Divorce rates are climbing in Missouri and around the nation, and for many couples this means that preparation for the financial aspects of the process is essential. A clear and reasonable path to a settlement and separation may be the best way to avoid conflict and give both partners resolution.
The usual divorce settlement is made between the two ex-spouses and their respective attorneys and then filed with the court. Relatively few divorces end up in litigation, but those that do often center around the division of property. If one ex-spouse chooses to stay in the marital home, then it is common for them to “buy” it from the departing ex-spouse. This means that the departing ex-spouse transfers their half of the ownership to the other in a non-taxable transfer of assets as part of the property division, and the worth of the home will be considered as credit as they allocate the remainder of the property. There will also be an income tax exclusion of up to $250,000 of the appreciation upon a future resale.
Until the divorce process is formalized, the couple will have the option to continue filing their taxes jointly. This will most likely lower the tax bill as compared to filing separately.
The assistance of a divorce lawyer can be beneficial when considering the financial side of the process and negotiating agreements. Missouri follows the principles of equitable distribution, which means that, unless the parties have been able to come up with a property settlement agreement, the court will divide marital property in a manner that it deems fair, which is not necessarily equal.
Source: Nerd Wallet, “Divorce: Making Sense of the Confusion“, J. Kevin Stophel, June 03, 2014