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Taxes: Always relevant, including in a divorce

“The No. 1 issue relating to retirement assets is taxation,” says one certified public accountant.

Georgia residents contemplating or currently involved in a divorce proceeding might want to closely ponder that statement.

The obvious reason why: Any division of assets in a divorce that results in taxes creates a windfall for the government and a loss to the recipient. That can be especially relevant in a high-asset divorce.

And that is something to be avoided to the fullest extent legally possible.

An experienced divorce attorney who is fully knowledgeable about retirement accounts and their potential distribution in a marital dissolution can be a strong ally and valuable font of information to a divorcing person involved in a marriage featuring one or multiple retirement accounts.

The reason why: There are rules and procedures for transferring retirement assets in a divorce. Noting and duly adhering to them results in expectations concerning property division and amounts to be transferred being fully realized. Not paying sufficient attention to them can severely undermine those expectations.

The central aim in any transfer of retirement assets -- whether an IRA, 401(k), company pension or other source of money -- is to clearly present to the government that the transfer is pursuant to a marital dissolution and, by law, not taxable. Ambiguity on this point can have jarring consequences.

An experienced divorce attorney well grounded in asset distribution matters knows well the tax considerations that loom in transfer arrangements. Working with a family law professional can help a divorcing spouse avoid tax payments while fully complying with state and federal laws.

Source: Fox Business, "How to split up retirement assets in a divorce," Marilyn Bowden, Sept. 16, 2013

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