On Monday, March 16, 2020, the Dow Jones saw its worst point drop in history. The coronavirus continues to stir up a volatile market, causing gains from the last three years to disappear completely in a matter of weeks. Especially in cases of complex divorce, this could mean significant losses to you and your former spouse’s investment and retirement accounts, which are tied to these plummeting markets. To help alleviate losses, there are some strategies you should consider when drawing up your divorce decree and figuring out how to divvy up these accounts.
Planning Your Divorce Around a Volatile Stock Market
There is no way to predict the future, and there is certainly no way to know for sure what will happen in the stock market in the days, weeks, and years to come. While the common belief is that everything tends to stabilize over time, it is difficult to see this when faced with market nosedives like those taking place lately. Regardless, here are some tips to consider during divorce when deciding how you will safeguard your investments and retirement accounts against these market downturns:
Understand Cost Basis of Stocks—The original purchase price of a stock—that is, the amount of money originally paid to attain the stock—is considered the “cost basis.” Overall, when divorce attorneys and judges help you and your former spouse determine what is “equitable” in Illinois in terms of dividing up the investment accounts, they are looking at the cost basis of each investment. Due to this, you will want to take a closer look at which investments your partner wants to take or which investments are being assigned to you. In some cases, you could face a huge tax bill due to appreciation, or you might receive some stocks that are nowhere near their “cost basis” value anymore....