When couples plan to divorce in Minnesota, they should prepare themselves for the financial consequences that a legal separation can bring. By understanding what to expect, individuals may be able to plan for unintended financial issues.
As part of the divorce, the couple will need to determine how to divide their property. This includes everything from the marital home down to furnishings and collectibles. People should also be aware of how judges may order their property to be divided.
Minnesota is an equitable distribution state. This means that courts divide property according to what the judges believe is fair and equitable. This does not necessarily mean that the property will be split evenly between the spouses. Depending on how the property is divided, there will be specific tax consequences. For example, if spousal support is ordered, the person who pays it will be able to deduct it on his or her tax returns. However, the person who receives support must report it as income.
Like assets, debts are also divided in divorce cases. If a judge orders one party to pay a debt that is in the other party’s name, the spouse whose name is on the debt may still be held responsible for payment by the creditor if the other spouse fails to pay it. Finally, if a separating couple has children, they will have to create a plan for child support and custody.
A potential divorcee might want to talk to a family law attorney. A lawyer may provide guidance about potential tax issues and other financial impacts involved in a divorce.