By JoAnne C. Holt, Divorce financial analyst
Just like your DNA – your divorce case is not like anyone else’s so stop asking your friends what you should ask for, what they did, how much they had to pay or are receiving and more. On the surface the facts may seem much alike, but many times the people you are talking to either have little depth of understanding about the nuances that played a part in the outcome, or had very adequate or inadequate representation.
Whether you go to court and a judge makes the decision or whether you were able to negotiate a settlement also plays a big role in the outcome.
Financial knowledge is critical in negotiating a positive outcome.
For example, if you do not have a clear understanding of your qualified retirement plans versus non-qualified plans you could find yourself without the asset you thought you were getting! Pensions can be tricky too, so make sure you understand elections – whether you select an individual payout or one with a survivor benefit can be a great negotiation tool.
I had a case recently where a friend came to me to review his marital settlement agreement. The language in the agreement said he was entitled to a specific dollar amount of his ex-wife’s pension. She had entered into a retirement program that encouraged highly compensated employees to retire. In that program the employee must retire after five (5) years. During those five years, 100% of the pension benefit is held in a special account and at the end she was paid out 100% of the contribution, plus interest. I explained that I thought my client was entitled to the same percentage of that “lump sum” and referred him immediately to an attorney. Long story short, I was right and he received a fat six figures! If someone else’s agreement read a little differently the outcome would be completely different!
Another very important aspect to a case is the existence or non-existence of non-marital funds and earnings thereon. Make sure you consult your financial expert about these accounts and their impact on your financial obligations after divorce. Look for next month’s article on “maintaining non-marital accounts.”
When you compare your case to someone else’s you may think your alimony payment is higher yet you think your situations are about the same. In the other case the alimony recipient may have received income producing assets in the divorce that helps support the lifestyle. In that case less alimony is necessary to “meet the needs” of the recipient. There are so many considerations to be made before the alimony amount is determined you cannot just look at your earned income.
Bottom line: get a very informed, clear understanding of how and why the division of assets is being applied and how and why the support payments, if any, have been calculated. This is one of THE most important financial decisions you will make in your life that have long-term consequences or benefits.
So do your research, ask questions and demand explanations.
JoAnne C. Holt is a Florida-based CPA, certified family mediator, and certified divorce financial analyst. She also founded www.standbyhousing.com, an organization that presents alternative housing solutions to fathers going through a divorce. Her columns on finances and divorce will run monthly on DadsDivorce.com.