Beware If You Are Splitting Stock In Your Divorce
Julie Hupp, CDFA®, CFP®
June 8, 2020
What Is Fair?
Sandra’s husband originally was suggesting that she take the older shares. As we reviewed all of the holdings, we realized those had the lowest cost basis and would result in the highest taxes for her. She was able to counter with a different proposal, one which was fairer in relation to the cost basis.
“Shares of stock have 2 values that are important – The current market price and the cost basis. “
The following chart shows an example of this issue. If this was Sandra, the newer shares would result in the most money to her.
|Current Share Price||$85|
|Shares||Date Purchased||Current Value||Cost Basis||Total Gain||Total Taxes||After Tax Value|
** Assume 25% Federal Tax Bracket
Minimize Your Risk
If you are in process of getting a divorce or you are post divorce, you can minimize the risk of these issues by working with a financial professional such as a Certified Financial Divorce Analyst™ (CDFA®) or a Certified Financial Planner Professional™ (CFP®). Ideally, the settlement agreement can specify exactly how shares like this are to be split to avoid any conflict post settlement.
We specialize in working with women during and post divorce. Please call 847-986-2680 with questions or a consultation.
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