Knowing What Assets Are Really Worth

GAINING INSIGHT INTO THE TRUE VALUE OF YOUR ASSETS WHEN PREPARING FOR A DIVORCE, IT’S ESSENTIAL TO DISCERN BETWEEN PRE-TAX AND POST-TAX ASSETS.

Assets like IRAs or 401(k)s typically fall under pre-tax categories. As you assess the value of these assets, it becomes crucial to devise a method for determining their post-tax value. This step is vital for achieving an equitable distribution of assets. To illustrate, consider a scenario where one party possesses a $40,000 IRA while the other holds a $40,000 bank account. At first glance, a simple equal division might seem reasonable. However, the reality could be different due to tax implications.

For instance, if the individual with the IRA were to liquidate it today, they might face penalties and ordinary taxes on the withdrawn amount. In contrast, the party with the bank account may not encounter such financial repercussions. Depending on the tax bracket of the IRA holder, the actual present value could be closer to $26,000 instead of $40,000. At Thurman and Associates LLC, we specialize in guiding our clients through the complexities of various asset types, their valuation, and the associated tax considerations.

Contemplating divorce and worried about safeguarding your assets?

Our experienced attorneys are here to provide guidance. Reach out to us today for comprehensive support through the divorce process.