| Q. |
Will I lose my pension? |
| A. |
Pensions and retirement plans are community
assets. Depending on the state you live in, the portion which was earned before your
marriage could also be considered a community asset. However, it is possible to keep your
pension and have it offset with other assets. |
| Q. |
Should the custodial parent
keep the house? |
| A. |
This is a great question, because it's one of
the most important overlooked questions. The answer is sometimes yes, sometimes no. It's
important to pinpoint exactly what it will cost to maintain the home, factoring in taxes
and inflation. The next step is to analyze if there is enough money coming in to stay
comfortable in the home (in other words, pay the bills each month). Once that has been
determined, the advisability of retaining the home must be compared to the advisability of
giving up other assets (such as liquid accounts, retirement plans, etc.). Finally, all
decisions need to be weighed against current economic and stock market conditions.
Certified Divorce Financial Analysts are trained to help people answer this
question before they commit to a settlement that cannot be changed. |
| Q. |
What if I bring a house into
the marriage that is in my name only, and I add my spouse's name to the deed? |
| A. |
In this case, the whole house could be
considered community property. You might have made a "presumptive gift" to the
marriage and should consult with a family law attorney to discuss your options. |
| Q. |
Is my IRA considered community
property? It's in my name only. |
| A. |
Everything acquired during the marriage, no
matter whose name it's in, is typically considered community property. In some states, the
increase in value of separate property could also be considered community. If you are
going through a divorce, it would important to evaluate the financial drawbacks to having
your IRA included in the list of assets you retain, post divorce. Remember, the funds in
the IRA cannot be accessed before 59 1/2 without paying a 10% penalty for early
withdrawal. |
| Q. |
I have never worked outside
the home. Can I get Social Security? |
| A. |
If your spouse has worked and if you have
been married for 10 years or more, than you are entitled to one-half of your spouse's
Social Security or your own, whichever is higher--even if you are divorced. Your spouse
still retains 100% of his/her Social Security benefit. This is an automatic guarantee and
therefore it is not a negotiation point in a divorce. |
| Q. |
How do we figure how much
child support should be paid? |
| A. |
Every state has Child Support Guidelines that
are mandated by the State. However, the Guidelines get tricky when one (or both) spouse is
an independent business owner who can control their wages. In this situation, it typically
helps to bring in a financial or tax expert who can help determine the true potential
income of the partie(s). |
| Q. |
Do we have to go to court? |
| A. |
Only if you can't reach an agreement. Then, a
court date is set and a judge hears the case. Less than 2% of all divorce cases go to
trial in the United States. |
| Q. |
What is a QDRO and why do I
need one? |
| A. |
A QDRO (or Qualified Domestic Relations
Order) is the legal document that divides up a qualified pension or retirement account
(including 401k's) pursuant to a divorce. The Judgment of Divorce is not sufficient to
divide up qualified plans, a QDRO is needed. There are many nuances that go into QDRO's
and make it an advocating (versus neutral) document. In order to protect your assets, be
sure to obtain qualified advice in this area from a specialist. |
