Many individuals in Texas and elsewhere decide to get divorced due to irreconcilable differences. For instance, perhaps the two parties are constantly in conflict regarding how they spend their money. However, in some cases, the goal of saving money is the driving force behind a divorce.
Legislation that made its debut in 2018 subjects high earners to what is called a marriage penalty. This penalty is essentially greater tax liability for high-income couples who file jointly. These individuals, who make upwards of $612,000 per year, fall within the tax bracket of 37%.
Couples in this situation may want to divorce to reduce their tax liability. However, this type of strategic divorce may have unanticipated ramifications that could impact the pair’s financial security long-term. For example, the two individuals might have to determine how to divide one party’s pension, which may be deemed a marital asset.
In addition, spouses are usually automatic beneficiaries of each other’s 401(k) plans. However, if they divorce, they would have to sign waivers to allow each other to get these funds. Also, if they get into a conflict, it would be relatively easy for the ex-husband, for example, to suddenly remove the ex-wife from his 401(k) account. This would be harder for the two parties to do if they were still married.
No matter why two people decide to get a divorce in Texas, the process can understandably be difficult to navigate. However, an attorney can provide the guidance needed to tackle asset distribution and other potentially complex divorce issues. The attorney’s aim is to make sure that the client’s best interests are protected during all phases of the divorce proceeding.