A divorce can have a significant impact on your finances both now and in the future. New York is an equitable distribution state, which means that marital assets are divided based in large part on what the court believes to be fair. Let’s take a look at what might happen to a marital home, a retirement account or a brokerage account after your marriage comes to an end.
You have a right to pursue ownership of a marital home as part of a final divorce settlement. However, this might not be a good idea if you can’t afford to pay the mortgage and maintain the property. Furthermore, there is no guarantee that you would be approved to take over the current mortgage or obtain approval for a new loan.
A traditional retirement account is funded with money that hasn’t yet been taxed, while a Roth account is funded with money left over after paying your taxes. However, withdrawals from a traditional account are taxed at your income tax rate at the time that they are made. Conversely, withdrawals from a Roth account are not taxed, which means that this type of account may be more valuable in the long run.
If you and your spouse divide securities held in a joint brokerage account, you can generally keep your cost basis and holding period. However, if those securities are sold as part of the divorce settlement, you may have to pay capital gains taxes on any profits realized.
If you think that your marriage is likely coming to an end, it is a good idea to speak with a family law attorney. An attorney can tell you more about property division laws and whether you might be entitled to alimony or other financial resources.
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