Website design By BotEap.comBreaking up is hard

Website design By BotEap.comLong after the wedding bells have faded, you may meet someone who has come to a fork in the road and decided to go in a different direction than their partner.

Website design By BotEap.comBuilding a life with someone involves many things. There are memories, friendships, family relationships, and possibly children and pets. Love plants a seed that eventually takes deep root as a family is born and grows. And while love isn’t always about money, divorce certainly can be.

Website design By BotEap.comWhether it’s just a house and retirement account or something more complex like business ownership, other investments and stock options, unraveling a lifetime of work is difficult and emotionally complicated.

Website design By BotEap.comAlthough there is no escaping the emotional toll that a divorce can have, it is not in a person’s long-term interests to make or avoid decisions that will affect future well-being because of emotion. To avoid being a financial victim and starting a new life the wrong way, there are steps that can be taken before a divorce is final. It is best to make these decisions as dispassionately as possible using professional resources whenever possible.

Website design By BotEap.comPeople considering divorce should assemble a team of qualified professionals who can advise on the legal, tax, and financial impact of various proposed divorce settlements.

Website design By BotEap.comHere are some tips to keep in mind:

Website design By BotEap.com1.) Don’t become a financial victim. If you suspect a spouse is planning a divorce, make copies of important records and notify creditors, banks, and investment companies in writing.

Website design By BotEap.com2.) Do not prepare an inaccurate budget. People are usually required to produce a budget for temporary maintenance (also known as Pendente Lite). But through inaccurate monitoring or record keeping, this invariably leads to problems when they find they are having trouble making ends meet with court-approved maintenance based on the budget provided. It makes more sense to bring in a qualified financial professional at this stage to help prepare the budget.

Website design By BotEap.com3.) Do not try to use the courts to punish a spouse. In most states, equitable distribution is the basis of the agreements. Hire a combative attorney or ignore other options such as mediation or collaborative practice It will be costly and toxic to post-divorce family relationships, especially when children are involved. (For a better understanding of this option, search for Collaborative Divorce or International Academy of Collaborative Professionals.)

Website design By BotEap.com4.) Don’t Forget Our Common Enemy: The IRS. As the proverb says: the enemy of my enemy is my friend. Both parties will be affected by taxes. With careful planning in advance, this can be minimized. If assets must be sold or qualified plans withdrawn prematurely, this can increase the tax bill and reduce assets to live on after divorce.

Website design By BotEap.comA 50/50 split may sound fair. But the bottom line is the portion of the marital property that each gets net of the tax collector.

Website design By BotEap.com5.) Don’t use a divorce attorney as a financial planner, accountant, or therapist. With rates over $300 an hour, it’s easy to rack up big bills and not get the expert advice other professionals may offer.

Website design By BotEap.com6.) Don’t forget to secure the seat. The premature death or disability of a spouse means the loss of support, maintenance, or help paying for college tuition and health insurance.

Website design By BotEap.comMake sure the life insurance names the spouse receiving support as the owner of the policy. In this way, if the spouse who pays the policies stops paying the premium, at least the beneficiary/owner will receive a notification and can take legal action to deal with the non-compliance.

Website design By BotEap.com7.) Don’t keep the marital home if it’s not affordable. Too often, couples fight over who gets the marital home. While there may be sentimental value or legitimate concerns about taking kids out of school, it may not make financial sense to keep the house. After all, real estate is a low-yielding asset (and has actually been negative in recent history), while mortgage, taxes, and maintenance costs can be a drain on post-divorce budgets. It usually makes more sense to sell the property while you’re still technically a couple to get the maximum capital gains exemption ($500,000 based on cost) and split the proceeds to buy or rent another place.

Website design By BotEap.com8.) Don’t forget to change payees. Failure to remove and change the spouse from one of the qualified insurance plans or policies, unless required by the settlement agreement, could result in benefits or assets going to someone the divorcing couple does not want to receive them .

Website design By BotEap.com9.) Don’t forget to close or cancel joint credit cards. To avoid problems, it’s best to close credit cards for any new charges pending from the final divorce. This will avoid the temptation for one of the spouses to rack up charges.

Website design By BotEap.com10.) Do not accept a settlement without having a QDRO in place. As long as a spouse has a qualified plan (for example, 401k or pension), a Qualified Domestic Relations Order will tell the plan administrator who is entitled to the asset and when. (Note that a QDRO does not apply to IRAs that are governed by beneficiary designations.) This is sometimes an afterthought, but it is critical. It’s a good idea to look at the language in these commands. If not worded correctly, it could delay the time a spouse becomes eligible to begin receiving benefits or could lead to investment decisions that may be unwise or detrimental to the spouse’s retirement interests.

Website design By BotEap.comThere are several methods for valuing pension or retirement benefits. This is often overlooked by time-hungry divorce attorneys or court personnel. Use a financial professional trained in these techniques to ensure that the settlement analysis is done correctly.

Website design By BotEap.comAnd make sure the attorney drafting the QDRO makes the beneficiary of the pension or retirement account eligible for initial benefits as soon as possible under the rules of the qualified plan. Otherwise, the beneficiary spouse may have to wait until the other spouse account holder makes withdrawals, which they may choose to delay out of necessity or spite. Some servicers will separate the portion for the spouse from the beneficiary, so it’s a good idea to make sure the funds are invested according to the beneficiary’s age and risk tolerance and not simply held in a low-cost money market account. interest.

Website design By BotEap.com11.) Don’t underestimate the impact of inflation. Without proper help reviewing settlement options or preparing a post-divorce plan, it’s easy to forget that the lump sum received today may seem like a huge sum but may be inadequate for inflation. Whether it’s for college tuition, health care, or housing, inflation can take a huge toll on a person’s budget and resources.

Leave a comment

Your email address will not be published. Required fields are marked *