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You've reached the end of the road. Your divorce is finalized, and it's time to look ahead. You've weathered the storms of tears and anger, and now you're facing a future that's uncertain. It's common to feel stuck in this transitional phase, and some may even revert to a carefree lifestyle reminiscent of their youth. However, this is not the time to make hasty decisions about money, career, or housing. Instead, it's crucial to avoid regrets by staying grounded and focused. Now is the moment to start the healing process and move forward. It's an opportunity to turn your experiences into something positive and meaningful as you embark on this new chapter of your life. The most important task for building a healthy new life is to fully understand your settlement agreement. I understand that the divorce process has been challenging, and you may feel the need to take a break. However, this step is critical. Many people I encounter are unsure about the details of their settlement because they're eager to avoid more attorney fees. However, reaching out to your attorney now can provide significant value for the fees you've paid. Take the time to thoroughly review your final decree and ensure you comprehend every aspect of it. If you're uncertain about any part, consider scheduling another meeting with your attorney or seeking assistance from a Certified Divorce Financial Analyst® like myself. As part of the post-divorce support my company and others offer, we can help you review your decree, set up accounts, and facilitate the transfer of assets as needed. At this point, you might encounter a term that often strikes fear: QDRO, short for Qualified Domestic Relations Order (pronounced "quadro"). This is a legal document necessary if you're entitled to a portion of your ex-spouse's retirement savings. It's surprising how many individuals realize years later that they never received their rightful share of the 401k or pension payments. This often occurs because no one completed the required QDRO or informed them about it. It's a situation you definitely want to avoid. Missing out on a pension allocation due to a late-filed QDRO is a real risk, and you don't want to find yourself in that position. Now that you've assessed your assets, the next step is ensuring they're managed effectively for long-term sustainability. This is where a trusted financial advisor becomes essential. There's no question about it - professional guidance is essential. When searching for one, consider this: while advisors may have access to similar financial products and services, their approach varies. Some prefer simplicity, while others navigate complexity. What truly matters is understanding the fees associated with their services and, most importantly, forming a connection built on trust and rapport. Follow your instincts and prioritize hiring someone you genuinely like and trust, even if it's based on a gut feeling. Avoid getting swayed by flashy sales pitches. Opt for the advisor who feels like a friend; in the grand scheme, it leads to greater satisfaction and peace of mind.

In 2015, Netflix debuted a documentary called "Divorce Corp," shedding light on the concerning realities of abuse, collusion, and corruption within the Family Court System. This documentary prompts an important question: How can individuals safeguard themselves in such a system? Determining whether the lawyer you've enlisted is aligned with the interests of justice can be a pivotal concern. Consider the following list of the top 10 questions to ask when interviewing a divorce lawyer. These inquiries are designed to assist you in evaluating whether your choice is the most suitable fit for your circumstances. 1. Ask: “On average, what percentage of your cases go to trial?” If the response is above 20%, be wary! That would be a sign of a litigious lawyer who is only interested in amassing the billable hours and isn’t interested in helping you and your spouse reach a settlement. 2. Ask: “Will you or a representative from your office assist me in creating an accurate financial affidavit?” The answer should be a definite “yes!” All your settlement negotiations and conversations regarding child support and any claims for maintenance will be based on the financial affidavit. Are you certain that your budget is correct? Have you forgotten to budget for expenses that you’re not used to incurring? Is your budget designed to account for current costs or those incurred after your divorce? 3. Ask: “Will you verify the accuracy of my spouse’s financial affidavit?” I’ve discovered that few lawyers will check your spouse’s affidavit for mistakes. Tax withholding is almost always still calculated as “Married” when it should be “Single.” I’ve noticed errors in the social security calculations, as well as many expenses that are double-counted. Your case may suffer greatly if no one is looking for these things. 4. If you have been a stay-at-home spouse then ASK , “How soon should I expect to return to work and what will the earning expectations be?” This is a huge deal! No matter what your experience is, if you’ve been a stay-at-home parent for five years or more your skills are probably outdated. If a lawyer tries to convince you that you might receive maintenance for a period of five years or more, he or she is probably just saying what you want to hear in order to build a big fat case file when you allow them to battle for an unrealistic settlement. 5. Ask: “Will there be an opportunity for my spouse and I to attempt to negotiate a settlement?” Many lawyers, from my perspective, don’t give you an opportunity to have a settlement negotiation meeting, instead they send written offers back and forth between you and the lawyer for your spouse. Why? Because they can charge for all the document write-ups and responses. Just think how effective it would be if you could meet with your attorneys and actually discuss each topic! Ask if your attorney would agree to this. 6. Ask: “I want to bring in a Certified Divorce Financial Analyst® to assist me have a better understanding of the kind of settlement I should aim for, is that okay?” Again, be wary if the response to this is anything other than “yes!” Why wouldn’t an attorney want you to have access to all the information you need to make good decisions? If your attorney doesn’t know anything about a CDFA® Certified Divorce Financial Analyst® don’t be surprised. Attorneys fiercely guard their billable hours and have little interest in diving into the specifics of your case’s finances. Additionally, since they lack financial expertise, they will be compelled to choose a 50/50 share of everything even if it might not be in the best interest of the couple. The two of you might save thousands of dollars in taxes and legal costs by using a CDFA®. 7. Ask: “I think my spouse may be hiding assets. How will you be sure we know about everything?” They should answer with assurance that they will review several years’ worth of tax returns and bank statements to check for any irregularities. However, a forensic accountant or CDFA® can perform the in-depth work to fully know for sure if assets are being hidden or diverted. 8. Ask: “My spouse owns a business and says it’s not worth anything, but we live on over $100,000 per year. How will we, as well as the judge, be able to determine the genuine worth of the company?” The response should be that in order to determine the business’ fair market value a formal business valuation should be requested. Also, a lifestyle study should be conducted to arrive at a more precise assessment about annual income. I’ve never known an attorney to do these in house. To provide evidence of an annual income they should be bringing in a CDFA®. 9. Ask: “I don’t have enough equity to refinance, but I want to keep the house. What options do I have?” In my experience, most attorneys will say you have two options, either refinance the home or sell. And, some will say you can keep the house if your spouse will allow you to keep their name on the mortgage. I’ve never heard them suggest other options. Here are a few that a CDFA® can help you explore. 1) Continue to jointly own the home for a number of years (usually three to five) then sell or refinance it and divide the proceeds. 2) Continue to own the home jointly for a number of years, (again, usually three to five) but the partner who isn’t residing there would get other assets in place of the equity share. To safeguard their credit, a clause might be added stating that you must show proof of mortgage payments each month and that the house must be sold if the mortgage is ever more than 30 days past due. 3) Continue to own the house jointly and rent it out. A CDFA™ can help with the terms of such an arrangement. 10. Ask: “We only have 401(k) account assets, yet I need money to put a down payment on a home. How can I obtain the cash?” This one can be tricky, but a CDFA® can help you find a creative solution. One does, however, need to have obtained, read, and understand the participant spouse’s 401(k) plan document. ERISA rules provide for a ONE-time opportunity to remove cash with no penalties. The amount is taxed as ordinary income but there would be no early withdrawal penalty. However, a carefully crafted QDRO could allow for multiple withdrawals with no penalty (if your case deemed that appropriate). Most attorneys are unaware of this type of creative solution.  Pose these questions to the attorney you are contemplating hiring. Through this process, you'll ultimately discover the right fit for you and your unique situation!

Going through a divorce can turn your world upside down, leaving you feeling lost about your life and what comes next. Many people naturally want to hold onto familiarity by staying in the family home. However, it's important to realize that this decision could end up being very expensive. Let's take a step back and consider the broader perspective. A house serves as a place to live but doesn't contribute to your income or lifestyle directly. If you and your spouse lived in the house for a significant period, there's likely a considerable amount of money tied up in its value. If you're granted the house in the divorce, it could be the most significant asset in the settlement. For instance, if the house is valued at $400,000 with $300,000 in equity, half of that equity is yours, and the other half belongs to your spouse. By keeping the house, you're essentially tying up $300,000 of your settlement. However, that same money could potentially generate over $13,000 annually if invested wisely. Additionally, don't forget about the ongoing costs of maintaining the house, which will require additional income to cover. Hold on, there's more to consider! The potential tax implications in the future could be significant. If you were to sell the house while still married, the $300,000 capital gain would typically fall within the marriage exclusion, allowing for up to $500,000 tax-free. However, once the house is transferred solely into your name, if you sell it with a $300,000 gain, you'll only be eligible for a personal exemption of $250,000. This means you could owe capital gains tax on $100,000 of the gain, amounting to $15,000. It's crucial to ensure your attorney has factored this into your settlement discussions. This is why I advocate for mediated divorces with a financial neutral to provide guidance on such matters. Divorce is undoubtedly challenging, but it also presents an opportunity for a new beginning. Ensuring that you're on solid financial ground is crucial for your future. To fully grasp the implications of any property settlement you're considering, consider consulting with a Certified Divorce Financial Analyst® (CDFA®). They can shed light on various financial matters involved. Remember, you only have one shot at getting your settlement right.

Decoding the Mystery of QDROs: Do You Really Need One and What Does it Involve? You and your spouse have almost finished settling your divorce when your attorney or mediator drops unexpected news: you need something called a QDRO. And guess what? It's going to cost you extra. Hold up! What exactly is a QDRO? Understand it or not, the QDRO is the final obstacle in your divorce journey because it ultimately is the legal tool to divide certain assets like 401(k) plans, 403(b) plans, pensions, 457 programs, deferred compensation plans, and some RSU (restricted stock unit) accounts. When a divorcing spouse has to share a qualified retirement account, a legal document known as a qualified domestic relations order, or QDRO, is needed. A QDRO must be prepared and filed to the plan in order for a Qualified Retirement Account to allocate all or a portion of the funds to a non-employee spouse. This assignment must first be made in the divorce judgment. However, keep in mind that a QDRO is not necessary for Individual Retirement Accounts, or IRAs. Legally, all that is required for an IRA to be divided is your divorce judgment. But even then an IRA can use a QDRO to take advantage of a little-known concept presented by divorce to avoid withdrawal penalties. MAKE NOTE…you have ONE chance to withdraw funds from a retirement plan without incurring penalties if you receive retirement assets from a former spouse via QDRO. The withdrawal before the age of 59-1/2 will not incur the typical 10% penalty, although it will be considered taxable income. If you wish to be able to accomplish this from an IRA or the employer-sponsored account, then you must use a QDRO! Yes, a QDRO! In my practice, I assist clients in the creation of QDROs by serving as their advocate with a QDRO lawyer I have investigated and found to be the most reasonable. I have learned about the numerous dangers that QDROs can provide, as well as, how frequently mediators and attorneys fail to address these issues during settlement negotiations. Below is a brief overview of some of the details that are frequently disregarded. · Is the non-employee spouse eligible to get a lump sum payout when they retire? · Would the non-employee spouse continue to get benefits if the employee spouse passes away? · Have any unpaid loan sums been considered? · When dividing a 401(k), what day does it actually happen? Are the earnings or losses from that point forward included? · Does the pension plan create a separate account for the non-employee spouse so they can pick their own beneficiaries and payout options? If not, have you taken any steps to shield the non- working spouse from early retirement penalties? As you can see, a QDRO's waters are dangerous and not recommended for beginners. Buyer beware, too! QDROs can cost between $500 and $3,000. The language of each plan's QDROs must adhere to extremely particular standards, so it is imperative that the preparer possess a copy of the plan documentation on hand before beginning to assure compliance. If the plan permits it, you should make sure that the QDRO will be PRE-APPROVED to avoid rejection and additional costs for a proper re-do. Once the judge has approved your decree as final, you send the completed QDRO to him or her as well. Only when it has been signed is it ready to be submitted to the plan. The non-employee spouse will then be contacted to obtain instructions for the disbursement or to learn the name of the new account created on their behalf. The QDRO process can be complex. It's crucial to have a professional guide you through it to avoid falling prey to opportunistic individuals who recognize your need for assistance and aren't hesitant to charge exorbitant fees, sometimes as high as $3,000.  Don't hesitate to reach out to us if you're in need of a precise, affordably priced QDRO. We're here to support you every step of the way.