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Tax planning and divorce - how do they fit together?

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Some of our Maryland readers may find themselves asking at some point, "Is there ever a good time for a divorce?" Well, for some people, particularly those who are anticipating a high asset divorce, the answer might just be "Yes - next year."

A marriage can breakdown for any number of reasons. One spouse or the other might take a definitive step which can't be overlooked by the other, such as infidelity. Or, couples may simply "grow apart." However, some couples may stay together regardless of the changes in the feelings they have toward one another, because there are serious financial implications if they don't.

For example, many couples who have significant assets, such as real estate, offshore accounts or retirement plans, may find that there are substantial tax-related implications involved in a divorce. The couple - or the one spouse in the couple who is considering a divorce - may decide to stay together for the sake of their bottom line until there is a better time to split. Other couples may have property which could either grow or depreciate in value significantly over a period of time, therefore making it more important in terms of asset valuation to stay together.

When everything is said and done, there are numerous reasons why couples split, and just as many reasons for why they stay together. Contemplating divorce is not only an emotional battle, it can have a substantial effect on the wealth a couple has accumulated through years of marriage. When someone is thinking of a divorce which will involve a significant amount of marital property, getting the best information on the right - and wrong - approaches to the divorce process can be well worth the time.

Source: Reuters, "Considering divorce? Good reasons to wait for January," Geoff Williams, Dec. 21, 2012

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