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Common errors to avoid in asset division

When New Jersey couples get a divorce, they need to be aware of the value and nature of their assets during property division. This means keeping in mind that tax penalties and other considerations may make some assets worth less than their apparent value when compared to others.

For example, a person might want to keep the house in exchange for another asset such as a retirement account. However, the person may not consider the cost of maintenance in looking at the value of both assets. Furthermore, the maintenance may be unaffordable on a single income.

There are some possible disadvantages with keeping a retirement account as well. For example, if the checking and 401(k) both have the same amount of money in them and one person gets each, the person with the checking account can withdraw money without a penalty. However, money withdrawn from the 401(k) is taxed as regular income. Another error with a 401(k) is failing to get a qualified domestic relations order to divide the account. This court order is necessary to take money from the 401(k) without a penalty.

Property division in a high-asset divorce may be a more complex process. There may be real property, business assets and offshore accounts. Art collections might need to be appraised and sold, divided or given to one spouse in lieu of another asset. Even if the property situation is complex, a couple may still be able to negotiate an agreement with the assistance of their respective attorneys. One advantage of negotiation is that it allows the couple to shape the final decision in a way they would be unable to do in litigation.

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