Hauer Snover | Attorneys at Law

Call Us Today for A Consultation

Best Lawyers | Best Law Firms | U.S. News & World Report | 2023
Best Lawyers | Best Law Firms | U.S. News & World Report | 2023

Experienced and Trusted Family Law Attorneys

Who Can Help You With
All of Your Divorce and
Family Law Matters

Photo of Professionals at The Law Firm of Hauer & Snover
Super Lawyers
AAML | American Academy of Matrimonial Lawyers
Avvo Rating 10.0 Superb | Top Attorney Divorce
Peer Reviewed | Leading Lawyers Network | Find a Better Lawyer, Faster
Listed in Best Lawyers | The World's Premier Guide

Tax considerations in high-asset divorces

On Behalf of | Dec 19, 2023 | Blog, High-Asset Divorce |

When a divorce involves significant assets, the financial landscape becomes even more intricate.

In Michigan, high-asset divorces carry unique tax implications that both parties should carefully consider. Understanding these tax consequences is necessary to make informed decisions during this challenging time.

Division of assets

When high-net-worth couples decide to part ways, the division of assets is an important aspect. Michigan law stipulates equitable distribution, but this does not necessarily mean a 50/50 split. The manner in which the division of assets occurs can have direct tax implications. For instance, selling a property may trigger capital gains taxes, impacting the overall financial outcome for both parties.


Alimony is another area where taxes come into play. In Michigan, the party paying alimony can deduct these payments from their taxable income, providing potential relief. On the flip side, the recipient must report alimony as income, subjecting it to taxation. Negotiating alimony terms becomes a delicate balance, considering the tax consequences for both parties.

Retirement accounts

High-asset divorces often involve the division of retirement accounts, such as 401(k)s and IRAs. The transfer of these assets requires careful consideration to minimize tax liabilities. A Qualified Domestic Relations Order may be necessary to ensure the tax-efficient distribution of retirement funds, avoiding potential penalties and preserving long-term financial well-being.

While Oakland County had a relatively low divorce rate of 3.7 per 1,000 population compared to other Michigan counties, many couples in the area still find dissolving a marriage a solid option. When the divorce involves high assets, it can add complications, including potential tax implications.