Here’s what you need to know about dividing up annuities during a divorce.
Assessing the Worth of the Annuity
Before you discuss the division of an annuity, it’s helpful to know the policy’s worth. This is done by calculating its present value, which includes factoring in interest rates and taxes. The process can be complicated and if you find yourself in this situation you may want to consult a financial advisor who can help you assess the value of the annuity.
Annuities and Tax Implications
When determining how an annuity is divided in a divorce, tax implications should also be taken into account. Different types of annuities have different tax treatments, and this could have an impact on their ultimate value. A financial advisor can help you understand the tax implications of the annuity and help you decide how to divide it in a way that is fair and equitable for both parties.
Rolling Over Annuities
Depending on the annuity, you may also have the option to convert it over into another type of account such as an IRA or 401(k). This can be beneficial if you want to reduce the amount of taxes owed on a portion of the annuity or if there are restrictions on how much an annuity can be cashed out during a certain period.
However, this option should be considered after consulting with a financial advisor who is knowledgeable about annuities.
Talking to a Financial Advisor
It may be a good idea to talk to a financial advisor who can help you understand the basic taxes and fees associated with dividing an annuity as well as any other options that may be available. A financial advisor can also assist with any paperwork that is necessary for the division of annuities during a divorce.
No matter the situation, it’s important to understand all of your options when it comes to dividing annuities during a divorce. Knowing the current value of an annuity, the tax implications, and other legal considerations can help make sure that both parties are treated fairly and that everything is handled correctly.
If you are looking for an experienced financial advisor, schedule a consultation with us! At Purposeful Wealth Advisors, we understand the complexities of divorce and money distribution. We’ll work closely with other dedicated professionals – divorce attorneys, and accountants – to arrive at comprehensive solutions.
Contact us today to learn more about how we can help you.
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Financial and investment planning inherently involve potential tax and legal implications, with which we are generally familiar. We do not, however, practice as lawyers or CPAs and cannot give specific legal or tax advice. You should always consult with your tax advisor, or your attorney when making complicated legal or tax decisions, however, we’re glad to work with your tax or legal professional to help you meet your financial goals. Raymond James’ financial advisors do not render advice on tax or legal matters.