Hello. I'm not sure if this is an estate planning or divorce question, so I hope I'm in the right forum. In any case, my husband and I had an amicable divorce several months ago. I already had my will and other estate planning document redone to reflect the changes in my status. My ex and I are now interested in exchanging two properties, one that he owns for one that I own. The one I own is little more valuable than the one he owns, but I don't care about that. My question is whether the rule that allows spouses to transfer assets without paying taxes expired immediately after the divorce or whether we might still take advantage of it since we were married for so many years and held accounts and other assets jointly. There was no mention of this transfer in our divorce agreement or order. Thank you for any help.
Submitted by Milk7 on Mon, 08/29/2011 - 13:22
Transfer of assets after divorce
Given how complex taxation issues can sometimes become, I'm sure that you are simply looking for a bit of information to point you in the right direction and that you plan to contact a MA attorney before attempting any property transfers. Having said that, you are correct: In most situations, divorced couples can transfer money or assets between themselves without paying transfer or capital gains taxes for up to one year from the date the divorce date. This rule applies even in cases, like yours, where the proposed transfer was not contemplated by the parties during their divorce. See Internal Revenue Code Section 1041(a). Additionally, transfers within 6 years of divorce are tax free if they are made pursuant to a "divorce or separation instrument." Hope that helps.