Dividing Complex Assets in Divorce: Why Equal Doesn’t Always Mean Fair
Understanding the Hidden Tax Impacts of Property Division
When dividing a marital estate, it’s easy to assume that equal numbers mean an equal settlement. But in divorce, not all assets are created equal—and overlooking the details can cost you down the road.
Take this example: one spouse receives a $500,000 home, while the other receives a $500,000 retirement account. On paper, it looks fair. In reality, the retirement account comes with built-in tax liabilities. Once withdrawals begin—typically around age 72—those funds are taxed as income, shrinking the actual value. The home, on the other hand, does not carry the same tax burden. Comparing the two without considering taxes is like comparing apples to oranges.
That’s why, when I help clients divide complex estates—those with multiple assets or asset types—I create a balance sheet that accounts for these hidden liabilities. For retirement accounts, I estimate at least a 20% tax impact, so we can see the true value compared to other property. This careful analysis helps ensure that both spouses walk away with a settlement that’s not just equal, but truly equitable.
If your divorce involves complex assets—retirement accounts, investment portfolios, or multiple properties—make sure your attorney understands how taxes and timing affect the long-term value of what you receive. The right approach protects your financial future and ensures your “half” really is half.
