Guest Post by John Ellsworth, Esq.
Handle your retirement savings with care in a divorce as this is a very tricky area. If you cash out a 401(k) plan to give the money to your ex, for example, the IRS considers that a taxable distribution and you’ll be stuck paying the tax. The way to avoid this pitfall is to have the transfer made pursuant to a qualified domestic relations order (QDRO). Such an order gives your ex the right to the funds and relieves you of the tax burden.
Sonya Britt, an assistant professor who has a PhD in financial planning, says the top predictor of divorce is arguments about money, after studying data from more than 4,500 couples.
She said it doesn’t matter how much you make or how much you’re worth. People argue about money at all levels.
“It’s not children, sex, in-laws or anything else. It’s money — for both men and women,” according to Dr. Britt.
Need to know how much a federally employed spouse makes for an alimony or child support determination? Just go to Search Federal Pay and type in their name. You will instantly see their salary and bonuses for 2012, 2011 and 2010.
Some people going through divorce will find anything to argue about. Stephen Benson, a 64 year old investment banker, settled his divorce with his wife of three years, Kim Charlton, 56, a former model. He agreed to pay her $365,000.
But when she removed a $150 copper weather vane from the top of their $4 million mansion, he claimed she damaged the house and refused to pay her until she returned it.
Charlton lugged the bulky weather vane to court as Exhibit A. She pointed out the four screws she hired a worker to detach.
The Judge ordered Benson to pay the $365,000 immediately and let Charlton keep the weather vane.
The New York Times has an article today about real estate agents and divorce. In a divorce, someone is moving out, and frequently the house is sold.
Real estate agents and brokers have to represent two people who are sometimes not speaking to each other. They may have to deal with court orders, half empty closets or a spouse in residence that doesn’t want to sell and move.
They don’t want the buyer to know about the divorce, because then the price goes down.
Sometimes an agent’s most difficult task is not keeping the divorce under wraps, but navigating between the two clients who are in the middle of it. If you are a real estate agent, tell us some of your stories about selling a house in the middle if a divorce.
Guest post by Camille Norest. (Editor’s Note: Across the pond they use solicitors but the advice applies to choosing a divorce lawyer here as well.)
When going through a divorce, it is important to have a divorce solicitor that you are comfortable and confident with to take you through the process. To do this, you need to find the divorce solicitor with the right set of skills for your situation. This will help you save time, money and stress when you need it most. Here are 5 helpful tips to finding your perfect divorce solicitor.
Budget
Like everything in life, hiring a divorce solicitor has a price, so it is good to find one that you can afford. That is not to say you need to take on the cheapest divorce solicitor out there, but you should ensure that you are getting the best work for your money. Compare rates along with the other important features for your choice of divorce solicitor to see what price makes more sense to you. Most solicitors will charge by the hour instead of agreeing to a flat fee, although it is worth asking if your case can be covered with a flat fee for simplicity’s sake.
Specialists
Every divorce is different, but some a more individual than others. Assess the aspects of your relationship breakdown to see what might complicate things with the proceeding divorce. This could include children, pre-nuptial agreements and your specific reasons for divorce. When you have done this, search for a divorce solicitor that specialises in those areas. They will have experience with any problems regarding your circumstances and will be able to clearly explain anything you will need to do to continue with the process.
Talk to Them
Being confident with your divorce solicitor is vital, and this reassurance can be as easy as picking up the phone to ask a couple questions. Inquiries are free more often than not, and any divorce solicitor worth your time should happily talk you through some of the procedures when asked. Don’t expect an hour long conversation spanning every detail, they are in high demand and very busy, but talking personally to a divorce solicitor is a great, quick way to see if they are right for you.
Experience
Look for a divorce solicitor that has a decent amount of experience. Though for some it may be enough for to read when the company was started, it is also important to find out what they have been doing all that time. If a divorce solicitor has been involved in any cases that well known within the industry, they will call attention to it on their website, so it is a good idea to research deeper than a homepage when picking who is best for you.
Friends and Family
While you may not want to bring your friends and family in to your relationship breakdown, in some cases it might be preferable to keep them separate, but asking them if they would recommend a divorce solicitor is sometimes very helpful. No one knows you like your friends and family, so they could be able and willing to give you good advice on choosing who to talk to for your situation. You don’t need to tell them all the details, but if they have been through a relationship breakdown and they liked who helped them with the proceedings, it is worth seeing if they would be right for you too.
Reuters has a story this morning about the pending divorce of Harold Hamm, 67, one of the richest men in America, and CEO of Continental Resources.
Sue Ann Hamm, 56, filed for divorce on May 19, 2012, in Oklahoma alleging that her husband was having an affair.
Harold Hamm’s net worth is estimated to be $11.3 billion dollars, most of it in the form of stock of Continental, an oil and gas fracking company. The Hamms were married in 1988.
Oklahoma is an equitable property state, so this case could break the record for marital settlements. That is held by News Corp. Chairman Rupert Murdock who paid $1.7 billion in his divorce.
As the baby boomer population reaches retirement age, divorces are doubling. Call it a second midlife crisis. Whatever the cause, it can throw a monkey wrench into the best laid retirement plans. Divorce is not a planned financial event.
The pension plan that was going to fund vacations and travel for two people may be split in half in a divorce. Now it must pay for two vacations, two dwellings, two cars and so forth. It may cost as much as 50% more for two people to live separately as it does to live together as a couple. Also, if one person gets sick, they may have to hire a caregiver.
None of the solutions are attractive. You can delay retirement, save more or reduce your life style. If you divorce in your 20s or 30s, you have time to recover your losses. It is not as easy if you divorce at 60 or 65.
The divorce rate for those over 50 years old doubled between 1990 and 2010.
One in four people divorcing are over 50.
The average retirement funds of a divorced person are $10,000 lower than average retirement funds of a married couple.
Guest Post by John Ellsworth, Esq
Guest Post by John Ellsworth, Esq
Guest Post by John Ellsworth, Esq.
If you’re paying alimony, you can take a tax deduction for the payments, even if you don’t itemize deductions.
Keep in mind, though, that the IRS won’t consider the payments to be true alimony unless they are spelled out in the divorce agreement. This is another rule for you to memorize: unless the divorce decree spells it out, it’s probably not going to be accepted by the IRS as alimony.
Your ex, meanwhile, must pay income tax on those amounts. Be sure you know your ex-spouse’s Social Security number. You have to report it on your tax return to claim the alimony deduction.
The opposite is true for child support: You don’t get a deduction for paying child support and the recipient doesn’t pay income tax.
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