If you have stocks, then one thing you may find is that you have to divide their value during your divorce. Unfortunately, this isn’t a straightforward process, and there are requirements that have to be met. There are costs and taxes that may be associated with selling, trading or transferring stocks.
How do you divide stocks during your divorce?
The easiest method is to sell the stocks and then divide the profits based on your after-tax proceeds. You may also split your assets into two accounts, because the Internal Revenue Service allows divorcing spouses to divide shares during a divorce. Keep in mind that those shares may go up or down in value, and that may influence how much you negotiate for.
Another option is to allow one spouse to retain the stocks and to have a clause in your divorce that allows you a percentage of the proceeds when those stocks are sold in the future. If you believe that a particular business will see a hike in its value, then that can be a beneficial option for both people.
Sometimes, people don’t want stocks during the divorce. For instance, one person may not be interested in investing in stocks and have a savings account with high interest rates instead. In that case, one person may be happy to negotiate that they don’t receive stocks but instead receive a specific lump sum payment that they can invest as they see fit.
Every case of divorce is different, so deciding what you want to do will vary based on your specific needs and goals. Your attorney can help you review your assets and work with you on your budget, so you can decide what you want to seek during the divorce and how much of your situation is negotiable.
You may also want to speak with a broker or accountant about the implications of keeping stocks or using high-interest rate savings accounts to help make your settlement last longer or support you longer into the future. Other options, like opening retirement accounts, may also help you manage these kinds of funds while addressing fees or other tax issues.