Michigan is one of 41 states in the country that follows the laws of equitable division for divorce purposes. Property division in Michigan does not have to be exactly equal but simply fair. Quite often, divorce settlements are both fair and equal in value but that is not a requirement of the law nor does it always happen. Whether a divorce includes simple property division or complex property division, there can be many challenges associated with such decisions.
Once the identification of marital property and non-marital property is made, the delineation of how to divide all assets and debts must be made. Retirement accounts can be one of the most complex asset types to transfer as the laws governing when and how such funds or ownership can be transferred without severe tax penalties are extremely strict and precise.
The division of most other assets, which also includes bank accounts, can be handled without either spouse being assessed taxes at the time. However, that does not mean that there are no tax implications that should be considered. The opposite is actually true. Assets that may appreciate and eventually be sold will then pose tax responsibilities upon the then-owning spouse in sole. A recent article describes this in detail and warns people facing a divorce to keep in mind that cash assets or those that will not appreciate greatly may, in fact, ultimately be worth more down the road.
Any divorce could potentially include a complex valuation of either current or future worth. Such topics can be good reasons that you may wish to consult with an experienced divorce lawyer before finalizing any agreement either with your soon-to-be-ex spouse or his or her representative. Taking the time to review the assets in more depth can save you money down the road.
Source: The Wall Street Journal, “What’s even worse than divorce? The taxes,” Bill Bischoff, December 3, 2013