Divorce Newsletters

Withdrawing Money from a Qualified Plan Without the 10% Penalty

January 1, 2016

Normally, 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.

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Safeguard Account Values During the Divorce Process

December 1, 2015

As 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.

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Who Should Claim the Children?

November 1, 2015

One 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.

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Non-Financial Issues in Divorce

October 1, 2015

As 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.

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What is the Best Way to Divide Investment Accounts?

September 1, 2015

Blake and Crystal are getting divorced, and they have agreed that Crystal will keep 60 percent of Blake’s IRA.

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Insuring the Divorce Settlement

August 1, 2015

Carrie 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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Don't Overlook Important Assets

June 1, 2015

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.

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How to Stretch a Dollar

May 1, 2015

What 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?

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Be Aware of the Child Contingency Rule!

April 1, 2015

A 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.

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College Planning Can Be a Part of Divorce Negotiations

March 1, 2015

If 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.

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