1. Home
  2.  | 
  3. Divorce
  4.  | Tax Considerations in High-Asset Divorces

Tax Considerations in High-Asset Divorces

High-asset divorce cases can present complicated and unique issues. It is important to be fully transparent with your attorney so that they can competently advocate for you and best protect your assets during your divorce. One of the biggest challenges in high-asset cases can be property division: Ohio courts generally divide marital assets equitably (although not necessarily equally) between parties, or in accordance with a prenuptial agreement. Property division can have vast tax ramifications — ramifications that often go unnoticed during the proceedings, only to appear after the divorce is finalized.

For example, the transfer of title from one spouse to another is a non-taxable event, based on 26 U.S. Code § 1041. However, if the property’s title is held by a business or a trust, then that title transfer may be taxable even though it is part of a divorce proceeding. Investment accounts can also be tricky to divide equally when the tax burden is considered. For example, shares from the same company might have different associated gains and losses if they were acquired over time across multiple purchases. If the stocks were divided purely based on quantity, without factoring in gains and losses, one party might end up having to pay much higher capital gains taxes even though both parties received an equal number of shares. Even failing to properly decide how future tax claims and deductions will be handled or allocated can cause expensive problems and may require the parties to consider issues such as capital losses or net operating losses well in advance of their next filing.

Property division can have serious and potentially unforeseen tax ramifications if each party does not have a competent advocate who is skilled in navigating high-asset divorce cases. Attorney Zachary Smith specializes in complicated, high-asset divorce cases and knows what strategies are needed to avoid these pitfalls.


Member of the Findlaw Network, Links to Findlaw Directory