2009-12-30T09:45:00-0600 2018-06-26T22:08:55-0500 True Ten financial strategies to consider during your divorce that your attorney may not tell you about. Being prepared and educated is the best way to avoid the common financial pitfalls associated with divorce. Ten financial strategies to consider during your divorce that your attorney may not tell you about. Being prepared and educated is the best way to avoid the common financial pitfalls associated with divorce.
Publicado: Dec 30, 2009
Actualizado: Jun 26, 2018

Ten financial strategies to consider during your divorce that your attorney may not tell you about

  1. IRS rule 72(t) allowing hardship withdrawals without the 10% penalty from 401(k) plans during divorce can help cash flow problems during dissolution proceedings;
  2. The Government Pension Offset and Windfall Elimination Provision are federal Social Security rules that often unexpectedly reduce Social Security retirement benefits in divorce situations and may cause inequity;
  3. An apples to apples comparison may not be possible for before tax and after tax dollars from an individual brokerage account versus an IRA. Agreeing to an equal offset of accounts with different tax ramifications may result in inequity;
  4. Comparing the present value of a currently available liquid asset such as a savings account versus the future value of a non liquid asset such as a pension may result in inequity;
  5. Child contingency and Alimony recapture laws are hard to analyze and often missed in setting support awards but can cause unexpected tax ramifications of great magnitude if left without review;
  6. Unrealized capital gains that may cause future taxes should be included in estimates of value when considering asset division. Agreeing to a division where each party receives an asset of equal value but one has a large capital gain built in will result in inequity;
  7. Dependency exemptions and tax filing status may have real cash value now and in the future and can be used as bargaining chips for financial settlements;
  8. Life insurance placed as security for support payments should be positioned before a final settlement is reached to ensure a policy will be available with an efficient cost structure;
  9. Qualified Domestic Relations Orders necessary to divide retirement plans should be drafted and approved by the plan administrator prior to the divorce being final to avoid delays common post divorce;
  10. Always consider alternative dispute resolution models if available. Alternative models such as Mediation and Collaborative Divorce can save the family thousands of dollars and months or years of emotional turmoil.
This checklist was created by Justin Reckers, CFP®, CDFA™, AIF®

Justin is a Managing Director of Pacific Divorce Management; a San Diego based firm specializing in the financial aspects that arise for couples going through a divorce. Justin has developed a passion for guiding people through what can be the most emotionally and financially devastating period in their life. He provides education and support during difficult decision making processes in order to facilitate rational and informed conclusions for clients. Justin also serves as a Financial Planner for Pacific Wealth Management, LLC, a San Diego-based investment management, consulting, and financial planning company where he specializes in comprehensive financial planning. His practice includes a comprehensive post divorce financial planning program for clients dedicated to preparing for financial independence and long term success during the post divorce transition. This program was developed with his Family Law experience in mind having seen the negative effects of lack of follow through.

For more information on Justin Reckers or to get in contact with him, go to his homepage: www.pacdivorce.com