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How to keep tax planning and divorce separate

Divorce is emotional, and that emotion often interferes with the efficient distribution of the marital estate. Forensic accountants can help by locating all the assets and liabilities for marital division. These specialized certified public accountants can also investigate and analyze financial evidence and interview parties to help prevent fraud. In their tax advisor roles, CPAs helps the parties of the divorcing couples to divide the marital assets orderly and with the least tax burden.

Any property that is acquired by the spouses during the marriage is generally marital property. Some retirement plans that qualify under the Employee Retirement Income Security Act are not subject to state laws that govern that govern the division of marital property. The courts determine on what is fair and equitable in 41 states for the division of assets. In the other 9 states, the separate property brought into a marriage will remain separate property as long as it remains segregated and identifiable.

When there are possible tax liabilities associated with property division, CPAs can help soon-to-be ex-spouses determine how much they owe due to the divorce so they won't be surprised come tax time.

When many people get divorced, it's easy to simply consider the immediate concerns, such as child custody, support, alimony and property division. However, the tax implications can be bigger than you might anticipate. By enlisting the help of a CPA, you will be able to determine your tax liability long before a tax bill will come due.

An attorney who is experienced in divorce and tax liabilities can provide more information and references for experienced CPAs and other financial advisors in your area..

Source: Journal of Accountancy, "Tax considerations when dividing property in divorce," Ray A. Knight and Lee G. Knight, accessed July 29, 2016

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