Separating from your Spouse… and your CPA?

In the divorce process, it is likely that you will face unintended tax consequences in your settlement options. Brazos County divorce attorneys are not always aware of many of these tax issues. A CPA can identify these divorce tax traps that can pop up after your divorce.

When your tax CPA has represented both you and your spouse in the past (such as preparing a joint tax return or giving estate planning advice) but now provides divorce advice to only one of you, one kind of conflict of interest arises. A second kind of conflict arises when your CPA has attempted to give you both generic marital property advice early in your divorce. For example, while attempting to help you both in the divorce, your CPA recommends a basic division of property. Your CPA has used preliminary values for your property. Later, it turns out that the values used to calculate the final division are substantially different. This can result in very different property split and it appears that your CPA has acted in the interests of one of you over the other. Conflicts bring liability risks for CPAs.

Your risk is that your CPA doesn’t think about the liability risk and kindly starts giving financial advice that turns out to favor your spouse. Whether the advice is for both of you or just one of you, the result could unintentionally cause lopsided financial effects for you.

Many times, CPAs would rather not get involved in divorce issues. Those CPAs prefer to avoid giving financial advice until after the divorce is final. Fortunately for these clients, there are CPAs out there who are willing to guide clients through the financial maze of divorce.

Brazos County divorce lawyer, Randy Michel, explains that a judge may consider the income tax implications in considering what a “just and right” property division would be. However, that does not mean the judge will ask questions on his/her own or drill down deeply unless your attorney can and will educate the judge as to the applicable tax implications.

If your divorce lawyer is not also a CPA, educating the judge could be a challenge. A CPA with experience in divorce cases can identify those unforeseen financial and tax issues and educate your attorney and your judge.

If you think you could benefit from this kind of advice, let me know. I can also refer you to a Brazos County divorce lawyer.