Taking the next steps after a divorce. Step Two: Assets

This is part two of a continuing series on life after divorce.

One of the incidents that led me to focus as a CDFA happened in my wealth management practice several years ago.  A woman came in to see me, bringing with her a copy of her husband’s 401k, two years after her divorce, asking how she could get the half of the balance she had been granted in the divorce.  Her attorney had negotiated the settlement, but the next step, to actually transfer the funds, was not the attorney’s role.  The client simply did not know how to do the next thing.

  • Cash assets – This includes all of the following: Checking accounts, savings accounts, credit union accounts, certificates of deposit, money market accounts, securities, stock options, brokerage accounts, mutual funds, U.S. Savings Bonds, precious metals and currency, cyber currency.Where are the statements sent? Change address? Remove spouse’s name? Open new accounts in single name? Change any beneficiary designations – check Agreement for restrictions. Still comfortable wth current financial advisor? Any conflict of interest? (Deal with investiment suitability below) Make arrangements for the transfer of funds. What documentation required to transfer the funds? Simple withdrawl and transfer of joint funds? Additiona documents needed? Both spouses may need to sign the withdrawl. A stock power, with signature guarantee (not just notarized) may be required. You may need the services of a financial advisor/CDFA™ to assist with the paperwork.
  • Deferred income assets – These include pension and profit sharing plans, 401(k) plans, 403(b), 457 plans, deferred compensation, SEPs, SIMPLEs, savings plans, Keogh plans and IRAs (Roth and Traditional), stock options, incentive plans, annuities, cash balance plans, etc.What does the Agreement provide for each of these assets? What needs to be done?  Beneficiary designations can now be changed – does Agreement have any restrictions? Where are statements sent? Change address? Letters of instruction for change of ownership? (See above re: QDRO’s) If retired, recalculate Required Minimum Distributions.
  • Motor vehicles – Motor vehicles, boats, airplanes, motorcycles, recreational and other vehicles.  Titles need to be transferred? Insurance separated? What kind/how much insurance? Refinance to be done of loan? Keys returned? E-ZPass account separated and tags turned in?
  • Jewelry and collectibles – E.g. stamp, coin, gun, camera, sports memorabilia or other collection of almost any item. Is it in the possession of who gets it under the Agreement? Properly insured?
  • Real estate – Refinance? Mortgage? Home Equity? Who pays? Current bills? Tax deductions? Judgment search? Escrow refund? Tax adjustments? Tax exemptions – remove or add? Change locks? Garage door openers? Alarm code?If marital home is for sale, who pays for repairs? How is price negotiated? How are proceeds divided? What if it doesn’t sell right away?
  • Business and professional interests – How addressed in Agreement? Buyout lump sum versus stream of payments? How made? When? Secured? How? Changes need to be made with State for any licenses?
  • Frequent flyer and rewards programs – Transfer? Buyout? When? Who responsible to do? Change email? Change on-line passcodes/account?
  • Safe-deposit boxes – In whose name? Where? Empty the box/get the keys.
  • Personal property – When exchange/remove? Notification?  Any triggers if not done? Mediation if not resolved?

Check back next month with a listing of the next step you should take after your divorce.

 

Securities offered through Cadaret, Grant & Co. Inc. Member FINRA/SIPC. Davis Financial and Cadaret, Grant are separate entities.

 
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Taking the next steps post divorce– Step Two

TAKING THE NEXT STEPS…

When all you want to do is put the paperwork away and forget about the divorce.

One of the incidents that led me to focus as a CDFA happened in my wealth management practice several years ago. A woman came in to see me, bringing with her a copy of her husband’s 401k, two years after her divorce, asking how she could get the half of the balance she had been granted in the divorce. Her attorney had negotiated the settlement, but the next step, to actually transfer the funds, was not the attorney’s role. The client simply did not know how to do the next thing.

Clients often wake up the morning after, expecting that everything will be different, just because the agreement has been signed. They are usually no more prepared to deal with the hands-on practical issues involved in dissolving their economic partnership the next day, than they were when negotiations were still underway. They still need the help and support of their divorce team to move on.

Here are a few of the general issues that clients face, post-divorce. Each case is different, and everyone may not need to deal with every item on the list. Some will need all; all will need some.

Begin by assessing your Assets:

a. Cash assets – This includes all of the following: Checking accounts, savings accounts, credit union accounts, certificates of deposit, money market accounts, securities, stock options, brokerage accounts, mutual funds, U.S. Savings Bonds, precious metals and currency, cyber currency.

Consider: Where are statements sent? Change address? Remove spouse’s name? Open new accounts in single name? Change any beneficiary designations – check Agreement for restrictions. Still comfortable with current financial advisor? Any conflict of interest? (Deal with investment suitability below) Make arrangements for the transfer of funds.

What documentation required to transfer the funds? Simple withdrawal and transfer of joint funds? Additional documents needed? Both spouses may need to sign the withdrawal. A stock power, with signature guarantee (not just notarized) may be required. You may need the services of a financial advisor/CDFA™ to assist with the paperwork.

b. Deferred income assets – These include pension and profit sharing plans, 401(k) plans, 403(b), 457 plans, deferred compensation, SEPs, SIMPLEs, savings plans, Keogh plans and IRAs (Roth and Traditional), stock options, incentive plans, annuities, cash balance plans, etc.

What does the Agreement provide for each of these assets? What needs to be done? Beneficiary designations can now be changed – does the Agreement have any restrictions? Where are statements sent? Change address? Letters of instruction for change of ownership? (See above re: QDROs) If retired, recalculate the required minimum

Determine your Distributions: 

c. Motor vehicles – Remember motor vehicles, boats, airplanes, motorcycles, recreational and other vehicles. Do titles need to be transferred? Insurance separated? What kind/how much insurance? Refinance to be done of loan? Keys returned? E-ZPass account separated and tags turned in?

d. Jewelry and collectibles – E.g. stamp, coin, gun, camera, sports memorabilia or other collection of almost any item. Is it in the possession of who gets it under the Agreement? Has it been properly insured?

e. Real estate – Refinance? Mortgage? Home Equity? Who pays? Current bills? Tax deductions? Judgment search? Escrow refund? Tax adjustments? Tax exemptions – remove or add? Have you changed locks, garage door openers and the alarm code?

If the marital home is for sale, who pays for repairs? How is the price negotiated? How are proceeds divided? What if it doesn’t sell right away?

f. Business and professional interests – How are they addressed in the Agreement?

Will there be a buyout lump sum versus stream of payments? How will they be made? When? Secured? How? Do changes need to be made with State for any licenses?

g. Frequent flyer and rewards programs – Will there be a transfer? Buyout? When? Who is responsible for this? Have you changed the email and on-line passcodes/account?

h. Safe-deposit boxes – In whose name? Where? Empty the box/get the keys.

i. Personal property – When will you exchange/remove? Notification? Any triggers if not done? Will there be mediation if it’s not resolved?

 

I generally recommend that clients continue any counselling from during the process, until they feel they’ve turned the corner. Dealing with these issues may bring up some of the unresolved emotional issues of your divorce. You don’t have to do this alone!

Your attorney may not wish to take this on, and you may be so sick of seeing him/her after the long divorce process that you’re fine with that! Or you may not wish to pay attorney fees to take care of most of this. CDFAs are specially trained to deal with these issues, and can seamlessly step in to finish up what has been brought to a legal conclusion.

Securities offered through Cadaret, Grant & Co., Inc., member FINRA/SIPC. Davis Financial and Cadaret, Grant & Co., Inc. are separate entities.

Taking the Next Steps – Step One

Taking the Next Steps – Step One

WHEN ALL YOU WANT TO DO IS PUT THE PAPERWORK AWAY

AND FORGET ABOUT THE DIVORCE 

One of the incidents that led me to focus as a CDFA happened in my wealth management practice several years ago.  A woman came in to see me, bringing with her a copy of her husband’s 401k, two years after her divorce, asking how she could get the half of the balance she had been granted in the divorce.  Her attorney had negotiated the settlement, but the next step, to actually transfer the funds, was not the attorney’s role.  The client simply did not know how to do the next thing.

Clients often wake up the morning after, expecting that everything will be different, just because the agreement has been signed. They are usually no more prepared to deal with the hands-on practical issues involved in dissolving their economic partnership the next day, than they were when negotiations were still underway. They still need the help and support of their divorce team to move on.

Here are a few of the general issues that clients face, post-divorce. Each case is different, and everyone may not need to deal with every item on the list. Some will need all; all will need some.

I generally recommend that clients continue any counseling from during the process, until they feel they’ve turned the corner. Dealing with these issues may bring up some of the unresolved emotional issues of your divorce. You don’t have to do this alone!

Your attorney may not wish to take this on, and you may be so sick of seeing him/her after the long divorce process that you’re fine with that! Or you may not wish to pay attorney fees to take care of most of this. CDFA’s are specially trained to deal with these issues, and can seamlessly step in to finish up what has been brought to a legal conclusion.

WHAT TO REVIEW?

First: Legal Issues. Of course, you need an attorney for much of this part!

  1. Last Wills & Testaments –Do you need a new Will? Who should be Executor/Executrix? Trustee of any testamentary trusts? Have you done Estate planning with both your CDFA/financial advisor and attorney?
  2. Children: What does Agreement require in a Will? What about a trust for minor children, naming trustee? Is there a need for a Supplemental Needs Trust? Who should be the Trustee?
  3. Life Insurance: Is an Irrevocable Life Insurance Trust appropriate? Who would be the Trustee? (There are more issues around life insurance to review with your CDFA, as well)
  4. Health Care Proxy – Who is named as agent to make medical decisions? Is that still OK or should a new Health Care Proxy be prepared?
  5. Power of Attorney – Who is named as agent to handle financial affairs? Is that still OK or should a new Power of Attorney be prepared?
  6. Retirement Accounts: What does the Agreement provide for each of these assets? What needs to be done? Is a QDRO required? A Qualified Domestic Relations Order is a formal letter of authorization sent to the administrator of a 401k plan, giving instructions on dividing the funds in the plan between the spouses. A QDRO needs to be signed by the Judge who granted your divorce. A new account, in the 401k plan, will be opened for the designated (former) spouse, and the agreed upon funds will be deposited there. Has a QDRO been prepared? If not, when and who pays? Is there a professional designated to draft this order? It’s a legal document, and must be drafted by a lawyer, usually a specialist in QDRO’s.
  7. Real Estate: Release of Liability? Mortgage? Home Equity? Deed transfer – what kind of Deed? Quitclaim deed executed? When? Professional identified? Who pays? Judgment search? Escrow required or refunded?

Check back next month with a listing of the next step you should take after your divorce.

Securities offered through Cadaret, Grant & Co. Inc. Member FINRA/SIPC. Davis Financial and Cadaret, Grant are separate entities.

IRA Contributions: Time to “True Up”

These days between January 1 and tax filing day, April 18, 2017, represent a unique opportunity for retirement planning. During this time period, you can ‘true up’ your full contribution for 2016, as well as make your 2017 deposit.

Contributions remain the same for 2017. For both traditional and Roth IRAs, you can contribute $5,500 if you are under age 50, with an increase to $6,500 if you are over age 50. Note that this year’s deadline to make an IRA contribution is April 18, 2017 for tax year 2016.

As always, there are income limits to deduct traditional IRA contributions; these income limits have increased for 2017 as follows:

  • Singles and heads of household who contribute to a workplace retirement plan can claim a fully deductible contribution if their income totals less than $62,000.
  • For married couples filing jointly, a spouse who contributes to a workplace retirement plan can claim a full deduction if their income falls below $99,000. From there, the deduction phases out between $99,000 to $119,000. If you can’t make a deductible IRA contribution, consider a nondeductible contribution.

Income limits for Roth IRA contributions have increased as follows:

  • Single filers earning less than $118,000 can make a full Roth IRA contribution; contributions are eliminated for filers earning more than $133,000.
  • Married couples filing jointly can make a full contribution to a Roth IRA if their combined income is less than $186,000. However, they are not eligible to contribute if their income exceeds $196,000.

Don’t let this opportunity to save for your future, using either Traditional or Roth IRA options, pass you by.  You can gain either tax advantages for your current filing year, or enrich your future. Contact me at 716-691-8207, or your investment adviser for further information.  Don’t wait too long!

Adrienne Grace is a CFP®, CLTC, CDFATM, and a Certified Divorce Financial Analyst.

Securities offered through Cadaret, Grant & Co., Inc. Member FINRA/SIPC. Davis Financial does not provide tax or legal advice. Consult with a qualified tax specialist regarding your particular situation and filing requirements

Valentine’s Day may be for lovers, but the day after is often about divorce

Valentine’s Day may be for lovers, but the day after is often about divorce

Valentine’s Day is full of expectations, on what we have created as a day devoted to romantic love.  When those expectations are not met, it can be the last straw for someone clinging to hope to save a marriage.

Most people contemplate divorce for six months to a year before taking any action. They may limp through the holiday season, filled with family events and traditions, unwilling to confront difficult issues.  But when the holiday bills arrive and one more Valentine’s Day is a disappointment, February 15 can be the day to take action.  It can be one New Year’s resolution that you keep. It can be your way to protect your romantic heart’s future.

But who is going to protect your finances during this difficult transition?

Regardless of when someone decides to end their marriage, I advise them not to try to go thru the process without a Certified Divorce Financial Advisor (CDFATM) to protect their financial interests.

You go to a divorce lawyer for legal advice and strategy; your CDFA professional is the instrument to clarify the financial aspects of the strategy.  Your CDFA gets and analyzes the numbers, and helps you quantify your goals.  This makes it easier for your attorney to move forward with the legal process, and can speed a successful outcome.

Working with clients and their lawyers, a CDFA forecasts both the short and long-term effects of the proposed settlement, letting you know what the financial future may bring with Settlement A vs Settlement B, and gives your attorney the reports and tools they need to help settle your case.

So if your Valentine Day is the final disappointment, take heart.  A new start can lie ahead with all of your interests protected.

 

Checklist to Begin a New Year

Checklist to Begin a New Year

The end of one year and the beginning of another makes us think about last-minute things we need to address and good habits we want to start keeping. To that end, here are seven aspects of your financial life to think about as you begin this year.

Your investments. Review your approach to investing and make sure it suits your objectives. Look over your portfolio positions and revisit your asset allocation.

Your retirement planning strategy. Does it seem as practical as it did a few years ago? Are you able to max out contributions to IRAs and workplace retirement plans like 401(k)s? Is it time to make catch-up contributions?

Review any sales of appreciated property and both realized and unrealized losses and gains. Take a look back at last year’s loss carry-forwards. If you’ve sold securities, gather up cost-basis information. Look for any transactions that could potentially enhance your circumstances.

Your charitable gifting goals. Plan contributions to charities or education accounts, and make any desired cash gifts to family members. The annual federal gift tax exclusion is $14,000 per individual for 2015, so you can gift up to $14,000 to as many individuals as you like this year without tax consequences. A married couple can gift up to $28,000 tax-free to as many individuals as they wish.

You can choose to gift appreciated securities to a charity. If you have owned them for more than a year, you can deduct 100% of their fair market value and legally avoid capital gains tax you would normally incur from selling them.

Besides outright gifts, you can plan other financial moves for your family – you can create and fund trusts, for example. The end of a year is a good time to review trusts you have in place.

Your life insurance coverage. Are your policies and beneficiaries up-to-date? Review premium costs, beneficiaries, and any and all life events that may have altered your coverage needs.

Speaking of life events… did you happen to get married or divorced in 2016? Did you move or change jobs? Buy a home or business? Did you lose a family member, or see a severe illness or ailment affect a loved one? Did you reach the point at which Mom or Dad needed assisted living? Was there a new addition to your family? Did you receive an inheritance or a gift?

Lastly, did you reach any of these financially important ages in 2016? If so, act accordingly.

  • Did you turn 70½ last year? If so, you must now take Required Minimum Distributions (RMDs) from your IRA(s).
  • Did you turn 65 last year? If so, you’re now eligible to apply for Medicare.
  • Did you turn 62 last year? If so, you’re now eligible to apply for Social Security benefits.
  • Did you turn 59½ last year? If so, you may take IRA distributions without a 10% penalty.
  • Did you turn 55 last year? If so, and you retired during this year, you may now take distributions from your 401(k) account without penalty.
  • Did you turn 50 last year? If so, “catch-up” contributions may now be made to IRAs (and certain qualified retirement plans).

The beginning of the year is a key time to review your financial “health” & well-being. If you feel you need to address any of the items above, please feel free to give me a call.

 

Navigating Post-Divorce Holidays

Navigating Post-Divorce Holidays

The first holidays after a divorce can be particularly hard and stressful on everyone in your life. Here are five things that helped me after my divorce, and may help you, as well.

  1.  Allow everyone to grieve and mourn the holidays of the past. Divorce is a kind of death: of unfulfilled expectations, or the family unit we used to be. Don’t try to pretend that the pain isn’t there.  Allow your kids to talk about the past, acknowledge it and move forward to now and how you’ll build your new future.
  2. Be Thankful.  Focus on what you and your children have, rather than what you’ve lost.  Revenge is not sweet.  Keeping your thoughts positive will benefit everyone.
  3. Watch your spending. More is not always better.  With budgets that may be tighter now, don’t dig yourself a hole that will be hard to climb out of in January.
  4. Create New Memories.  Use this time to create memorable new experiences for both you and your children.  Do something different.  Make something together.  Create new ornaments, baked treats, table decorations; take lots of pictures of your new holiday creations.
  5.  Try to avoid some of the usual rushing around, to allow for some quiet time.  Be thoughtful.  Think about what will support you and your kids best, during this time of transition.

As you well know, divorce is a long process. My therapist friends tell me it usually takes two years for people to ‘get over’ their divorce.  Sometimes it’s longer. The first holidays are hard but once you get past this one, it will get easier. Really!