Divorce and finances are two subjects that are often difficult for people. Divorces are often emotional, messy situations that are fraught with feelings of distrust and betrayal. Finances and taxes can be complex and difficult to understand, and mediators (as well as family law attorneys) often struggle with properly educating a couple on the financial complexities of their settlements. A failure to consider the spouses' particular financial situations, and the tax effects of the proposed settlement, during divorce negotiations can have a substantial negative effect on the parties' ability to come to an agreement that is fair and equitable.
The tax treatment and financial impact to the parties of potential transfers of assets such as the marital home, investments, and and retirement accounts must be considered. The Tax Code provides for certain benefits (non-recognition of tax) on transfers of property incident to a divorce, but these transfers must be planned, and the benefits can be lost if people proceed without the proper guidance. Furthermore, considerations regarding the tax basis of property transferred as part of a divorce must be considered, as well as how to protect survivor retirement plan benefits, or spousal and child support. Failure to address these issues can result in unexpected hardship and tax liability in the future, and dissatisfaction with the settlement in the long run.
Just Resolutions has mediated hundreds of cases involving child custody, parenting time, and child support. It is particularly important, when there are children involved, to create a safe place for divorcing couples to make decisions for their future. By doing so, we can help the parties work together to create solutions to address financial and emotional issues, and come to an agreement that maximizes the well-being of the entire family going forward.
Just Resolutions is here to help clients make the best possible decisions about how to resolve a stressful situation successfully. Most often, clients can arrive at a settlement they are satisfied with—and one that makes financial sense for both of them.
We focus on resolving conflict so that you can get back to what you do best!
Negotiating for a spouse to retain the marital home when they cannot afford the costs of living there
Failing to consider the cost basis of property as part of the division of assets
Thinking that retirement assets have the same value as an equal dollar amount of non-retirement assets
Not valuing defined benefit plans correctly
Not understanding the capital gain taxes upon the sale of the marital home or how the sale can impact each party
Not understanding the purpose of a Qualified Domestic Relations Order (QDRO), or the need to have it completed and filed at the time of the divorce or immediately after
Not taking into account transaction costs or deferred taxes when dividing assets
Not protecting spousal and child support payments through the use of insurance or an annuity
Not being aware it is possible to take a distribution from a retirement plan, as part of a divorce settlement before the age of 59 1/2, and avoid the 10% penalty
Not understanding the importance of making the recipient of spousal or child support the owner of an insurance policy that ensures payment
Not protecting the survivor retirement plan benefits of the non-employee spouse
Not understanding the different division methods of a retirement asset, and not knowing which is best under the facts at hand