Going through a divorce will not be an easy process, but the situation becomes even more complicated and nuanced when there are high value assets involved. For instance, married couples who own a lot of real estate together may be in for more of a battle than they realize. People often find that real estate is difficult to value and difficult to divide.
Let’s take a moment to learn what to expect from a real estate-focused divorce and how to prepare. In the Bay Area, the marital home is often a high value asset that must be divided. Divorcing spouses should consider how they’re going to file their taxes for the year when they’re deciding on if and when to sell the house because there are different tax implications if they’ll still be filing jointly, or as separate households. For starters, the existence of marital tax breaks are a strong argument for selling the house before the divorce is finalized, rather than buying one spouse out and keeping a large, expensive house. If you sell while you’re still married, you may be able to avoid paying capital gains tax because you can exclude up to $500,000 of the proceeds as a married couple. However, if you buy out your spouse and keep the expensive property, it’s a different story. Your ex will avoid paying capital gains tax on any home equity received because it’s part of the divorce settlement. But when you’re finally ready to sell the house, you’ll probably have to pay some capital gains tax if your net proceeds exceed $250,000, which is the exclusion limit for single filers. You’ll also need the help of a certified tax specialist with divorce tax experience to help you navigate how mortgage interest and real estate taxes will impact your divorce. For example, if your divorce is scheduled to finalize in December, it may make sense to delay until January 1st. This is because the IRS looks at your marital status at midnight on December 31 to determine your household status for the year. So if your divorce is finalized in December, you’ll need to file as a single, head of household for the whole year—even if you were married for most of that time. If you wait just a day or two to finalize in early January, you can take advantage of the marital tax breaks one last time.
Real Estate and Divorce
While all situations are different and nothing is completely concrete, generally speaking real estate acquired during marriage is divided equally among parties during a divorce. Property is often divided equally regardless of who earned the assets or debts involved.
That said, these things can be influenced in certain directions based on a number of criteria including income, time married, causes of divorce, and other various reasons. Divorce will be different for everyone, but most will still have to go through the processes of listing all assets and dividing them up. This is where having a good divorce lawyer can come in handy.
At Silva & Associates, we are experts in divorce law and will work with any of our divorce clients to ensure that their property and real estate ventures are divided best in their favor. To get a better understanding of what we can provide and how we can help you, call our team today so we can get a better understanding of your specific situation.
Divorce and New Money
Whether you are a financial planner, a real estate mogul, or in some other lucrative business, if you have a lot of money — especially new money, not generational wealth – it is vital to plan for a divorce. Even if you think there is no chance it will happen, it is always better to be safe than sorry.
Money is the leading cause of stress in a relationship. The more you earn, the more trouble can brew between a couple, some divorce lawyers say. Overall, divorces tend to pick up, rather than decrease, in periods of economic growth, when incomes rise across the board, according to the American Academy of Matrimonial Lawyers. And if you thought there was friction in your relationship over finances, just wait until you are dividing everything up!
If you want to learn more about what to expect during a divorce and how you can plan for one, call our team at Silva & Associates today.
Divorce and Old Money
Old money refers to people that come from generational wealth. Oftentimes, those who come from generational wealth are in line for or have already received an inheritance. If this is the case, it should be noted that inheritance is considered separate property in California. However, to keep an inheritance separate, you will need to avoid commingling your marital assets with your inheritance. For example, if you deposit an inheritance into a joint bank account, your inheritance may now be considered marital property. While it may seem okay to do this at the beginning of your marriage, it could have consequences later in the event you do decide to get divorced. If you are planning on getting a divorce and expect to receive an inheritance during the divorce process itself, keep that money separate from your other marital assets. Avoid placing the inherited funds into a joint checking account or using them to pay for marital property such as your mortgage on the family home. Instead, deposit the inheritance into a separate bank account that is yours alone. Also, to prevent future complications, do not pay off marital debts with any funds from this inheritance. Keep proof of separate assets and funds. To maintain your inheritance(s) keep records of all assets, property, and bank statements that can prove your inheritance is separate property. Maintain separate accounts.
While the overall divorce rate has flattened for most age groups, there is one segment of the population where divorce rates are actually increasing – older Americans in long-term marriages. Generally, divorce among old money individuals are often considered gray or late life divorce, i.e. divorces involving spouses over the age of 50. While divorce rates tend to go down as people age, they can still happen — just look at Harry Macklowe, the New York City real estate investor who got divorced after nearly 60 years of marriage. And, in these cases, there are often more assets to be divided up, including joint bank accounts, marital property, credit cards, and more. In Macklowe’s case, the divorce cost nearly $2 billion. In a gray divorce, there are a number of critical issues you need to be aware of so your divorce doesn’t go sideways. If you don’t want to waste money or time on your divorce, or add stress to your life, you should go with an experienced attorney to get the best result.
Divorce Help with Silva & Associates
If you are looking for a divorce lawyer to provide assistance and legal advice for your situation, our team of legal experts at Silva & Associates can give you the help you need. Whether the situation you need help with a high-income divorce, filing for legal separation or help with something more specific like child support, our team is here to answer any questions you may have regarding the process.
Give us a call today, or take a moment to fill out our contact form.