, a person should think carefully about their tax bills before agreeing to take one marital asset as opposed to another, as different types of property can have different tax implications.
Take, for example, a couple’s investment property. The person who gets that piece of property will have to think about the taxes he or she will pay on rent income as well as capital gains tax should the person decide to sell the property. On a slightly different but related note, the person receiving the property should also be fully prepared to make property tax payments on it.
When a couple has a lot of assets to divide, the tax consequences to each person can be significant depending on how the couple decides to split the property. This adds an extra layer of complexity to a divorce or bed and board divorce that may require an experienced family law attorney to help sort out.