Divorce is a challenging, time-consuming and often expensive ordeal. It’s a drain on your emotions, but the financial impact can be just as taxing.

The financial implications of a divorce become especially complex for those going through one later in life, because they generally have higher account balances and more tax liability. If just one aspect of your financial plan is overlooked, you may unwittingly find yourself responsible for a hefty sum–or worse, you could end up leaving your assets to the wrong beneficiaries.

To help you plan ahead and ensure something like that doesn’t happen, here are four financial items to address if you’re going through a divorce:

1. Take care when receiving assets with unrealized capital gains.

Let’s say you and your spouse have a joint taxable investment account. Inside that account, each investment likely has a different amount of unrealized gain or loss. Some assets may have appreciated significantly, while others may have only realized small gains or even losses.

When splitting up the assets inside the account, the fair market value of the assets received by each party may be equal. But one spouse may receive the significantly appreciated assets, while the other spouse may receive the assets with small gains or losses. The spouse who received the highly appreciated assets will also receive a large tax liability when those assets are sold, thereby reducing the total amount received.

What you can do:

Identify specific assets–not just accounts–to be received by each party. That way, you can avoid unequally receiving an asset with a large built-in tax liability.

2. Consider reducing your liability on any tax balances due–especially when filing tax returns–before your divorce is finalized.

If you’re not careful, you may end up liable for your spouse’s share of your joint tax liability. Unless a final divorce decree is obtained by the last day of the year, both parties are still considered married for tax filing purposes. As such, you will have to file either as Married Filing Jointly or Married Filing Separately.

If you file joint returns, you could end up liable for your spouse’s share of the tax liability. If you file separate returns, however, your liability is limited to only the tax due on your return, since there is no joint liability. Keep in mind, though, that filing separate returns will result in a larger federal tax bill than if one joint return is filed.

What you can do:

The timing of your divorce matters for tax purposes. Map out how you may be affected from a tax perspective if you were to file Married Filing Jointly, Married Filing Separately or Single.

3. Review your beneficiary designations for all accounts.

This is one of the biggest mistakes a recent divorcee can make–and it’s also one of the easiest to avoid. Many people don’t realize that for estate planning purposes, their beneficiary designations trump what’s stated in their will. This means that if, for example, your will states that your IRAs are to be left to your second spouse, but your beneficiary forms for the accounts still say that your first spouse gets your IRAs, then your first spouse will still receive those assets.

What you can do:

Most beneficiary forms are easily available through the places you hold accounts; simply ask the custodian for a beneficiary designation form and return it to the custodian. Remember to name both “primary” and “contingent” beneficiaries in case your primary beneficiary passes away.

4. Enlist the help of a financial advisory team.

Because not all divorce lawyers are up-to-speed on current federal, state and local tax codes, it can be a wise move to seek out a financial advisor who can help you navigate the tax impact of your divorce. This is especially true for people who have a high net worth, several children, children from different marriages, or split residency between multiple states.

What you can do:

A financial advisor, like the ones at Wealth Enhancement Group, may prove to be an invaluable asset when it comes to protecting you and your heirs’ finances during this major life event.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.