Dividing assets in an Arizona divorce is rarely simple – but when significant wealth is involved, tax consequences can dramatically affect the outcome. Many spouses work with a Chandler divorce lawyer or Chandler family law attorney to ensure that what appears to be a fair settlement on paper does not create unequal tax burdens after the divorce is finalized.
Arizona’s community property laws require a fair and equitable division of marital assets. However, failing to account for taxes can distort what looks like a 50/50 split, leaving one spouse with a disproportionate financial obligation.
High-net-worth spouses often hold diverse assets, including real estate, investment and retirement accounts, businesses, and other financial holdings. Under Arizona’s community property laws, spouses must make full financial disclosures and perform valuations of their marital assets and then divide and distribute them as close to 50/50 as possible, or in a way that’s fair and equitable to both spouses. They may agree on the details of the division in a settlement agreement with the help of forensic accountants and professional mediators, or bring their disputes to court for a judge to decide.
One important consideration is each asset’s tax liabilities or benefits.
In general, divorce attorneys in Arizona consider the dissolution of marriage process for spouses with financial holdings of $1 million or more as high-net-worth or high-asset divorces, requiring more extensive financial forensics, a lengthier discovery process, and considerable tax implications.
Divorce attorneys consider the divorce process for spouses with total assets between $100,000 and $1 million as sub-high-net-worth divorces, and spouses with $5 million or more in total assets are considered very high-net-worth spouses with complex asset division and considerable tax implications to factor into asset division decisions.
Spouses with complex financial holdings and high-net-worth assets face complicated tax implications for each asset transfer. An experienced high-net-worth divorce lawyer in Arizona consults with financial forensics experts and tax professionals when considering the tax implications when advising a client on the divorce settlement process. Common tax implications include the following:
During an Arizona divorce, considering how taxation affects both asset value and spousal support calculations is a crucial aspect of the discovery process to protect each spouse’s long-term financial interests, ensure the accurate division of diverse financial holdings, and ensure that each spouse meets their tax obligations.
