Frequently Asked Questions Regarding Divorce
Settlements
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| Q: |
As a
collaborative practitioner, how would you work with an attorney in a collaborative
divorce? |
| A: |
We will work as an objective and neutral
financial professional to help layout what your assets and income are and help work to an
agreeable equitable distribution of those assets. We will also help you and your spouse
work out a realistic and agreeable amount of alimony if that is required as well as the
calculation of child support guideline amounts based upon the income of you and your
spouse. |
| Q: |
Will I be able to
receive alimony? |
| A: |
The tests for alimony
(also known as maintenance or spousal support) include some of the following, however,
keep in mind that no two cases are the same. You need to seek individual advice in order
to determine how the specifics of your case may impact your ability to receive alimony:
- Need - Can you support yourself with earned income plus
investment income?
- Ability to pay - Does the payer of alimony have sufficient
funds to pay?
- Length of marriage - A long-term marriage (10 years or
more) is typically a stronger case for the lower-earning spouse.
- Health of both parties.
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|
| Q: |
Will I lose my
pension? |
| A: |
Pensions and retirement
plans are marital assets. Depending on the state you live in, the portion which was earned
before your marriage could also be considered a marital asset. However, it is possible to
keep your pension and have it offset by other assets. |
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|
| Q: |
Should
the custodial parent keep the house? |
| A: |
This is a great
question, because it's one of the most important overlooked questions. The answer is
sometimes yes, sometimes no. It's important to pinpoint exactly what it will cost to
maintain the home, factoring in taxes and inflation. The next step is to analyze if there
is enough money coming in to stay comfortable in the home (in other words, pay the bills
each month). Once that has been determined, the advisability of retaining the home must be
compared to the advisability of giving up other assets (such as liquid accounts,
retirement plans, etc.). Finally, all decisions need to be weighed against current
economic and stock market conditions. Certified Divorce Financial Analysts are
trained to help people answer this question before they commit to a settlement that cannot
be changed. |
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|
| Q: |
What if I bring a
house into the marriage that is in my name only, and I add my spouse's name to the deed? |
| A: |
In this case, the whole
house could be considered marital property. You might have made a "presumptive
gift" to the marriage and should consult with a family law attorney to discuss your
options. |
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|
| Q: |
Is my IRA considered
marital property? It's in my name only. |
| A: |
Everything acquired
during the marriage, no matter whose name it's in, is typically considered marital
property. In some states, the increase in the value of separate property could also be
considered marital. If you are going through a divorce, it would important to evaluate the
financial drawbacks to having your IRA included in the list of assets you retain, post
divorce. Remember, the funds in the IRA, with limited exceptions, cannot be accessed
before 59 1/2 without paying a 10% penalty for early withdrawal. |
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| Q: |
I have
never worked. Can I get Social Security? |
| A: |
If your spouse has
worked and if you have been married for 10 years or more, then you are entitled to
one-half of your spouse's Social Security or your own, whichever is higher -- even if you
are divorced. Your spouse still retains 100% of his/her Social Security benefit. This is
an automatic guarantee and therefore it is not a negotiation point in a divorce. |
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| Q: |
How do we
figure how much child support should be paid? |
| A: |
Every state has Child
Support Guidelines that are mandated by the State. However, the Guidelines get tricky when
one (or both) spouse(s) is an independent business owner who can control their wages. In
this situation, it typically helps to bring in a financial or tax expert who can help
determine the true potential income of the spouse(s). |
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|
| Q: |
Do we have to go to
court? |
| A: |
Only if you can't reach
an agreement. Then, a court date is set and a judge hears the case. Less than 2% of all
divorce cases go to trial in the United States. |
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|
| Q: |
What is a QDRO, and
why do I need one? |
| A: |
A QDRO (or Qualified
Domestic Relations Order) is the legal document that separates a qualified pension or
retirement account (including 401k's) pursuant to a divorce. The Judgment of Divorce is
not sufficient to separate qualified plans: a QDRO is needed. There are many nuances that
go into QDROs and make them advocating (versus neutral) documents. In order to protect
your assets, be sure to obtain qualified advice in this area from a specialist. |
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Copyright: 2006, Roderick
C. Moe CPA, PA. All material contained herein is copyright protected and
may not be reproduced in any manner without the express written permission of the
copyright owner.
Certain text is reproduced with the permission of the Institute for Certified Divorce
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