New Jersey residents who are going through a divorce may find that the property division stage becomes complicated when it comes to retirement plans that are owned by one of the parties. There are a variety of different types, and there is often no way to know how evenly they may be divided until they have been closely examined.
One thing divorcing couples in New Jersey need to consider is whether they will file their income taxes jointly or separately for the last year of marriage. A person's tax status is determined as of the last day of the filing year, so those whose divorces have not been finalized as of Dec. 31 are still considered "married" for income tax purposes. There are reasons for and against filing taxes in both ways for the final year of marriage.
Divorcing people in New Jersey need to understand that the portion of their retirement accounts accumulated during their marriage is subject to division. Under the law, amounts that accrued during the marriage are considered to be marital property. Each different type of retirement account has its own rules, so it's important for people to understand the differences.
When people divorce, it is important for them to consider all of the different ways their finances may be impacted so they can take proactive steps to prevent problems. Even when a divorce is an amicable one, these financial considerations are important when people work to come to an agreement.
When a couple divorces in New Jersey, it is not uncommon for one spouse to be ordered to pay spousal support to the other spouse. The recipient of such support may feel confident that their needs will be taken care of after the divorce. However, such divorce decrees are not foolproof.
In many New Jersey divorces, one or both parties fail to appropriately plan financially for life after they become single. Not paying attention to certain matters can lead to financial disasters down the road. There are several planning strategies people may want to do.
There is a common misconception across the nation -- including here in New Jersey -- that if you are a couple with a considerable amount of assets that you also have a prenuptial agreement. Unfortunately, as some here in Englewood know, this isn't always the case. In fact, a couple might easily come into wealth later on in a marriage. By this time though it's too late to sign a prenuptial agreement and a couple might not even have a postnuptial agreement on their radar.
One of the most contentious areas of divorce is property division. This is particularly the case in high net worth divorces, where the divorcing couple is more likely to own a small business. If you are in such a situation, you are not alone, as the U.S. Census Bureau estimates that married couples own 3.7 million businesses in the U.S. Having a closely held business can raise a couple of difficult issues that are not present in most run-of-the-mill divorces. To resolve them, help from outside experts is often needed during the divorce process.
Once the terms of a divorce are agreed upon and both parties walk away from the table, the effects may not have rippled through just yet. Depending on when a high-asset divorce unfolds in New Jersey, the financial impact may be felt during the tax season. Anyone who has received or paid a divorce settlement or child support in the past year should be aware of the tax implications of doing so.
Regardless of the length of a New Jersey marriage, there will most likely be property to divide in any subsequent divorce proceedings. For those with significant assets, the process of dividing property can be particularly complex and is typically referred to as a high-asset divorce. Because of all that may be at stake, it is important to understand the distinction between premarital and marital property and how marital are typically handled in divorce proceedings.