Tag Archive for: Tampa Bay Collaborative Divorce

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

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.

How Non-Marital Investments Can Become Marital Property

Florida law generally considers assets acquired before marriage as non-marital property. Inheritances or gifts from someone other than your spouse received during the marriage are also generally categorized as non-marital property.  However, certain actions—whether intentional or accidental—such as tax loss harvesting can turn these assets into marital property.

Here’s how:

  • Reinvestment in Joint Accounts: If you sell investments from a separately owned account and reinvest them into a joint account with your spouse, those funds may now be considered “co-mingled” and marital property.
  • Using Proceeds for Marital Expenses: If you use the money from a tax loss sale to pay off a joint debt, buy a family home, or cover household expenses, you might be converting separate property into marital property.
  • Active Trading and Appreciation: Even if you keep investments solely in your name, the way you manage them during the marriage could make a difference. If you hold on to a non-marital investment and it passively grows, it generally would retain its separate nature.  But if you are actively trading in your separate account, such as by switching out VTSAX for VFIAX for the tax benefit, then that very act could convert the non-marital investment, or at least any future appreciation, into a shared marital asset.

How a Prenuptial or Postnuptial Agreement Can Protect Your Investments

One of the best ways to prevent tax loss harvesting from unintentionally converting your separate investments into marital assets is by having a prenuptial or postnuptial agreement. These agreements clearly define which assets remain separate and how investment accounts should be managed during the marriage.

A well-drafted prenup or postnup can:

  • Specify that all investment accounts remain non-marital, regardless of how they are managed.
  • Clarify ownership of appreciation in separate investments, even if active management occurs.
  • Set rules on tax strategies like tax loss harvesting, ensuring that any proceeds from sales are not accidentally converted into marital property.

Having a legally sound agreement in place can help avoid disputes down the road and provide peace of mind that your assets will be protected, even in the event of divorce.

Why Investors Need a Collaborative Approach to Divorce

If you’re an investor facing divorce, the last thing you want is a public, drawn-out legal battle. Collaborative Divorce offers a better alternative. Instead of going to court, you and your spouse work together—alongside financial, mental health, and legal professionals—to reach a fair and private resolution.

At Family Diplomacy: A Collaborative Law Firm, we understand the complexities of high-net-worth divorce cases. Adam B. Cordover is a leader in Collaborative Divorce, deftly helping clients navigate through the toughest of choices under challenging circumstances. His experience in handling family law matters involving sophisticated financial topics ensures that you receive expert guidance in a manner that seeks to keep your divorce amicable and efficient.  And his advocacy for an interdisciplinary team approach can help you get the perspective of an accountant or financial planner before you make a choice with long-lasting consequences.

We Can Help Protect Your Financial Future

Divorce doesn’t have to mean financial ruin. With the right legal guidance, you can protect your investments and make informed decisions. Let us help you through this process with care, confidentiality, and expertise.

Contact Family Diplomacy: A Collaborative Law Firm today by clicking the button below.


Adam B. Cordover is co-author and co-editor of an American Bar Association book on Collaborative Family Law.  He has trained judges, lawyers, mental health professionals, and financial professionals in Collaborative Practice and other forms of private dispute resolution throughout the U.S., Canada, Israel, and France.  Family Diplomacy accepts clients throughout the State of Florida through our Virtual Practice, and we have offices in Tampa, St. Petersburg, and Sarasota.

Collaborative Divorce: Control Your Own Destiny

When you’re facing the difficult decision to divorce, it’s natural to feel overwhelmed. And when you are used to making high stakes decisions, the feeling of powerlessness is just unacceptable. Decisions about your family, finances, and future carry immense weight. The last thing you want is to surrender control of your destiny to a judge in a public courtroom. That’s why many C-Suite executives, doctors, business owners, high-ranking military officers, and other professionals in Florida choose Collaborative Divorce.

What Is Collaborative Divorce?

Collaborative Divorce is a unique and private approach to family law that puts you and your spouse in charge. Instead of battling it out in court, you work together with a team of professionals to craft agreed upon solutions tailored to your family’s needs. Each of you have your own separate lawyers to provide you with independent legal advice.  The Collaborative Lawyers are there solely for the purpose of reaching an out-of-court agreement, and are prohibited, once the Collaborative Process begins, from being used to fight in court.  Additionally, your Collaborative Team may include a financial expert to navigate tricky financial discussions and a Facilitator (who is a licensed mental health professional) to keep discussion focused on the future rather than the disputes that led to the divorce.

Maintain Control Over Critical Decisions

Unlike traditional litigation, Collaborative Divorce fosters cooperation rather than conflict. You, your spouse, and your lawyers share the same goal: to find resolutions that work for everyone in your family. This approach gives you the power to decide how to divide assets, plan for your children’s future, and address any other issues that arise. Instead of a judge dictating your future, you together with your spouse maintain control over these critical decisions.

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Simplifying Divorce for High Net Worth Individuals: Working With Your CPA or Financial Advisor

The Challenge of Divorce for High Net Worth Individuals

Navigating a divorce is never easy, and for high net worth individuals, the process can feel even more overwhelming. Between managing the complexities of Florida Family Law Rule of Procedure 12.285—commonly known as mandatory disclosure—and safeguarding your financial future, it’s natural to want to simplify the experience and delegate much of the work. That’s where a skilled family law attorney can be invaluable. By working closely with your CPA or financial advisor, we can streamline the disclosure process and minimize the demands on your time and energy.

Understanding Mandatory Disclosure

Mandatory disclosure requires each party in a divorce to provide detailed financial documentation. For high net worth individuals, this often includes extensive information about investments, business interests, real estate holdings, and more. The sheer volume of documentation can be daunting, but it doesn’t have to be. If you already have a trusted CPA or financial advisor, they are likely familiar with much of your financial landscape. Our team can work directly with them to gather and organize the required information, so you don’t have to get bogged down in the details.

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Video: Cordover Keynotes Family Law Now Virtual Summit

Family Diplomacy managing attorney Adam B. Cordover recently gave the keynote address at the Third Annual Family Law Now Virtual Summit. The aim of the Summit is to provide legal professionals and those individuals facing separation, divorce, and other family law matters with vital information, strategies, and tools to support them as they navigate through the process.  The Summit was hosted by veteran Canadian lawyer Russell Alexander and benefitted The Denise House, which provides a safe shelter and supportive programs in Canada for women, with or without children, experiencing gender-based violence.

Examining Models of Collaborative Practice

The topic of the keynote address was “All the Ways to Collaborate: Examining Different Models of Collaborative Practice.”  In the keynote, Cordover urged lawyers to tailor the Collaborative Process to meet the needs of their family law clients.

You can view a video of the keynote, which is about 20 minutes long, below.

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How Are Medical School Student Loans Handled In a Florida Divorce?

When you’re facing a divorce in Florida, one of the complex financial issues you might encounter is how to handle student loans, particularly medical school student loans. These debts can be substantial, often amounting to hundreds of thousands of dollars, and it’s natural to wonder how they will be treated during the divorce process. Understanding your options and rights is crucial, especially if you and your spouse are seeking a Collaborative Divorce, which focuses on finding amicable solutions privately rather than through a public divorce court battle.

Understanding Marital vs. Non-Marital Debt – Med School Loans

In Florida, the law distinguishes between marital and non-marital assets and debts. Marital debts are those incurred during the marriage, regardless of whose name they are in or who incurred them. Non-marital debts, on the other hand, are typically those incurred before the marriage or after the date of separation.

If you took out medical school loans before you were married, these debts are generally considered non-marital, meaning you would be solely responsible for them. However, if you took out the loans during the marriage, things get a bit more complicated.

Medical School Student Loans as Marital Debt

If your medical school student loans were taken out during your marriage, they will be considered marital debt. This means that both you and your spouse could be responsible for repaying them, even if it was taken out in only one spouse’s name.  If some student loans were taken out prior to the marriage and other medical school debt was taken out during the marriage, then some loans will likely be considered non-marital and other med school loans will be considered marital. In a traditional divorce, this could lead to a lengthy and contentious battle, especially if the loans are significant.  More commonly, especially in a Collaborative Divorce, only one spouse ends up taking responsibility for paying off the marital portion of the loans, while they also typically get something in return to offset the debt.  Alternatively, the other spouse may take on a different set of debts as an offset.

In a Collaborative Divorce, you and your spouse have the opportunity to work together to find a fair and equitable solution. The Collaborative Process encourages open communication and cooperation, allowing both of you to express your concerns and preferences.

At the end of the day, a court will likely order, and most divorcing spouses agree on, an equal distribution of your family’s marital net worth.  So, for example, if your family has a total of $3 million in marital assets and $1 million in marital debts, equaling a net marital estate of $2 million, then likely each of you will end up with around a net worth of $1 million from the marital estate (though most people agree to an equal distribution of your marital assets/debts, you can also agree to an unequal distribution if it makes sense for your family or as an alternative to alimony).  For this reason, when determining how you are going to split your assets and debts, it is important to look at not just one debt, like medical school student loans, but at your family’s full financial picture.

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Collaborative Jewish Divorce

In these uncertain times, if you are Jewish and considering divorce, you may wonder where you can safely turn.  I have watched in horror at the chants of “Jews will not replace us” in Charlottesville in 2017, the massacres of Israeli civilians on October 7th, and the more recent intimidation of Jewish students on campuses across the U.S.  I have personally experienced people telling antisemitic jokes to me, apparently not realizing that I was Jewish.   If, with this as a backdrop, you are facing the upheaval of divorce, let us help you and your family through a Collaborative Jewish Divorce.

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Create Your Own Path with Collaborative Divorce

If you’re reading this, chances are you’re either going through a divorce or know someone who is. And let’s face it, divorce isn’t exactly a walk in the park. But what if I told you that in Florida there’s a way to navigate this challenging time while still preserving your self-determination and sanity? Enter: Collaborative Divorce.

Picture this: instead of duking it out in a courtroom with lawyers battling it out, Collaborative Divorce brings everyone to the table – you, your soon-to-be ex, and a team of professionals (including separate attorneys to provide each of you with independent legal advice) dedicated to finding solutions that work for everyone involved. Sounds pretty good, right? Here’s why it’s worth considering:

Collaborative Divorce Puts You in the Driver’s Seat

One of the biggest perks of Collaborative Divorce is that it empowers you to take control of your own future. Instead of leaving decisions about your life in the hands of a judge, you and your soon-to-be ex get to work together to find solutions that meet both of your needs. From dividing assets to co-parenting agreements, you have a say in it all.

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Virtual Introductory Collaborative Divorce Training – March 2024

In the world of family law, where emotions can be overwhelming, imagine helping families go through a divorce peacefully and with a team to support you and the family. What if you could work with professionals you know, like, trust, and respect? Learn to offer Collaborative Divorce services in this highly interactive Virtual Introductory Interdisciplinary Collaborative Family Law training, designed for attorneys, mental health professionals, accountants, financial advisors, mediators, and anyone wanting to help families in a better way.  The training takes place on every Wednesday in March 2024, from 1:00 pm to 5:00 pm Eastern Time.  It is not jurisdiction-specific, and past trainings have included participants from all around the globe.  This training will focus primarily on the One Coach (also known as Neutral Facilitator or Neutral Mental Health Professional) model of Collaborative Practice.

 

Working Together Online

This training happens online, on Zoom. You can join from home, work, or wherever you’re comfortable. It takes place on four Wednesdays in March 2024, from 1:00 to 5:00 PM Eastern Time. This flexibility makes it easy for busy professionals to attend.

Learning from Different Perspectives

The training covers Collaborative Law from legal, emotional, and financial angles. Whether you’re a lawyer, mental health professional, financial expert, or mediator, this training helps you understand how to resolve issues related to family law in a new and supportive way.

Meet the Experts

The training features experts like Adam B. Cordover, J.D., M.A., a collaborative attorney; Jeremy S. Gaies, Psy.D., a licensed psychologist; and Kristin E. DiMeo, CPA, ABV, and J. David Harper, CPA, ABV, PFS, CFF, CBA, CVA, both accountants. All members of Tampa Bay Collaborative Trainers, they bring their vast and diverse experience to help you learn the different ways to help families through difficult issues.

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2023 Tampa Pride Guide

Family Diplomacy Sponsors 2023 Tampa Pride Guide

Family Diplomacy: A Collaborative Law Firm is proud to sponsor the 2023 Tampa Pride Guide.  The Guide is published by Watermark Online.  According to Carrie West, president of the event, “We welcome everyone near and far to our great city of Ybor for the 9th Annual Tampa Pride.  We share this celebration with thousands of visitors to enjoy our community’s welcoming hand and spirit through our day long LGBTQ festivities.”

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Collaborative Divorce: An Unbundled Legal Service

Traditionally, divorce has been an adversarial process, with lawyers making arguments in front of a judge about what his or her client should get.  And yet, you are probably not looking to get in a prolonged battle with your spouse; rather, you are likely looking to move on with your life and ensure your kids do not get caught in the middle.  This is why I specialize in Collaborative Divorce, which unbundles divorce negotiations from the adversarial court process.  In effect, I am a resolution specialist.

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