Divorce is ultimately about dividing assets and therefore, of course, having a complete list of assets is extremely important. There are several resources you can use to help gather asset and liability information, including the Financial Affidavit and the list of documents required by New Hampshire Family Division Rule 1.25-a. These do a good job of identifying and quantifying most traditional financial assets such as bank accounts, retirement accounts and life insurance cash value, and liabilities including loans and credit card debt.
Read MoreWhat can you do when you have two people, one pie, and each one wants three-quarters of the pie? And nobody wants to accept a smaller piece of pie?
Read MoreA few years ago I wrote about the Child Contingency Rule, an IRS regulation that is designed to prevent child support payments from being disguised as alimony. I think this rule bears repeating since it is not well known, yet easy to run afoul of. Further down you will see an example that ran across my desk just last week.
Read MoreIf you are assisting a client who has young or teenage children, you have probably had a conversation about paying for college. Typically this is not a big part of the divorce negotiation. Any savings earmarked for college is usually kept intact and set aside from the property to be divided. A discussion around who will pay for college is warranted and perhaps the couple comes to a rough agreement of who will take on that responsibility. More often than not the higher-earning spouse takes on much of the burden.
Read MoreSurprises are nice on your birthday, Christmas and April Fools’ Day. But they are not so welcome when you find out, post-divorce, that they result in a hefty tax bill. A pre-tax settlement can look very different from a post-tax settlement if consideration is not given to such issues as cost basis and depreciation. You can help your client make wise decisions by keeping some tax issues in mind during the divorce proceedings.
Read MoreWhen you are helping your client navigate through the divorce process, it is important to take steps to protect their credit score. After the divorce is completed the client’s financial future will be impacted by this number, affecting their ability to take out a mortgage, secure an auto loan, and perhaps even to rent an apartment. Some employers are looking at credit scores as a gauge of the person’s integrity. Here are some tips you can give your client to help them preserve their good credit history.
Read MoreIt is not unusual, when splitting assets in a divorce, to divide each account right down the middle. That might be fine to do for most types of investment accounts, but when it comes to annuities you need to be very careful. Because of their unique structure, dividing an annuity can have unexpected tax consequences.
Read MoreLife insurance is traditionally purchased to cover the risk that one spouse in a marriage will die and leave the surviving spouse unable to support his or herself. When the couple divorces you might think this risk no longer exists, as the two parties are no longer dependent on one another. However there are several reasons why life insurance may still be necessary, and this brings up a host of issues.
Read MoreMost likely, as you work out a settlement for your divorce clients, you are making an attempt to figure out whether the assets and income your client will have post-divorce is sufficient for his or her needs. Depending on the age of the client this exercise might have you looking just a few years ahead (for young clients) or right through retirement (for older clients.) For your clients who are approaching retirement age, factoring their Social Security benefit into the picture is important.
Read MoreThe tax return is a valuable tool in divorce. It contains a variety of information that helps us find or verify financial data. Here aresome examples of how to mine the federal tax return:
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