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Protect your financial health during a divorce

On Behalf of | Nov 19, 2019 | Firm News

The cost of divorce in Texas is high. Not only is a divorce emotionally taxing, but it can also wreak havoc on your financial health. Often, couples end up in financial trouble during the course of a divorce. If you are comfortable with your wealth and assets, you may not think that divorce can destroy your financial life, but the truth is that it can. In fact, it is crucial that you consider ways to protect your financial health from ruin.

Be careful fighting for the house

The house may appear to be the most valuable asset you share with your spouse. It may seem reasonable to fight for an asset worth millions of dollars. The costs of divorce are already high. Ensure you prepare to undertake the mortgage and the high maintenance costs of your real estate property.

Keep track of tax penalties and where your money goes

During a divorce, you may have attorney fees, the cost of a new home and other financial considerations to replace items that your spouse may keep. With your money tied in the divorce, it may seem like a logical choice to dip into your 401(k). After all, when the divorce is over, you will be comfortable again. If you plan to borrow from the 401(k), do not forget that you have to pay taxes on that money. If you forget to withhold taxes, you may face a tax bill and a 10% penalty if you are under 59 years of age.

Tax implications are crucial to remember during a high-asset divorce. If you are in the higher income bracket than your spouse, keep in mind that you will not receive a tax break when it comes to alimony. If you want to maintain your wealth, you need to plan for the extra taxes and costs involved with the divorce.