The divorce process requires taking stock of your finances. You will be expected to provide a detailed accounting of your assets and debts, as well as your income and expenses. If you and your spouse use credit cards and earn rewards or airline miles on trips and purchases (including work-related transactions), these rewards and miles are considered marital assets and are subject to equitable distribution. Read more in this article.
Money issues are often the source of marital problems that can lead a couple to divorce. By understanding one another’s expectations regarding money and personal assets, i.e. inherited or gifted assets, a newly married couple will start their marriage with peace of mind and open communication. For that reason, a couple should consider a prenuptial agreement before walking down the aisle. This article provides more information on the process and benefits of using prenuptial agreements.
Spring is here but so is tax season. If you are considering divorce or have started the process, historical tax returns have important information regarding income and assets. It is important to understand some of the underlying schedules of the federal tax return which may require a conference with your accountant. If you have doubts about the numbers shown on this year’s joint return, it may be better to file separately. Read this article for more information.
Splitting retirement accounts pursuant to a divorce requires a separate agreement, a qualified domestic relations order (QDRO). This agreement may cover a 401(k), 403(b) or a pension plan, must meet specific requirements and must be presented to the retirement plan administrator. Although a QDRO is not needed to split IRA assets, the divorcing parties should consider the timing of division to ensure that it does not produce unwanted tax effects. Additional information regarding QDROs can be found in this article.
Divorce requires that you make some important decisions, ones where mistakes will cost you either in lower income or in reduced financial assets. For example, is it better to sell the marital home or keep it in exchange for another asset? Or, is it smarter to take the 401(k) or IRA instead of the taxable account when splitting assets? There are numerous options that must be carefully analyzed so that you make the best decision for your situation. This article notes additional points to consider.