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Divorce and finances

Depending on the state in which the spouses reside and are filing in, their property and financial division will fall under community property or equitable distribution. Knowing who will retain ownership of finances, assets, and property will make the divorce process that much easier when the times comes. Having all finances in order and accounted for, will help to divide these things with little to no hassle.

Claiming Property

When it comes time to file your Federal Income Tax Returns, any property that you own is a big factor in how your returns are handled. Deductions for property tax  and interest paid can occur. Many of these factors are dependent on which spouse retains legal rights to the property. In a divorce, only one spouse can retain rights to a single property, and what typically happens in this case is the other spouse transfers their interest in the property over to the other. When this is done, the transfer of property is considered a gift to the spouse in terms of tax purposes. This means that the spouse with sole ownership is responsible for all taxes due on that property in the event of a sale of the property or otherwise.

Transferring Property

When spouses do agree to a transfer of property there are many aspects involved. These should all be clearly listed in the marital agreement, signed and entered into by both spouses upon nuptials. The exchange of funds, such as the original equity in the property, should all be specified in the agreement, as well as the method in which the paying back of equity is to be done upon the event of a divorce.

Depending on the state that the couple resides in, divorce laws will differ, and so too will the courts decision to split property as it is usually seen as different from state to state. Having a marital agreement will make for an easy and hassle free transition of property and finances. Having this squared away prior to the marriage makes for a good understanding of the proceedings, should the dissolution of marriage occur. Always be prepared.

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