Property Settlements

Typical Scenario

More often than not as negotiations heat up between parties there are numerous iterations of divorce property settlements that fly back and forth. We can help manage these, show what each means to you now and in the future, and suggest viable alternatives.

A CDFA can project working capital (cash flow) and net worth from the expected divorce settlement to your retirement. We can show how seemingly equitable settlements can differ leaving a person able to flourish post-divorce or in a situation of pending financial distress. See Graphs below.

Divorce Financial Planning Ex 1Divorce Financial Planning Ex 2

 

 

 

 

 

 

Both settlements appeared equitable on the surface as far as asset/debt division and maintenance. But as you can see, a remarkably different life can result after the divorce decree has been signed. Here are the main sources of money as a result of divorce that need to be analyzed and key decision must be made. A CDFA can help you make smart choices regarding the following (everyone’s case is different):

Marital Property

  • The marital home (and other real estate) – Market Value? Can or should we keep it? What other options do we have?
  • Family business – what’s the value? how can this be divided or can it?
  • Retirement accounts (IRAs/Qualified plans, Qualifies Domestic Relations Orders (QDRO’s), Tax Issues, Defined benefits/pension)
  • Other assets (stocks/bonds/real estate) and debt that make up net worth.
  • Appreciation on separate, non-marital property – is that fair game?
  • Taxable vs. non-taxable property – how will this affect my settlement?
  • Presumptive gifts

Child Support

  • Usually set by state through specific guidelines – is it negotiable?
  • Not taxable to custodial or tax-deductible to non-custodial

Spousal Support

  • In most states, spousal support is not mandated. Rehabilitative support is a common scenario.
  • Factors considered – Need of one party, the other party’s ability to pay, length of marriage, etc.
  • Modifiable vs. non modifiable support – what this difference and how could this be beneficial?
  • Social Security – how does this impact mine or my rights to my spouse’s social security?