Nashville, TN family law attorney Anne Hamer talks about how the division of complex assets impact taxes in a divorce. She explains that when helping a client divide a complex estate—one with numerous and varied assets—it is essential to consider the tax implications of each asset. For example, retirement accounts such as 401(k)s or IRAs are subject to taxes when withdrawals begin, typically starting at age 72. In contrast, a home’s value is not taxed in the same way, making it fundamentally different from a retirement account.

She emphasizes that dividing assets is not simply a matter of equal dollar amounts. For instance, giving one spouse a $500,000 house and the other a $500,000 401(k) does not result in equal value, because taxes will reduce the actual amount realized from the 401(k). Each asset must be evaluated individually, taking into account its potential liabilities.

To achieve a fair comparison, she incorporates these considerations into a balance sheet, including estimated tax penalties—for retirement plans, she typically adds at least a 20% estimate for taxes upon withdrawal. She stresses that dividing complex assets requires an attorney who understands both the immediate and long-term implications of each asset, ensuring that property is distributed equitably and realistically.