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Planning For Divorce

Statistics confirm that more than half of all marriages end in divorce.  It is important that divorcing couples (hopefully on a cooperative basis) address a variety of financial issues that can have significant affects on cash flow and long term security:

1.          What are the tax consequences of splitting up the couple’s property?

2.          What is the best strategy for dealing with each spouse’s interest in retirement plan accounts?

3.          What is the best strategy for dealing with each spouse’s defined benefit pension benefits?

4.          If the wife gets custody of the kids, can the husband still deduct his child support payments?

5.          How can the support payments that the husband makes to an ex-wife, or vice versa, be made tax deductible?

6.          Are those payments always going to mean taxable income to the former spouse?

7.          Can the parties agree to anything they want?

8.          Which spouse should claim the children as dependents?     

9.          What are the strategies for eliminating exposure to federal gift or federal estate taxes?

10.     Who should retain the house or should the house be retained at all?

11.     When should the house be sold, before or after the divorce?

12.     Can child support be protected in the event of death?

The above are just a few of the many questions which should be addressed in planning for a divorce. A Certified Divorce Financial Analyst (CDFA), Certified Divorce Specialist (CDS) may need to be consulted to help ensure the best outcome for an unfortunate event.

OBJECTIVES

The objective is to identify planning strategies that a divorcing couple may consider reducing the taxes for both parties:

If the couple cooperates through their advisors, these strategies can be used to accomplish positive planning and create some “win-win” benefits in a difficult situation.  If cooperation is not possible, and hard-nosed negotiation is the only alternative, then the strategies may be helpful in the negotiation process.  Stated simply, they will help in deciding how to play the hand.

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Last modified: 05/11/10