Find out the basis in your home

If you receive the family home that has a low basis, you may be liable for capital gains taxes later. This would also apply to stock accounts and other real estate. Basis does not relate to the amount of the mortgage. It relates to the amount originally invested in the property adjusted by improvements, sales costs, etc.

Capital gain on the house

The 1997 revised tax law says we can no longer roll over capital gain in the family home. The one-time exclusion of $125,000 is also gone. Instead, we have somthing even better. Now, each spouse can take up to $250000 exclusion if they have lived in the house two of the past five years.

If your house has a very large capital gain, you should consult with a CPA or a financial divorce professional to see how to handle this the best way. It is possible for both spouses to take the $250,000 exlcusion for a total of $500,000 if it is handled properly.

Also, because so many times the wife gets the house and then finds she can't afford to keep it, the capital gains issue should definitely be addressed before the final settlement is agreed upon.

Know the difference between separate and marital property

Separate property is everything you bring into the marriage and keep in your own name. It is also what you receive during the marriage as a gift or an inheritance.

Marital property is everything acquired during the marriage - no matter whose name it is in. And in some states, but not all states, the increase in the value of separate property.

For instance, consider a $30,000 savings account brought into the marriage and is now worth $35,000. The $30,000 would be set aside as separate propety and the $5,000 would be included in the pot of marital assets to be divided.

Assume the wife adds $100 each month to her IRA which is in her name only. That is still considered to be a marital asset because it is "everything acquired during the marriage, no matter whose names it is in."

Check with your own state to see how property is handled.

Property settlement is a done deal

After the divorce is final, if you change your mind about how something was divided, or which property you got, it is too late to change it. The only exceptions would be if you found additional property that was not disclosed or if you feel fraud was involved.

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Collaborative Divorce Teleclass

Do you want to know more about Collaborative Divorce? If you are going through divorce, you may want to choose this option. If you are a professional, you will learn more about how to make this work for you. In either case, don't miss this teleclass to be held on Tuesday, May 12th at 11am Mountain time. Go to www.FDAdivorce.com to register.

Consider cost of living increases for child support

We all know that children seem to get more expensive as they get older. They seem to have more expensive "toys" such as computers, skis, orthodontics, etc. Many couples discuss including a cost of living increase each year for child support.