Divorce is a life transition that no one wants to experience. The reality, though, is 50% of all first marriages, 67% of all second marriages, and 74% of all third marriages end in divorce. [1]

Most people would assume that an equitable split would involve taking all of the bank accounts, investments, pensions, etc. and dividing them in half. It’s important to remember, however, that what looks equal on paper may not really be equitable.

Anyone going through a divorce should be looking at all of the figures and how they fit into his or her life. Issues such as taxes and any possible penalties, income vs. expenses, growth or depreciation of assets, future values, etc. should be considered in order to figure out what a truly equitable split is.

For example, a non-retirement account bank savings account will not have capital gains, so if you need to access it you won’t be stuck with a bill from the IRS. On the other hand, a stock account that has gains will require you to pay either short-term or long-term capital gains tax if you need to sell stock to access your money. So, in this example, a $100,000 bank savings account will not be equitable to a $100,000 stock account that has produced gains and may also require you to pay commissions to liquidate.  

When clients who are going through a divorce come to Shard Financial, we look at all of the financial aspects of their situation. When we have a clear picture of what the clients’ assets, debts, expenses and incomes are, we are able to produce scenarios that allow them to figure out which assets they should fight for and which ones may not be best for them to keep. We have the knowledge to assist their attorneys in making sure the couple truly does have an equitable divorce.

For a free consultation please call our office at 810-714-5566.

[1] Jennifer Baker of the Forest Institute of Professional Psychology in Springfield, Missouri – www.divorcerate.org

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Margie Shard, CFP®, president and wealth advisor at Shard Financial Services, Inc. in Fenton, recently attained memberships in two organizations that specialize in a unique form of divorce and civil dispute resolution called Collaborative Practice. Read more about this alternative to traditional divorce.

 Other useful tips on divorce from the Institute for Divorce Financial Analysts: