Retirement plans must be transferred according to a qualified domestic relations order and transferred directly to a retirement account of the receiving spouse, Weinstock added.
With investments and brokerage accounts, “assets may have a low tax basis and when divided, the parties should consider the built-in gains or losses associated with these assets,” said Howard Kaminsky, managing director at the Minneapolis office of CBIZ MHM. “Real estate assets will also have taxable gains/losses on disposal. Homesteads have special tax rules depending on when they’re sold, how long the parties lived in the house and [how] it’s sold.”
Beyond tax law is the home and busines a divorcing couple built through the years. Both can cause acrimony. “The business-owning spouse will sometimes play games with business finances to reduce the value,” Weinstock said. “The home is a bit easier to value but sometimes more sentimental, like fighting over the children or the dog.”
How should couples objectively divide a family business, where years ago one spouse put in long hours and one spouse, at that same time, stayed home to raise kids?
Again, the answer is common to money in divorce: a third party. “It’s critical to conduct a business valuation through an independent expert,” Colletti said.