Equitable Division of Marital Accounts
All
marital property in a divorce in Georgia is subject to an equitable division.
The meaning of property in a divorce case is broad, and brokerage accounts
(investment accounts) are considered as property as well. Accordingly, any
marital portion of brokerage accounts will be equitably divided between spouses
in the divorce proceeding.
What Is a Brokerage Account?
A brokerage
account is a type of financial account, just like a bank account, that holds assets.
However, a brokerage account is different than a bank account in that a
brokerage account is used for investment purposes. Many financial entities offer
brokerage accounts to consumers, and consumers may easily open and use these
accounts to invest in stocks, bonds, mutual funds, exchange-traded funds, and
so on. Simply put, a consumer can open a brokerage account through a broker,
put funds in the brokerage account, and start investing.
Generally, just
as the Federal Deposit Insurance Corporation protects deposits in bank
accounts, Securities Investor Protection Corporation protects funds held in
brokerage accounts.
A brokerage
account may be titled in a spouse's individual name or jointly with the other
spouse.
How Is a Brokerage Account Divided in a Divorce in Georgia?
In a divorce in
Georgia, the first step in determining the division of a brokerage account is
to figure out the value of the marital portion of the brokerage account, which
may be the entire account depending on the circumstances. Then, you would split
(not necessarily 50/50) the marital portion of the brokerage account. The title
of a brokerage account is not the sole factor the court considers in
determining the value of the marital portion of the brokerage account.
When valuing and
dividing a brokerage account, a spouse should consider the tax implications
because taxes could affect the strategy regarding how to divide the brokerage
account.
Any earnings
from brokerage accounts, including interest, dividends, and gains, will be
taxed. The amount of taxes owed on such earnings may depend on the income tax
bracket of the respective spouses and the length of the period of time (short-term
versus long-term) the underlying assets were held. Further, depending on the
circumstances, some spouses will be subject to the Net Investment Income Tax. Also,
such taxes may be imposed on the spouses both at the federal (the IRS) and
state (Georgia Department of Revenue) levels. In other words, even if the
brokerage account is split evenly, the net value of the 50% of the brokerage
account to a spouse after taxes may be different than that to the other spouse.
Simply put, an
analysis of the value of a brokerage account to a particular spouse may be
complicated. Such analysis may further be complicated due to the fact that the
relative value of a brokerage account to another asset (for example, real
estate or pension) may be different. Therefore, it may be worthwhile to consult
with both a Georgia Divorce Lawyer (Atlanta Divorce Lawyer) and tax specialist
regarding division of brokerage accounts in your divorce case.
Written by: Daesik Shin