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YOU AND YOUR soon-to-be ex will have to agree on how to divide up your marital assets. This is called the divorce property settlement. Typically each party walks away with certain items the other one isn't interested in anyway such as cars, clothes and various personal stuff. The remainder of a divorcing couple's combined net worth is usually split up according to some agreed-upon ratio — say 60/40 or 50/50.

So far, so good. But here's the problem. The agreed-upon split is often done without considering taxes. That can turn out to be a costly mistake for one side and an undeserved windfall for the other. Why? Because some assets carry a built-in tax liability while others don't. In splitting things up, you certainly wouldn't ignore a mortgage against a piece of real estate. For the same reason, you shouldn't ignore the fact that a particular asset may have a hefty tax bill attached.

Our calculator will help you arrive at a property settlement based on net-of-tax figures, which is really the only fair way to do it.

Divorce Planner Worksheet

1. Gains from assets held for shorter periods will be taxed at regular rates. Don't forget to include any state and local taxes that apply.

2. Warning: Transferring unvested employer stock options to your ex as part of a divorce settlement could result in negative tax consequences for you. So it's usually best to keep your unvested options and transfer other assets to arrive at the agreed-upon overall property split. Please see Who Gets the Stock Options? for the complete story on how to avoid triggering current income taxes in this situation.

3. Warning: You must be careful if you intend to actually transfer money in traditional or Roth IRA accounts set up in your name to your ex. Otherwise he or she could get the money, while you get stuck with the tax bill. Please refer to the Splitting the Retirement Accounts for the complete story on how to avoid triggering current income taxes in this situation.

4. Don't forget to include any state and local taxes. Warning: You must be careful if your ex will receive a share of your qualified retirement account balances. Otherwise he or she could get the money, while you get stuck with the tax bill. Please refer to the Splitting the Retirement Accounts for the complete story on how to avoid triggering current income taxes in this situation.

5. However, you must meet all the qualification rules for this tax break to apply. Even if you conclude there are no federal taxes to worry about, there may be state and local taxes to consider. Be sure to read Who Gets the Homes? before leaving this topic. Warning: If your ex will occupy the house after the divorce, but you will continue to own all or part of the property, you must take action to preserve your $250,000 federal gain exclusion.

6. Watch out if your ex owns stock in your closely held corporation and you intend to have the corporation cash him or her out. See Business Ownership Interests for more details.

7. If necessary, you can make adjustments by moving around various assets until you get the desired net-of-tax outcome. Just be sure to heed the warnings about dividing up certain types of assets, like employer stock options and retirement accounts. The objective is to reach a divorce property settlement in which each side fully understands the resulting tax consequences.