Frequently Asked Questions
Divorcing individuals have a myriad of questions as they contemplate the financial aspects of their situation. Below are some common questions and answers. These, and many other questions, are concerns we help clients address.
Q: How is a CDFA different from a regular financial planner?
A: A Certified Divorce Financial Analyst (CDFA) has specialized education in the effects of divorce on financial assets, to include taxation and estate planning consequences. Most general financial planners, including CERTIFIED FINANCIAL PLANNERS (CFP's), do not possess this knowledge or expertise. Here is an example to help illustrate how choosing a CDFA might be important. If a divorcing husband and wife are splitting a retirement plan, such as a 401(k), it may be possible for the recipient spouse to withdraw funds without incurring the 10% early withdrawal penalty normally applied when assets are withdrawn prior to age 59-1/2. However, such an action has to be done correctly. If the recipient spouse is to receive, as an example, $40,000 of a retirement plan, then the potential 10% penalty amounts to $4,000. Working with a professional who can assist you with the proper procedure to avoid losing that 10% to the IRS may be a big savings!
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.
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.
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. If you are going through a divorce, it would be 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 cannot be accessed before 59 1/2 without paying a 10% penalty for early withdrawal.
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.
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.
Q: What is a QDRO and why do I need one?
A: A QDRO (or Qualified Domestic Relations Order) is the legal document that divides up a qualified pension or retirement account (including 401k's) pursuant to a divorce. The Judgment of Divorce is not sufficient to divide up qualified plans, a QDRO is needed. There are many nuances that go into QDRO's and make it an advocating (versus neutral) document. In order to protect your assets, be sure to obtain qualified advice in this area from a specialist.
divorce financials divorce finance jacksonville divorce money retirement after divorce divorce money plan qdro quadro qdro drafting jacksonville qdro writing qdro writer who writes quadro writes qdro retirement plan split divorce retirement plan jacksonville divorce split assets fair equal retirement plan after divorce retire after divorce financial plan after divorce divorce financial planner jacksonville divorce finance divorce financial plans divorce finances divorce finance planner divorce analyst money divorce plan divorce money plan jacksonville child support alimony divorce help financial planning for divorce qdro money financial planner jacksonville jax separating divorce assist
|
