A divorce may have a profound impact on your finances, and you may feel this impact for many months, years or decades after your union comes to an end. Therefore, it’s important to understand how New York law treats the division of joint assets and debts in a final divorce settlement. It is also a good idea to understand the potential tax consequences of selling a home or liquidating a brokerage account.
What happens to joint debts in a divorce?
The divorce decree may declare that your former partner is responsible for paying off a joint credit card balance. However, the credit card company can still come after you if your ex fails to live up to their obligation. This is because the contract that you sign with a creditor trumps the language in the divorce decree. A bank, credit union or other financial institution may also contact you in an effort to obtain the unpaid portion of a mortgage, auto or other type of loan balance.
What are the potential tax consequences of a divorce settlement?
If you record a profit of more than $250,000 from the sale of a home, you may owe capital gains taxes on that money. This figure increases to $500,000 if the sale is finalized before the divorce is. In most cases, you will need to pay capital gains taxes on any profits realized from the sale of stocks, commodities or other assets.
Will you receive ongoing financial assistance from your former spouse?
In the event that your spouse was the breadwinner during the relationship, you may be entitled to spousal maintenance after the marriage ends. If you share children, the other parent may be required to make monthly child support payments.