I think it is fair to say we have all had clients who, for emotional reasons, want to stay in the marital home yet can’t afford the mortgage payment or cost of maintaining the house. Emotions are taking precedence over good financial decisions, and this client could be jeopardizing their future. In some situations there may be a way to solve this problem, satisfying the client’s wish to remain in the home and yet relieve him or her of some of the financial burden. This tool is the reverse mortgage.
Read MoreThere is an old saying, “If all you have is a hammer, everything looks like a nail.” It is meant to imply that if you are familiar with a single, certain subject you may have a confirmation bias to believe it is the answer to any problem. Could it be applied to Certified Divorce Financial Professionals? We do believe we have important knowledge and can be helpful in any divorce case. Are we the answer to every problem? Probably not. But here is a sample of questions I have been asked by divorce attorneys in the past, illustrating the importance of good financial advice in any divorce case:
Read MoreIn January my newsletter focused on a little known strategy that allows alternate payees to withdraw money from a qualified retirement plan before normal retirement age without paying a penalty. This can be very helpful when cash is needed but the only place to get it is a 401(k) or 403(b).
Read MoreWhen alimony and child support are awarded in a divorce, it is strongly recommended that these payments be secured. If the payor becomes disabled or dies, the ability to continue payments could be in jeopardy. The need for payments would not go away but the ability to pay would – a situation you don’t want your client to experience.
Read MoreNormally, distributions made from a 401(k) or 403(b) or other qualified plans before the participant attains age 59-1/2 are called “early distributions” and are subject to income tax as well as a 10% penalty tax. That means a distribution taken could incur taxes equaling 50% or more depending on the individual’s federal and state tax bracket.
Read MoreAs we all know the divorce process can take a few months at best, and in some cases years. Once an agreement is in place it then takes a couple of months for the court to approve the documents. When dividing investment accounts, the decree and other forms have to then be given to the account custodian to process. Therefore a spouse who is awarded an investment account in the divorce may not take actual possession of that account for some period of time. This is especially true for 401(k)s, 403(b)s and other company-sponsored accounts that require a QDRO, as the drafting and approval process often takes 6-12 months.
Read MoreOne component of a divorce plan is to decide which parent will claim the child(ren) on their tax return. Let’s look at why this decision is important.
Read MoreAs financial planners, we are hard-wired to ask lots of questions about the financial issues involved in a divorce case. Our focus is on gathering the financial information, organizing it, and then using it to help one or both parties make the decisions necessary to divide assets, calculate alimony and child support and answer other questions.
Read MoreBlake and Crystal are getting divorced, and they have agreed that Crystal will keep 60 percent of Blake’s IRA.
Read MoreCarrie felt good about her divorce settlement. Her ex-husband Jamie was going to pay her $3,500 per month alimony for 5 years, long enough for Carrie to go back to school and earn her MBA. She planned on starting a career as a management consultant once her youngest boy was in high school.
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