Prenups & Marriage Agreements

Understanding Capital Gains Before You Divide Property

September 21, 2026 By Diana Telfer

When dividing property in divorce, it is easy to focus on one number:

What is the asset worth today?

For entrepreneurs, professionals, and high-net-worth families, that number does not always tell the full story. A more useful question is:

What will this asset actually be worth to me after taxes, costs, and liquidity are considered?

Consider a simple example.

One spouse receives $500,000 in cash. The other receives a brokerage account worth $500,000.

Equal division?

Not necessarily.

If the investments in the brokerage account were purchased for $250,000, the account carries $250,000 of unrealized gain. If those investments are sold later, capital gains taxes can reduce what the owner actually keeps.

The same issue can arise with rental properties, vacation homes, investment accounts, business interests, and other appreciated assets.

Market value and tax basis are different numbers

To understand capital gains, start with tax basis.

Very generally, tax basis begins with what was paid for an asset, although improvements, depreciation, refinancings, and other events can change that number over time. When an asset is sold, the difference between the adjusted tax basis and the sale proceeds generally helps determine the taxable gain.

Imagine a vacation home purchased during the marriage for $400,000 that is now worth $1 million. The marital balance sheet might show a $1 million asset, but that property also carries unrealized appreciation.

Now compare that with $1 million in cash.

Same current value. Very different after-tax reality.

That distinction matters when building a thoughtful divorce settlement.

Rental property: appreciation is only part of the story

Rental properties deserve special attention because the tax picture can be more complicated than market value alone.

Suppose you and your spouse bought a rental property years ago for $350,000. Today it is worth $900,000.

At first glance, it can seem simple to assign the property to one spouse and offset the value with other assets. But depreciation claimed during the marriage can reduce adjusted tax basis and create additional tax consequences when the property is eventually sold.

Capital improvements, refinancings, and rental history can also affect the final picture.

Before accepting a rental property in divorce, ask:

What is the current adjusted tax basis? How much depreciation has been claimed? What could the tax consequences look like if I sell this property in five years?

You do not need to predict the exact sale date. You do need to understand the asset you are receiving.

Brokerage accounts: look underneath the balance

Brokerage accounts create the same issue in a less obvious way.

Imagine two taxable investment accounts, each worth $750,000. One holds investments with an approximate cost basis of $700,000. The other holds investments purchased years ago with an approximate cost basis of $300,000.

On paper, they look equal.

They are not necessarily equal.

The first account carries about $50,000 of built-in gain. The second carries about $450,000. If those investments are sold later, the person receiving the second account can face a much larger tax bill.

That does not make the second account a bad asset. It means the full picture matters.

Before dividing brokerage accounts, look at cost basis, unrealized gains or losses, tax lots, concentrated stock positions, and whether either spouse expects to sell investments soon after divorce.

Sometimes investments can be divided in a way that shares both current value and embedded tax exposure more fairly.

Vacation homes: memories can cloud the numbers

Vacation homes are difficult because they are both valuable and emotional.

A mountain cabin, beach house, or family retreat can hold years of traditions. Children learned to ski there. Holidays happened there. Friends gathered there. The property can represent a chapter of family life no one feels ready to close.

That emotional value is real.

The financial picture still needs to be clear.

Before deciding to keep a vacation home, understand what was paid for it, what improvements were made, whether it was ever rented, how it has been treated for tax purposes, and what would happen financially if you needed to sell it several years after divorce.

Keeping the property can still be the right choice. The point is to make that choice with the tax consequences visible, not hidden.

Divorce does not necessarily erase the tax

A common misconception is that transferring an appreciated asset between spouses during divorce resets the tax basis to current market value.

Generally, that is not how it works.

Qualifying transfers between spouses or former spouses incident to divorce are generally not treated as taxable sales at the time of transfer. In many cases, the person receiving the asset also receives the existing tax basis.

In practical terms, the tax is often deferred, not eliminated.

If you receive an appreciated asset in the divorce and sell it later, you can be the person who experiences the tax consequences tied to appreciation that occurred during the marriage.

That is why tax basis deserves a place beside fair market value on the financial spreadsheet.

Should every asset be discounted for future taxes?

Not automatically.

An asset might not be sold for decades. Tax laws can change. Future circumstances can affect how the asset is treated. Automatically subtracting hypothetical future taxes from every appreciated asset can create its own distortions.

The goal is not to assign a perfect future tax bill to every asset.

The goal is to identify meaningful tax differences before settlement, so each person understands what they are actually receiving.

For significant assets, a CPA, tax attorney, financial neutral, or other qualified professional can help model potential outcomes.

Ask a better question before you say yes

Before accepting an appreciated asset in a divorce settlement, ask:

“If I needed to turn this asset into spendable money, what would I actually have?”

That question reveals what a simple net-worth statement can miss.

Capital gains. Depreciation. Transaction costs. Liquidity concerns. Tax exposure. The real economic value of an asset after divorce.

For women who have spent years building businesses, investments, and financial security, these details matter. A settlement can look fair on paper and still create problems later.

Protect what you built

A thoughtful property division is not simply about dividing today’s market values.

It is about understanding what you are receiving, what comes with it, and how that asset fits into your financial life after divorce.

If your marital estate includes appreciated real estate, rental properties, vacation homes, brokerage accounts, business interests, or other significant investments, tax consequences should be discussed early, not after the settlement has already been signed.

At Telfer Family Law & Mediation, I help clients use collaborative divorce and mediation to evaluate their options with the legal, financial, and tax implications in mind. When appropriate, financial and tax professionals can be included so important questions are addressed before decisions become final.

If you are considering divorce and want to protect the wealth you have built, contact us to schedule a consultation and learn more about a divorce process designed around informed financial decision-making.

Protect what you built by understanding not only what an asset is worth today, but what it is actually worth to you.

This article provides general educational information and is not legal, tax, financial, or investment advice. Tax laws are complex and individual circumstances vary. Consult qualified legal and tax professionals about your specific situation.

We want to mediate because we do not want attorneys involved!

August 13, 2026 By Diana Telfer

I hear a version of the same comment regularly from couples who contact me about mediation:

“We want to mediate because we do not want attorneys involved.”

As an attorney myself, that statement always gets my attention.

Usually, what they mean is not that attorneys have nothing valuable to offer. They are worried that bringing attorneys into the process will make things more adversarial, more complicated, and more expensive. They have heard the nightmare stories from friends and family—divorces that dragged on for years, legal fees that spiraled, and disagreements that became battles once the lawyers became involved. They do not want a disagreement they believe they can work through together to turn into a legal fight.

And sometimes, unfortunately, that fear is justified.

Attorneys are trained to identify risk. We anticipate what might go wrong and try to protect our clients from it. That is an important part of our job. But in family law, there is a danger in treating every future possibility as something that must be prevented.

Sometimes, in our effort to protect clients from future conflict, we create rigidity that can actually make future conflict more likely.

A Parenting Plan Cannot Predict a Child’s Entire Childhood

A recent change to Utah’s custody statutes provides a good example.

For parenting plans involving young children, Utah law now recognizes that a child turning five may constitute a substantial change in circumstances warranting a review of parent-time, unless the parenting plan or order provides otherwise.

I have already heard attorneys approach this change from the perspective of:

“We need to put language in the agreement so the other parent cannot come back when the child turns five.”

My question is: Why?

Why is returning to the parenting plan when a child turns five necessarily a bad thing?

Certainly, there are families where repeated litigation is a serious concern. If parents have a history of high conflict, coercive behavior, repeated litigation, or an inability to make decisions together, creating greater certainty may be appropriate.

But that is not every family.

For many parents, revisiting a parenting plan as their child grows may be entirely reasonable.

A parenting schedule that works beautifully for a two-year-old may not be the best schedule for a five-year-old starting kindergarten. And what works for a five-year-old may need adjustment when that child is ten, fourteen, or sixteen.

Children change.

Their school schedules change. Their activities change. Their friendships become more important. Their developmental needs change. Parents’ work schedules and living circumstances may change too.

When parents divorce while their children are young, we are asking them to make decisions today about children they have not met yet—the future versions of their children.

No parent knows exactly what a three-year-old will need when that child is thirteen.

So why should every parenting plan be designed as though the goal is to make future conversations as difficult as possible?

There Is a Difference Between Stability and Rigidity

Children need stability. Parents also need predictability.

But stability does not necessarily require rigidity.

A well-designed parenting plan can provide a dependable structure while also recognizing that families evolve. Rather than trying to prevent parents from revisiting their agreement, we can help them develop a process for doing so constructively.

For example, parents can agree to periodically review their parenting plan as their children reach important developmental stages. They can identify circumstances that should prompt a conversation. They can agree to consult with a child-development professional, parenting-plan specialist, mediator, or other neutral professional before anyone considers going to court.

Most importantly, they can be educated about the difference between reviewing an agreement and fighting over an agreement.

Those are not the same thing.

What If We Designed Parenting Plans for Healthy Change?

Instead of asking:

“How do we prevent the other parent from ever trying to change this?”

Perhaps we should also ask:

“How can these parents address change without turning it into a legal battle?”

That is a very different question.

It shifts the focus from protecting a client against the other parent to helping both parents build a framework for solving future problems.

A parenting plan might say, in substance:

As the children grow and their developmental, educational, social, or extracurricular needs change, the parents recognize that the parenting schedule may need to evolve. The parents will periodically review the schedule and discuss whether modifications would better serve the children’s needs.

The agreement could then provide a dispute-resolution process if the parents cannot agree—perhaps consultation with a neutral professional followed by mediation before either parent seeks court intervention, where legally appropriate.

That does not eliminate disagreement. Nothing can.

What it does is give parents a roadmap for disagreement.

Attorneys Can Help Families Build Problem-Solving Skills

I believe one of the most valuable things a family law attorney can do is help clients understand that not every future risk needs to be eliminated.

Some risks should be managed by creating good processes rather than erecting legal barriers.

When we draft an agreement solely around the question, “How do I protect my client if the other parent becomes unreasonable?” we may inadvertently create an agreement designed around fear.

But what if these parents are reasonable?

What if they become more cooperative after the divorce is over and the emotional intensity of the separation has passed?

What if their child simply needs something different five years from now?

For many families, the better question may be:

“How do we create enough structure to provide stability while preserving enough flexibility to respond to the children we actually have—not the children we are trying to predict today?”

That is one reason I believe mediation and collaborative divorce can be so valuable. The goal is not simply to resolve today’s legal issues. It is to help families develop agreements and problem-solving processes that can continue working long after the professionals are gone.

Perhaps the measure of a good parenting plan should not be whether it prevents parents from ever coming back to the table.

Perhaps it should be whether, when life inevitably changes, they know how to come back to the table without going to war.

With deep care,

Diana

Photo Credit: A storm approaching, captured by my dear friend Carolyn Storey

Why Even the Most Successful Women Struggle with Financial Decisions During Divorce

August 11, 2026 By Diana Telfer

As a collaborative divorce attorney and mediator, I have worked with many women who are extraordinary decision-makers.

They own successful businesses. They perform surgeries. They manage large organizations. They negotiate complex contracts. They lead teams, make payroll, solve difficult problems, and confidently make decisions involving hundreds of thousands—or even millions—of dollars. And many of them are raising children, too.

Then divorce happens.

Suddenly, the woman who confidently runs a company tells me, “I’m not great with my personal finances and am afraid of making the wrong decision.”

The physician who makes life-changing decisions every day worries she will overlook something important.

The executive who negotiates multimillion-dollar contracts second-guesses herself over whether to keep the house or how retirement accounts should be divided.

If this sounds familiar, you are not alone. And more importantly, let me tell you, there is nothing wrong with you!

Divorce is different

People often assume that financial decisions are logical exercises and that divorce should just be like any ordinary business transaction. If that were true, divorce would be much easier.

But divorce is not just about finances. It is about your future, your children, your home, your identity, and the life you imagined. The financial decisions are wrapped inside one of the most significant emotional transitions a person can experience.

I have seen this time and again

One of the things that has surprised me throughout my career is how often highly accomplished women underestimate themselves during divorce. I have represented women who successfully built thriving companies from the ground up, but questioned whether they deserved their share of the marital estate.

Others have spent years managing family finances while still saying, “My husband understands the money better than I do.” Sometimes that is true. More often, it reflects confidence that has quietly eroded over years of one spouse taking the lead on financial matters or making the final decisions.

Professional competence and financial confidence within a marriage are not always the same thing.

Why confidence changes during divorce

Several factors tend to converge at once.

Every Decision Feels Permanent
Business decisions can usually be adjusted.
Markets change.
Strategies evolve.
New opportunities emerge.

Many divorce decisions, however, are difficult—or impossible—to undo. That fact naturally creates more anxiety.

The stakes feel personal

Selling a business is one thing. Deciding whether to keep the family home where your children grew up is something entirely different.

One decision affects a balance sheet, the other touches memories, identity, and family.

Decision fatigue is real

Divorce requires an astonishing number of decisions.

Housing. Parenting schedules. Insurance. Taxes. Retirement. Businesses. Real estate. Support. Budgets. College expenses. Personal property….

Many women continue managing demanding careers while simultaneously making dozens of significant personal decisions. Eventually, even excellent decision-makers become exhausted.

Women often carry invisible responsibilities

Many professional women continue carrying much of the family’s emotional labor during divorce. They are helping children adjust, managing school schedules, supporting aging parents, keeping employees focused, and serving clients or patients.

They are trying to maintain normalcy while privately grieving the end of a marriage. By the time they sit down to review financial documents, they are already mentally exhausted. This is the weight of carrying so much.

The fear of making a costly mistake

One comment I hear frequently is: “What if I agree to something I’ll regret five years from now?” Well, that is a reasonable question as divorce often requires people to make decisions based on uncertain future events.

Will the housing market change? Will interest rates fall? Will my business continue to grow? Will my income stay the same?

The truth is that no one has perfect information. However, good decisions are rarely about perfectly predicting the future; they are about making thoughtful, informed decisions based on the best information available today.

This is one reason I value the Collaborative Process

One of the reasons I chose to focus my practice on collaborative divorce and mediation is that it allows clients the time and support to make informed decisions.

Instead of rushing to prepare for court, collaborative divorce encourages assembling the right professionals to answer difficult questions.

Financial neutrals can help analyze settlement options.

Divorce coaches can help clients separate fear from decision-making.

Attorneys provide legal advice and help clients understand the long-term consequences of various choices.

No one is expected to have all the answers alone.

You do not have to prove anything

Perhaps the most important thing I tell successful women is this:

💪🏼 You do not have to prove that you can handle divorce by yourself.

💪🏼 Asking questions is not weakness.

💪🏼 Taking time to understand your options is not indecisiveness.

💪🏼 Seeking guidance from experienced professionals is not failure.

👉🏻 In fact, those are often the very skills that made you successful in your career.

Moving forward with confidence

The goal during divorce is not to make perfect decisions; we aim to make thoughtful ones. That requires information, perspective, and time.

And sometimes a team of professionals can help you see issues from multiple angles before making permanent choices.

I have watched many women begin the divorce process feeling uncertain and overwhelmed. Months later, they leave with something far more valuable than a settlement agreement.

They leave with confidence because they understood the decisions they were making. That confidence often becomes the foundation for the next chapter of their lives.

Looking ahead

In next week’s post, I’ll explore why business owners experience divorce differently from other professionals and how protecting a closely held business often requires a very different approach than simply dividing other marital assets.

A note to women business owners and professionals

You have spent years building your career, your reputation, and your financial future. Divorce should not diminish that work. With the right guidance, you can make thoughtful financial decisions that protect both what you’ve built and where you’re going next.

I am here to support you!

Diana.

Loving forward while honoring the Past: Prenups in Second Marriages and Blended Families

March 3, 2026 By Diana Telfer

Falling in love again often comes with deeper self-knowledge, clearer priorities, and (very often) with more complexity.

Second marriages and blended families carry not only hope for the future, but meaningful ties to the past: children, shared history, financial responsibilities, and emotional commitments that do not disappear when a new relationship begins.

Yes, planning doesn’t sound very romantic. However, it is an act of deep care for everyone involved.

Why second Marriages are different

A first marriage is often built from a relatively clean financial slate. In contrast, second marriages frequently include:

Established careers and retirement accounts
Property owned before the relationship
Children who depend on a parent’s long-term financial security
Ongoing support obligations or shared business interests

Emotionally, there can also be lingering sensitivities from prior separations or losses. This combination of legal and emotional layers means assumptions that might work in a first marriage can create unintended consequences in a second.

Thoughtful planning acknowledges that this relationship is beginning in a landscape that already has history.

Commitment to a new Spouse and Responsibility to Children

One of the most tender balancing acts in second marriages is this: how do you fully commit to a new partner while also honoring responsibilities to children from a prior relationship?

Without clear planning, the law may make those decisions by default. That can lead to outcomes neither partner intended; such as assets passing in ways that leave a surviving spouse financially insecure, or children feeling unexpectedly excluded.

A prenuptial agreement creates space to talk openly about questions like:

How will we provide for each other during the marriage?
What do we want our children to receive in the long term?
How do we define fairness when our histories are different?

Naming these intentions together reduces the chance that love for one person will later be interpreted as disloyalty to another.

Common Sources of Tension

Certain assets tend to carry both financial and emotional weight in blended families:

Inheritances meant to stay within a family line
Family homes filled with history and memory
Retirement accounts built long before the current relationship
Business interests that support not only the couple but extended family or employees

Without clarity, these assets can become flashpoints. A surviving spouse may assume security that the children believe was promised to them. Adult children may fear being displaced. A new partner may worry about long-term stability.

Clear agreements do not eliminate emotion, but they do reduce ambiguity. And ambiguity is often what fuels conflict.

When Lack of Clarity Creates Conflict

Most families do not end up in conflict because someone intended harm. Conflict often arises because expectations were never discussed.

A parent may think, “Of course my children know I will always take care of them.”
A spouse may think, “Of course we share everything; we are married.”

Both can be sincere. Both can be incompatible if never reconciled. Without a plan, those unresolved expectations may collide at the worst possible time — during illness, incapacity, or after a death, when grief is already heavy.

Clarity now is a gift to the people who would otherwise have to untangle those questions later.

Aligning Prenups with Estate Planning

In second marriages, a prenuptial agreement should not stand alone. It works best when aligned with estate planning documents such as wills, trusts, and beneficiary designations.

Together, these tools can:

Provide security for a surviving spouse
Preserve intended inheritances for children
Clarify how specific assets will be handled
Reduce the likelihood of future legal disputes

When these pieces are coordinated, they tell a consistent story about care, responsibility, and intention.

Reducing Loyalty Conflicts and protecting Relationships

Blended families can carry invisible loyalty tensions. Children may worry that accepting a stepparent means betraying the other parent. A new spouse may fear always coming second to the past.

Thoughtful agreements help quiet these fears. When financial expectations are transparent and agreed upon, family members are less likely to interpret planning decisions as emotional rejection. The legal clarity creates emotional breathing room.

In this way, a prenup does not divide a family into sides. It helps define roles and responsibilities so that love does not have to compete with uncertainty.

I always remind my clients that planning is not about choosing one relationship over another; it is about honoring all of them with clarity. In second marriages and blended families, a well-crafted prenuptial agreement can be an act of protection, respect, and care for past, present, and future relationships alike.

With Warmth,