Tag Archive for: postnup

How Tax Loss Harvesting Can Turn Non-Marital Investments Into Marital Assets

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If you’re an investor going through a divorce, you likely have a keen eye on your finances. You may already be familiar with tax loss harvesting, a strategy that can help reduce your tax bill by selling investments at a loss to offset capital gains. While this technique can be a smart financial move, it can also have unintended consequences in divorce—potentially turning what you thought was your separate, non-marital property into a shared marital asset.

What Is Tax Loss Harvesting?*

Tax loss harvesting is a strategy that can be used to lower your tax liability. For example, if you have investments in a taxable brokerage account that have lost value, you can sell them at a loss to offset capital gains from other investments. This reduces your overall taxable income and can lead to significant tax savings.

There are many rules associated with tax loss harvesting.  For example, you cannot sell a mutual fund at a loss and then immediately repurchase that same mutual fund.  However, one strategy that many investors utilize is to sell one investment at a loss and then purchase a similar, but different, investment.  For example, you might sell VTSAX, the Vanguard U.S. total stock market index fund, at a loss and purchase VFIAX, the Vanguard S&P 500 index fund, which is highly correlated with VTSAX.  The White Coat Investor website has a really good explainer on tax loss harvesting.

Many investors use this approach as part of a long-term financial strategy, reinvesting the proceeds into different securities to maintain their investment portfolio. However, if you are going through a divorce, you must be careful about how and when you execute tax loss harvesting.

*Please note that we are not accountants, financial advisors, or tax lawyers, this information is not intended to provide advice, and this is for educational purposes only.

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Asset Protection and Florida Divorce

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If you are facing divorce in Florida and have accumulated substantial assets, you may be wondering what asset protection strategies are available. Fortunately, there are some steps to consider, both before and during divorce. Florida is an equitable distribution state, meaning the law divides marital assets fairly, though not necessarily equally. Below are some methods to explore (please note that this is just an overview, and you should speak with a lawyer to determine if these apply to your situation and how to employ them):

Asset Protection Before Divorce

Prenuptial or Postnuptial Agreements.

A prenuptial agreement is signed before a marriage, and a postnuptial agreement is signed during a marriage. Both can be legally binding agreements that essentially allow you to make your own law and specify how assets will be divided and spousal support will be handled in case of divorce. These agreements must be entered into voluntarily, with full disclosure of assets, and include other elements that can help ensure that it holds up if challenged.

You can learn more about prenuptial and postnuptial agreements here.

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Protecting Your Florida LGBTQ+ Family

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If you or a member of your family identifies as lesbian, gay, bisexual, transgender, queer, or otherwise (LGBTQ+), you are likely feeling under siege from the rhetoric and actions of Florida and national politicians.  You may be wondering what you can do to protect your family’s rights.  This blog discusses steps that you can take to shore up your Florida LGBTQ+ family law rights.

Adopting Your Children

If you are in a same-sex relationship and have children with your partner/spouse, and if you are not a biological parent, you need to adopt your children.  This recommendation surprises a lot of families.  But I have seen heart-breaking situations where a couple splits up, the non-biological parent is denied recognition of their parenthood, and all contact is cut off between that parent and the children until the children are adults.

Even if your children were born during your marriage, if you are a non-biological parent, you should adopt.  Though there is a presumption that a child born during an intact marriage is the legal child of both parents, the likely applicable statute still uses language that only recognizes straight parents.  Section 742.11, Florida Statutes, states the following:

(1) Except in the case of gestational surrogacy, any child born within wedlock who has been conceived by the means of artificial or in vitro insemination is irrebuttably presumed to be the child of the husband and wife, provided that both husband and wife have consented in writing to the artificial or in vitro insemination.
(2) Except in the case of gestational surrogacy, any child born within wedlock who has been conceived by means of donated eggs or preembryos shall be irrebuttably presumed to be the child of the recipient gestating woman and her husband, provided that both parties have consented in writing to the use of donated eggs or preembryos.

When gestational surrogacy is utilized, section 742.13, Florida Statutes, still defines a “commissioning couple” as “the intended mother and father of a child who will be conceived…”

Because case law and legal presumptions can change, and because same-sex parents who utilize artificial insemination, in vitro fertilization, and other methods have not had their rights codified by statute, I urge you to look into adopting your children.

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Kiplinger: “Think of Prenups and Postnups as Financial Planning Tools”

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In an insightful article in Kiplinger, “Think of Prenups and Postnups as Financial Planning Tools,” Andrew Hatherly, a Chartered Retirement Planning Counselor, delves into how prenuptial and postnuptial agreements are not just for those planning for the worst.  Rather, they can be essential tools in financial planning, particularly for couples marrying later in life. This blog post discusses the contents of article, which you can read here.

When you think of prenuptial and postnuptial agreements, what comes to mind? For many, it’s the idea of planning for a potential divorce. However, these agreements can be so much more than just a contingency plan—they can be crucial financial planning tools that help you and your partner start your marriage on solid ground, especially if you’re marrying later in life or have substantial assets.

Why Consider a Prenup or Postnup?

In today’s world, where financial independence is increasingly important, prenups and postnups (which is like a prenup, but it is signed after you are already married) offer a clear framework for managing your assets. Whether you’re entering a marriage with significant wealth, a business, or debts, these agreements provide clarity. They help you and your partner establish expectations and protect what matters most to you both.

If you’re getting married later in life, you likely have accumulated assets, retirement accounts, or even a business that you want to safeguard. A prenup or postnup can protect these assets and ensure they’re distributed according to your wishes, not just the default laws of your state. Additionally, if one or both of you have children from a previous marriage, a prenup or postnup can help ensure that they’re provided for.

Debts: A Growing Concern

Let’s not forget about debt. Whether it’s from student loans, credit cards, or a previous mortgage, debts are increasingly common. A prenup or postnup allows you to specify how these liabilities will be managed during your marriage. This means one partner isn’t left responsible for the other’s debts, which can alleviate a significant source of stress and conflict.

Financial Transparency and Communication

One of the biggest benefits of drafting a prenuptial or postnuptial agreement is the open financial dialogue it fosters between you and your partner. These agreements require both you and your fiancé/spouse to fully disclose their financial situation, including assets, debts, and income. This transparency can prevent future misunderstandings and ensure that you both are on the same page when it comes to money management.

It’s not just about protecting yourself; it’s about ensuring that your financial partnership is built on honesty and mutual respect. By having these discussions early on, you set the tone for how you’ll handle financial decisions throughout your marriage.

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How We Review Your Prenuptial Or Postnuptial Agreement With You

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Your fiancé or spouse’s lawyer has provided you with a prenuptial agreement or postnuptial agreement, and it is a behemoth.  It is common for these documents to be 30 to 60 pages of dense “legalese,” sometimes with hundreds or thousands of pages of additional financial disclosure.  Don’t just sign the agreement without understanding it!  It can have a significant impact on your rights in the event of divorce or the death of your spouse.  Further, these documents are rarely “take it or leave it,” and you can negotiate terms that address your needs.

This post discusses how we review and negotiate prenuptial agreements and postnuptial agreements for our clients.

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