Get Your Head Straight Before You Negotiate!

May 16, 2012 at 9:36 am (Uncategorized)

What does a CDFA do in a divorce?  First, CDFA stands for certified divorce financial analyst.  We all must have 2 years or more experience in the financial services or accounting industry before we can start studying for our CDFA.  We must self-study and pass 4 modules to obtain our certification.  Then every 2 years we must have 20 hours of continuing education credits.  Some of those credits can be from the financial services, legal and/or accounting classes.  As an insurance licensed CDFA, according to your home state, you must also obtain insurance continuing education credits on top of the CDFA.  If you have further licensing (CFP or CPA), there are even more continuing education classes you must maintain.  So it is safe to say, CDFA’s are experienced and educated on many levels about financial assets, documents, taxes, etc.  So that qualifies us to be the expert in your divorce to help with separation of marital assets.  What these associations don’t teach us, is the emotional aspect of these negotiations.  When a client has been hurt, deceived, or worse is seeking revenge, it makes it extremely difficult for their attorney, their soon to be ex spouse and attorney, and especially the children to negotiate a settlement.  If you are this spouse, it is very difficult to separate emotions from facts. 

Here is a typical client of mine.  For the most part the hurt, deceived or unsuspecting spouse is my client.  It is the job of the CDFA to document the facts (from financial documents).  With the help of the attorney, these documents can be obtained through the process of discovery.  Discovery is uncovering the facts.  Now that the financial documents are obtained and recorded, it is the job of the CDFA to put them in a logical order, review for accuracy, calculate future outcomes for both parties and help the client decide what asset they should take and how much.  And here lies the problem.  The hurt spouse has a very difficult time separating emotions from facts.  Court is the last place they want to spend their money and energy seeking revenge, righting wrongs, or bringing all the dirt out on their spouse.  In the end it doesn’t really help you heal and move forward.  Time, self-reflection, help groups and therapy (not alcohol, drugs, gambling or shopping therapy!) will help you through the emotions of it all. 

If a spouse cannot see past the hurt, anger or revenge, then they should wait to negotiate so their decisions are not emotional ones.  The biggest questions clients have is, ‘How am I going to be after the divorce?’.  That question is usually a financial one.  CDFA’s can take the ‘fear’ out of that question and help clients on the right financial path post-divorce.  CDFA’s with mediation training can help couples split their marital assets, and project post-divorce budgets without having to battle it out in court. 

How I use my mediation skills is to teach clients how to negotiate.  There is no cut and dry way to split assets.  The worst a client can do is split everything down the middle 50/50.  Not only is this not the best way, they may incur unneccessary penalties and taxes.  Taxes are an issue most attorneys won’t touch with a ten foot pole!  So seek the help of a qualified accountant or CPA who can be on your divorce team and your future.  It is well worth the money to pay them to do your taxes right the first time and help you with any tax liabilities in the future.  It is also well worth the money to hire a CDFA along with your attorney.  CDFA’s know more about financial assets, tax penalties, and can project future growth on your assets.  Forensic accountants are just that.  They can look back at your financial history, but they do not project forward. 

So settle your emotions and gain some knowledge about financial assets, taxes, and work on your negotiation skills.  Work with someone who has many years of experience doing this and do not rely on the internet and your friends for all the answers.

Leave a Comment

Divorced Spouse Social Security Benefits

May 2, 2012 at 7:39 pm (Retirement Plans)
Tags: , ,

I just attended a seminar today on social security benefits.  I’m telling you, what a confusing subject!  If anyone claims to know all there is to know about social security, I would bet they don’t!  Even the customer service people who work at social security don’t know all the answers.  But one subject that is pretty clear is the benefits a divorced spouse is entitled to.  If you were married for 10 years or longer, over the age of 62, have been divorced from your spouse for at least 2 years and are currently unmarried, you may qualify for 1/2 the benefits of your ex-spouse.  So how do you know what your ex-spouses benefit is? Just know their social security number.  That’s why I insist all my clients keep either a tax return or a copy of their ex’s social security card or number.  When you make your trip down to the social security office, you will have your own earnings in the system if you worked and you will have your own benefits based off of 40 quarters of working.  If you didn’t work 40 quarters then the benefit will be lower than if you had worked at least 40 quarters.  Now your ex-spouse may have worked 40 quarters or more and may have earned more income than you.  If this is the case, and you have met the above 4 criteria, it would be to your benefit to ask at the social security office if you can apply for your benefits or the ex-spouse.  You will get whatever is higher.  Your ex doesn’t even have to know about it!  And it won’t affect his/her’s benefit in any way.

Also, if you have been married more than one time and for 10 years or longer and meet the above criteria, you have 3 social security benefits to choose from!  Yours, and your past 2 exes!  So whichever is the highest, that is the one you take.  But beware, social security will not freely give you this information or even ask you if you have been divorced.

I once had a case where the wife was always self-employed. She never contributed to social security.  Her first marriage was to a man who had been married twice before.  He was older and already collecting social security.  She was a much younger wife, but approaching her mid 50′s.  When her divorce process started she had been married almost 9 years.  The divorce took right at a year.  I informed her about the 10 year requirement, but she either wouldn’t listen or didn’t believe me.  She was not going to receive any alimony so her biggest benefit would be qualifying to receive half of his social security when she reached her full benefit age.  The attorney finalized the divorce at 9 years and 11 months.  The client never told the attorney, the attorney was unaware of the 10 year qualifying rule.  A year later I ran into the former client and she told me that I was right and that she should have listened to me.  She said at the time she didn’t realize the impact it would make.  Now she is back to where she was, no reported income and now not enough time to build up her own benefits.

Best advice:  if you are close to 10 years at the end of your final divorce hearing, make sure you stretch it to 10 years if you are the lower wage earner.  If you are the higher wage earner, it makes no difference.  If you can obtain a copy of your spouse’s social security benefits statement through the divorce process, keep that copy for later.

And we wonder why social security is going broke?

Leave a Comment

Funding Your Divorce

April 18, 2012 at 1:12 pm (Financial Statements)
Tags: , ,

Let’s face it, divorces cost a lot of money.  Even the most amicable divorces cost money.  And if your divorce is litigious, it could cost upwards of $25,000, $50,000 or in some higher net worth couples $100,000!  So what do you do if you are the spouse who does not have access to the money?  And you are blindsided by the divorce?  Which is many times the case.  Rarely do I see a divorce where both spouses come together and say let’s end this marriage, equally divide our assets and debt and spend as little as possible paying for a divorce.  Unfortunately it is often the opposite.  One spouse checks out of the marriage and plans their exit without letting the other spouse in on the plan.  Which leaves the other spouse totally blindsided and no money to hire a well qualified attorney.

I have been doing some research across the country on Divorce Funding.  Believe it or not currently 4 states offer it.  It is not cheap.  It is a high interest loan, often upwards of 14% or more, but what it gives you is the money to hire the best attorney, forensic accountants, mediators, etc. for your divorce case.  You don’t have to pay it back until the divorce is final and assets are split.  The advantage is that you have enough money to assemble the best team for your divorce.  You do not have access to the money for yourself, the lender pays the professionals directly. You will have the funds to help uncover hidden assets and assemble the best legal team in your area.  What these banks tell me is when you can hire a top-notch team from the start, your divorce settlement will be better than if you didn’t assemble the right team.

The disadvantage is you have to pay it back at a higher interest rate.  And you must qualify with a net worth of $2 million or more.  Now I know I have just knocked out most of the readers of this post with this news!

So what do you do if you have no idea what your marital net worth is?   If you are worth $2 million or more, you pretty much live the life of a millionaire so you should know.  For the rest of the population there are some ways to gather enough money to hire the best attorney for your case.  If you have been blindsided by the divorce, or were served papers and are ill prepared, your first step is to meet with several attorneys.  You will need to know first how much of a retainer you will have to hand over to an attorney before you panic.  And if you can’t afford to speak with an attorney, borrow money from a friend or family member and go.  Pay the attorneys fee and bring a notepad to take notes.  The better prepared you are before you meet, the more legal information you will be able to abstract from your meetings with attorneys.  State your case, ask the attorney questions, and ask how much they think your case will cost.  Choose your attorney wisely.  Look for my next posting on questions to ask a potential attorney.

Now back to funding your divorce.  Once you have narrowed down your choice of attorneys, find out how much of a retainer they will require.  Just be cautious, don’t always go with the cheapest attorney or the one who asks for the smallest retainer.  Their experience in cases like yours, their experience working with your spouse’s attorney, and your overall mental health will be a big factor in what your divorce will cost.

So how do you fund it?  Currently there are no banks offering divorce funding in the state of South Carolina, but there are banks in Florida, New York, New Jersey and California offering the funding.  With again, the threshold of $2 million or more in net worth.  So now what?  You may need to apply for a personal loan, ask for loans from family members or friends, take a loan out on your 401k (if you have already been to court, you will not be able to do that), sell savings bonds, cash out a life insurance policy, etc.  But don’t hire the first attorney you meet if you don’t feel it is a good fit, because you will go to court with the ill-matched attorney and may not fair well in court.  And after you go to court in may be too late to access any of your funds if the courts put a freeze on your assets.

If you have any questions about how to access some of your assets, feel free to call Splitting Assets, 803-790-2674.

Leave a Comment

What about the children?

April 10, 2012 at 9:33 pm (Emotional Decisions)
Tags: , ,

This post has nothing to do with the financial aspect of splitting assets in a divorce, but it does concern the subject that burns me up more than anything and that is the children.  The manipulation, control, and flat-out abuse that children suffer from angry spouses is unforgivable!  Today on Facebook I saw a wall photo that just touched me to the core.  It read: It is easier to build up a child than it is to repair an adult……choose your words wisely!

Divorce can be difficult not only on the adults involved, but it is far worse on the children.  The children love both of their parents, no matter what the parents think of each other.  All the trash talking and bitterness gets you nowhere, but full of anger.  And who feels that anger? Your children.  Think wisely parents before you use your child to get back at your ex!  I’ve seen cases where the parent who really never spent any time with the children, all of sudden want custody just to get under the skin of the soon to be ex.  Think about how that affects the children!  And it doesn’t stop when the divorce is final!  Remember you are a parent first!  You are a role model for your children.  Believe me, children see and understand far more than you think!

I see former clients rage war against the other parent by using the children to manipulate the other parent.  For example, one parent doesn’t really want the child around.  But the parent uses the child to try to manipulate and try to ruin the other parents  life.  The parent cancels time with the child because the parent thinks it will ruin the other parents social time with the new significant other.  The vindictive parent gives up time with their own child just to hurt the other parent!  Come on!  Who does this hurt?  The child.  The poor young child goes off to daycare expecting one parent to pick them up and that parent doesn’t show up.  So who shows up is the other parent.  The child loves both mommy and daddy, but was really looking forward to spending time with the other parent.  Wake up moms and dads.  You are not hurting your ex, you are hurting the child and destroying what could be time well spent with your children, teaching them, loving them, spending quality time with them.  You don’t have to be a Disney parent to be a great parent.  What children crave more than anything in the world, is not toys or vacations, they just want your undivided attention.  It doesn’t have to be extravagant.  Just quality time together.  And forget the trash talking of the other parent.  All that does is cause angst in your child because your child loves both their mother and their father and they need you both in their life.  They don’t need to continue to hear you argue, disagree or speak bad of each other.  Be the big person and demonstrate how adults need to treat each other.  You may hate the person you divorced, but you both created a child and brought him/her into this world and you need to continue to be an example for them.  Or guess what?  Your child will have problems with relationships, respect, trust and getting along with others.  As a parent do you really want to set your child up for failure?  All we want for our children is for them to grow up and be loving, responsible adults who are happy and are good and kind to others.  Start now being that example!

Leave a Comment

Signs of a controlling or abusive husband

March 21, 2012 at 5:36 pm (Uncategorized)
Tags: ,

This is the title of my first e-book coming out soon.  Now don’t fret men, there will be a comparable one for you following soon.  I will be releasing a series of e-books rather than one overall book geared towards divorcing women.  Each e-book will be a chapter based on stories of divorced women.  All the stories are chapters in the lives of 22 women that I interviewed this past year.  So not all 22 stories fit in this book because not all the women lived with controlling or abusive husbands.  But what I found interesting is a commonality in all the husbands.  Similar controlling behaviors.  Some times this behavior would lead to physical abuse, but not always.  What is always of concern is what starts out as controlling behavior often leads to emotional and physical abuse.  Many of these women were very emotional during their interviews.  And I am happy to say, some were able to look back for the first time and see the patterns that they never saw before in their ex-husbands.  All of these women have advice for other women who may find themselves married to the same type of man they were married to.  I encourage any woman who is going through a divorce to download my e-books on Amazon when they become available.

While you may be experiencing divorce, you may find it comforting to know, you are not alone!  You may feel you are the only one in the world who is going through it, but you are not.  You may find comfort in knowing that not only will this divorce be over soon, you will come out the other side a stronger mom, sister, or future wife because of it.  Please read these stories and know you are not alone!  You are a survivor!

1 Comment

Financial Infidelity

March 19, 2012 at 4:59 pm (Financial Statements)
Tags: ,

People would be surprised just how much spouses lie, cheat and steal from each other.  What most often is revealed during the divorce process is financial cheating.  Hidden bank accounts, loans on 401(k)s, unknown credit cards, personal loans and equity lines to pay off secret credit cards or even worse to support another person outside of the marital home. In a 2010 survey by the National Endowment for Financial Education found that 31 percent of people admitted to hiding information about debt, purchase, or bank balances from their spouses.  This is an alarming number! What is often discovered during the divorce process are financial assets and debts that one spouse was not fully honest about revealing to the other spouse.   

What might have started as an innocent credit card, ended up mushrooming into a very large debt.  The items that were purchased on the credit card most often are never known by the other spouse.  Often that spouse will hide these items from the other spouse.  I remember one case that started out innocently enough as tracing bank accounts through the couples’ joint checking account.  But what was found was an equity line that the wife knew nothing about.  I instructed her to go to her bank and request copies of the equity line back to the date it was opened.  What we found was shocking.  Her husband took out the equity line without her knowledge and was using it to pay off all the credit card debt he had racked up.  We also found a 401(k) loan of $40,000 that he spent. Guess what asset he was willing to let her have?  The house, with the 1stmortgage with a balloon payment due in one year, a maxed out equity line, and no possible way for her to refinance both the

1st and 2nd mortgage on her income alone.  This left her no choice but to sell the home in a year at a reduced value because the housing market had taken such a big hit.  The wife took the home against my advice.  The husband walked away with zero debt, his full 401(k), and no responsibility to help sell the marital home.  Was this a good deal for the wife?  Not in this case. 

Other cases I have found extra income sources through hidden bank accounts.  One case I found an extra $80,000 in it, solely in the wife’s name.  She claimed it was her deceased mother’s money, but upon further tracing, we found large chunks of money siphoned out of the couples’ joint account every time the husband was deployed overseas.  This resulted in the husband keeping his full retirement and all of the equity in the marital home.   

One recent case I was hired to solely check a year’s worth of bank statements.  After categorizing all the debit card purchases I determined that the husband was not making a single credit card payment through this bank account, when he provided credit statements that showed payments being made.  What was missing here?  Another bank account.  

Allow the financial expert on your divorce team to  turn over every financial rock so there is no question after your divorce that every stone was uncovered.  There is nothing worse than getting through the divorce to remember something that you hadn’t thought about for years that could have made a difference in your settlement.  If your spouse will not share financial statements with you, then make copies for yourself when you see them.  Plus, if your spouse refuses to share financial documents with you, think of it as a big red flag!

Leave a Comment

Why is the tax return so crucial in your divorce?

March 14, 2012 at 6:04 pm (Financial Statements)

This comes at an appropriate time.  It is tax season.  No, you can’t avoid it.  You earn money, you have to file a return to the IRS and your states department of revenue.  But why are tax returns so crucial in a divorce?  All income derived from many sources is captured in your personal tax return.  Also, all allowable deductions are shown on your return.  It is amazing the information that will show up on your return if you know what to look for.  Now I couldn’t possible list all that you can find on the return that would be pertinent to your divorce, because every person’s financial house is different.  But there are some general categories to look for on the returns. 

First, get a copy of the actual returns.  You may get that any number of ways.  You can look through your personal records.  You may go to the CPA or accountant who filed the return for a copy or you may sign a power of attorney for them to act on your behalf to obtain a copy.  Go directly to the IRS and Department of Revenue and request a copy for yourself.  This takes the longest, I have seen it take as long as 6 months.  Or you may obtain a copy through your divorce attorney through the discovery process.  But one thing to note is that the copy that your spouse provides may or may not be accurate or include all copies of W-2’s, 1099’s, and K-1’s.  If your spouse owns a business there will be more returns you will need to obtain beyond the personal returns.  The corporate return, unless you are one of the owners will not be easy to obtain through the avenues listed above.  Your only option here is through your attorney.   

From the tax return you can find, bank accounts, investment accounts, stocks, businesses your spouse may own or be a partner in a business, and all of his/her income sources.  It is of the utmost importance to have the copies of 1099’s, W-2’s and K-1’s.  Having a CDFA on your divorce team

is crucial to sort out this information.  Your divorce attorney may or may not have an expertise in the area of finance.  Even if they do, working with a CDFA will give you the edge over negotiating the right settlement for you. 

Another good source for you is the IRS website itself.  If you don’t understand a term, look it up.  Go to www.irs.gov and type whatever term you don’t understand in the search box and they will guide you to the IRS publication that pertains to that item.   

Want to know if your spouse ever moved their 401(k)?  Or took money out of their IRA?  It will show on the first page of the federal return.  One thing it will not show is whether or not your spouse took a loan out on their 401(k), but their paystub will show you that because it must be paid back to the company holding the 401(k).  Now what happened to the money from that loan?  That will take more research but it can be found.  Again, look to your financial expert on your divorce team for help with this.  It may lead you to a dead-end, or to a pot of gold!   

A word of caution to a non-working spouse:  if you did not contribute any income to the household you do not have to sign the tax return.  The only time this has shown to be of any importance is if your spouse owes taxes.  I had a client who was a stay at home mom her entire marriage.  She and her ex-husband had 4 children together and she never signed a tax return except for one year.  She was coerced into signing by him and that happened to be the year, he owed taxes on more than $800,000 of unreported income.  Since she signed the return, IRS came after her while she was going through her divorce.  She had to hire a tax attorney to help her file as an innocent spouse.  She didn’t owe the money, but it was a very stressful time.

Leave a Comment

What Doesn’t Kill You Makes You Stronger

March 7, 2012 at 7:09 pm (Emotional Decisions)

“You know the bed feels warmer, sleeping here alone, you know I dream in color, and do the things I want.  

You think you got the best of me.  Think you had the last laugh.  Bet you think that everything good is gone. 

Think you left me broken down. Think that I’d come running back.  Baby you don’t know me, cause you’re dead wrong.  

What doesn’t kill you makes you stronger. Stand a little taller.  Doesn’t mean I’m lonely when I’m alone. 

What doesn’t kill you makes a fighter, footsteps even lighter.  Doesn’t mean I’m over cause you’re gone. 

What doesn’t kill you makes you stronger, stronger.  Just me, myself and I. What doesn’t kill you makes you stronger, stronger. Stand a little taller.  Doesn’t mean I’m lonely when I’m alone.”  These are the lyrics from Kelly Clarkson’s latest hit, “Stronger”.   

Every time I hear this song it takes me back to my own divorce and reminds me of all the stress, heartache and drama that I suffered through during my divorce.  What got me through every single day was thinking of this phrase that is now a song, “What doesn’t kill me makes me stronger’.   And saying, “Why am I going through this?  Is there a lesson here for me?” 

This personal experience is what I share with every single client who walks through my door.  You will look back one day and think how in the world did I survive the stress of my divorce?  By thinking that every event in your life is a learning experience will get you through this stressful time.  Some people have a bigger learning curve than others!   

Think back through your life when events were stressful, such as the death of a loved one, an unruly teenager, drama in high school, or even a friend saying something behind your back that is hurtful.  Every stressful moment in your life is a learning experience.   

When my clients call me and tell me something terrible has happened to them, I ask them, “What have you learned from this experience?” Sometimes it takes a while for them to see the true lesson and others they see it and correct it right away.   

Another important technique to dealing with the stress of your divorce is to journal.  I hear this from every therapist I speak with.  Not only is it important to get what’s on your mind out on paper, it is a great reference to look back and see how far you have come through your divorce.  Many clients are concerned someone will find their journal, so if you don’t want prying eyes to see, then tear it up after you write it done.  Only drawback is that you can’t look back on what you have written or been through.  But it is a great tool to relieve stress, sort out your emotions, and learn from your mistakes.   

Just remember, this too shall pass.  Your divorce in the history of your lifespan will just be a ‘blip’ on the radar screen.  Look at this time as a time for growth, change, and searching for the new you!

Leave a Comment

New Year, New Focus

January 18, 2012 at 6:30 pm (Mediation)

As I reflect on the changes in the world this past year and especially the U.S. economy, there have certainly been changes in the way people go through the divorce process.  In 2011 I obtained the collaborative law certification and the mediation certification.

With these certifications I have added another tool to my tool box to help untangle the financial complexities of separating assets and debt as a result of divorce.  Mediation has been the focus this past year.  Whether it is in conjunction with a mediator and acting as a neutral for the couple, through the collaborative law process, or court ordered mediation representing one client, the entire process places the outcome in the hands of the divorcing couple.  Not in the hands of the courts. 

What I have learned from attending these classes is that what’s popping up all over the country are law  practices focused solely on divorce mediation.  Couples are deciding that they don’t want to place the decisions of their future in the hands of the courts.  

So as a result, Splitting Assets is focusing solely on the mediation process in divorce.  This includes litigated cases that are mandated to mediation.  Here is what sets our firm apart from the rest: 

  • Focus on educating the client and attorney regarding the financial assets and the impact of taking one asset over another in preparation of mediation
  • Assist attorneys during the mediation process, to answer questions regarding various scenarios
  • Use of the Family Law Software™ in mediation, to make changes and print out marital assets and debt sheets for the purpose of the mediated settlement agreement
  • Answer tax ramifications regarding alimony, retirement accounts, and other taxable assets during mediation
  • Be available to the client regarding post-divorce asset transfers

Leave a Comment

What is a QDRO?

August 30, 2011 at 3:37 pm (Retirement Plans)

 QDRO or qualified domestic relation order is a domestic relations order that creates or recognizes the existence of an ‘alternate payee’s’ right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a retirement plan, and that includes certain information and meets certain other requirements. It is a judgment, decree or order that is made pursuant to the state domestic relations law and that relates to the provision of child support, alimony payments, or marital property rights for the benefit of a spouse, former spouse, child, or other dependent of a participant.

 

A state authority, generally a court, must actually issue a judgment, order, or decree of otherwise formally approve a property settlement agreement before it can be a ‘domestic relations order’ under ERISA. The mere fact that a property settlement is agreed and signed by the parties will not, in and of itself, cause the agreement to be a domestic relations order.

 

There is no requirement that both parties to a marital proceeding sign or otherwise endorse or approve an order. It is also not necessary that the retirement plan be brought into state court or made a party to a domestic relations proceeding for an order issued that proceeding to be a ‘domestic relations order’ or a ‘qualified domestic relations order’. Indeed, because state law is generally preempted to the extent that it relates to retirement plans, the Department takes the position that retirement plans cannot be joined as a party in a domestic relations proceeding pursuant to state law. Moreover, retirement plans are neither permitted nor required to follow the terms of the domestic relations order purporting to assign retirement benefits unless they are QDROS’s.

 

What you just read is the complete definition according to ERISA (Employee Retirement Income Security Act of 1974) and the Department of Labor. So what does it mean? It means that in order to ‘split’ any part of one spouse’s pension or retirement plan held at their current or past employer with the divorcing spouse. This crucial legal document is necessary to complete the final step in dividing retirement assets in divorce.

 

Here are some common misconceptions from clients:

 

A QDRO is not necessary to divide an IRA; the final divorce decree will suffice with investment companies and banks. Caution to investments held in annuities and investments with surrender charges. Call the company to find out what, if any surrender charges there will be before signing the final decree.

 

The misconception that the divorce decree is accurate on how retirement assets should be divided; to ensure an ‘accurate’ divorce decree, have your attorney share the language used in the decree to divide the retirement assets with the attorney drafting the QDRO before the final hearing. This language must be approved by the employer before the judge signs the final order.

 

My divorce decree is all I need to get my portion of retirement assets; we recommend having the QDRO ready and approved by the employer’s benefits department when finalizing the divorce. This way the judge can sign both the final decree and the QDRO at the final hearing. Otherwise it may take 6 months to 2 years or longer before you can have these assets placed in your name.

 

The spouse receiving his/her portion of retirement assets will have to pay taxes on their portion. There are options to receiving your portion of retirement assets without paying full taxes. Call us, we can show you your options. 

My spouse has a 401(k) and a pension to divide, all I need is one QDRO; This is wrong, each plan will require a separate QDRO. Please ask your attorney what your QDRO will cost and who will pay for it and put it in the final order. They may cost from $650 to $1,200 each!

The pension is split and QDRO is complete, now I can get my portion of the pension; this is not always the case, you must know what your options are before agreeing to split the pension. It depends on what the plan administrator outlines about your options. Some may require the alternate payee to turn a certain age before having access to income or a lump sum option. So if you are expecting income now, you may have to wait until you and/or your spouse turn 65.

My attorney can draft the QDRO as part of their retainer; most attorneys do not draft QDRO’s as part of the divorce, they outsource the job to another qualified attorney. The attorney drafting the QDRO must obtain a sample or model QDRO from the plan administrator to properly prepare the document. Most companies will supply this model or sample to the QDRO attorney

What happens to my money once the retirement plan or pension is in my name? You have several options depending on the plans rules. If it is a 401(k), then your portion can be rolled into an IRA without paying taxes or penalties. If you are under 59 ½ and decide to take money from your plan you will be subject to not only income taxes, but a 10% early withdrawal penalty too!

These are just some of the many questions that client’s ask us. The process can be overwhelming and confusing, but to us, it is just part of the completion of the divorce decree. If you or your clients have questions regarding how a QDRO works or need a qualified SC attorney to draft a QDRO, we can do that!

 

Leave a Comment

« Older entries

Follow

Get every new post delivered to your Inbox.