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Understanding divorce and taxes is critical early on

The idea of getting divorced can understandably be hard to process emotionally. However, the financial aspect of divorce can be just as challenging to navigate, especially with regard to determining the tax consequences of certain moves. Here are some important points to consider before moving forward with a given property distribution decision in Utah.

First, perhaps two people who are going through divorce have a traditional Individual Retirement Account and a Roth Individual Retirement Account. Each account has $50,000 in it. So, does this mean that both are worth the same thing? The short answer is no.

The reality is, the traditional retirement account has not yet undergone taxation. Thus, the person who ends up with this account could lose as much as 35% of the cash in it. Meanwhile, the other account has been taxed already, so the person who gets it will not have to worry about paying taxes on the funds in it in the future.

Figuring out how to approach the division of assets in Utah can no doubt be confusing. Fortunately, a divorce attorney can help a divorcing spouse to figure out the best way to divide shared assets based on his or her individual financial goals. The attorney’s main aim is to help the divorcing party to achieve a mutually satisfactory, comprehensive and fair settlement with the other party. Of course, if no settlement can be reached outside of court, the attorney will be prepared to litigate the property division matter with the goal of achieving a positive outcome for his or her client.

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