Splitting marital assets during a divorce in Indiana can create ongoing conflict and frustration. Couples who have invested a significant portion of their income may feel uncertainty about the future of their portfolio.
Separating investments requires cooperation from both parties. People should understand their options to determine which outcome will provide optimal satisfaction. Over time and with strategic planning, couples can implement a solution to benefit them both.
One option is for couples to evenly split the holdings of marital assets. For example, for an account with 400 shares, each spouse could keep 200 shares. Before going this route, Fidelity suggests that people examine their ability to tolerate ongoing investment risk. An individual who primarily managed the home throughout his or her marriage and is actively seeking employment following a divorce should probably not assume the volatile risks of investing.
An important note from the IRS reminds people that despite splitting their holdings with a former spouse, their cost basis and holding period will remain unchanged. These aspects influence the value of an investment during its sale or if someone choose to withdraw money from the investment account.
Selling taxable accounts
Another option for divorcing couples is to sell their taxable investment accounts and then split the money after the sale. The Financial Industry Regulatory Authority reminds people that withdrawing from or selling certain investment accounts before the date discussed in the original agreement could have financial implications. These repercussions often come in the form of taxes and penalties. Couples should assess the consequences of choosing to sell their investments before making that decision.
If a couple’s divorce is during a time of market volatility, they could lose money with their decision to sell their investments. If possible, they may choose to temporarily maintain joint ownership of their investments until market conditions improve and a sale of their investments will yield a profit.