I have to pay my ex-wife to cover the equity difference in our marital home, but the divorce decree does not specify in what form this money has to be paid.
I am planning on cutting her a check for part of the amount and transferring the remaining balance from my IRA to hers.
Do I need to pay more to cover her fees, penalties, and taxes if she chooses early withdrawal on those retirement funds or is my debt considered paid?
I am not licensed to practice law in your jurisdiction, but I can provide you with a general answer to your divorce and child custody question.
The problem with your issue is ambiguity and only the judge in your case could provide you a concrete answer. Divorce decrees, like contracts, can lead to problems if they do not specifically address the issues between the parties.
In your case, your order says what you must do but does not specify how it must be done. If this issue were to go back to court, the judge would need to determine what was meant by the original order and may read this provision with other clauses in the divorce decree to make up his/her mind.
In many cases where an equity equalization is needed, the party retaining the residence will refinance and take out additional debt on the new mortgage to produce the payment.
Divorce Tips For Men:
If your divorce decree calls for such a refinance, the court may reasonably conclude that the equalization should come from that source. If the decree does not call for refinancing, and does not specify placement, I would argue the method should be what the receiving party reasonably expected at the time of divorce.
If the receiving party expected X amount in liquidated funds, you may need to take steps to produce that outcome. If part of the payment involves retirement account transfers, I would make sure the transfer accounted for taxes and penalties. For example, a $10,000 transfer from one IRA to another does not equal $10,000 in liquidated funds.
As with any civil action, the best way to avoid a major hassle is to settle the issue on your own. If the decree does not provide you with an answer, you both probably have legitimate arguments and the cost of litigation probably outweighs the contested amount.
I recommend contacting the receiving party to see if she would accept your proposal or something similar. Your proposal may provide her with less cash today but she can reasonably expect a greater return in the future if she leaves the money invested.
To fully advise you on your situation, a complete understanding of your situation is necessary. I recommend contacting a family law attorney to review your case.