Frequently Asked Questions on Divorce and Finances:
The following are some of the questions asked most often. We hope you find the information offered useful.
What is Collaborative Law?
What is a Certified Divorce Financial Analyst?
How does alimony work?
Does the custodial parent get the house?
- How does child support work?
- If I never worked, am I eligible for Social Security benefits?
- Will I lose my pension, IRA, 401(k), etc.?
- What is a QDRO and why is it needed?
A: Collaborative Family Law is a reasonable approach to divorce based on three principles: 1) A pledge not to go to court
2) An honest exchange of information by both spouses
3) A solution that takes into account the highest priorities of both adults and their children.
Mutual respect is fundamental to the collaborative way. You may cease being spouses, but you don’t cease being worthy human beings. When respect is given and received, discussions are likely to be more productive and an agreement reached more easily. (For more information on Collaborative Law, please click on the "Collaborative Divorce" tab on the left.)
A: Someone who has been certified by the Institute for Divorce Financial Analysts has a background in finances and has taken a four course series, passing all the examinations. CDFAs are trained and qualified to serve as a financial expert on divorce cases, present powerful data to back up options, and educate clients on the financial implications of different divorce settlement proposals.
The divorce settlement will in part determine your financial well-being for many years to come. It is critical that it be soundly structured, especially if your spouse assumed more responsibility for your family’s finances. The guidance of a financial specialist will help protect your interests. Reviewing all assets and incomes, the financial specialist will assist you in analyzing viable financial options for your future.
Q: How does alimony work? A: No two divorce cases are alike - you need to consult with you attorney to focus on your particular situation, however the "tests" for evaluating alimony/spousal support/maintenance include:
Need: Can you support yourself with earned income plus investment income?
Ability to Pay: Does whoever will be paying alimony have sufficient funds to pay it?
Length of Marriage: A long-term marriage (10 years or more) generally is a stronger case for the lower-earning spouse.
Previous Lifestyle: Roughly speaking it takes into account how you lived your lives prior to the divorce, perhaps with some modifications.
Age & Health of Both Parties: May be impacted if major wage earner is retired, is disabled or in poor health, or may never have worked, etc.
A: Sometime yes, sometimes no, as it often may not be prudent to be awarded the house if there isn't enough income to afford to live there. You need to consider mortage payments, taxes, utilities, repairs, and inflation. Consider whether it is worth giving up other assets in the settlement (liquid accounts, pensions, etc.). Also, consider the current market and economic conditions. A Certified Divorce Financial Analyst is trained to help you understand all the consequences before commiting to a settlement than cannot later be changed.
A. Washington State, as does every other state, has Child Support Guidelines that are mandated. In instances where one spouse, or both, is an independent business owner who can't control their wages, it is helpful to bring in a financial or tax expert who can help in determining the true potential income.
A: If your spouse has worked and you've married for at least 10 years, your are entitled to one-half of your spouses Social Security, or your own, whichever is higher - even if you are divorced. Your spouse still retains 100% of his/her Social Security benefit. This is an automatic guarantee and therefore it is not a negotiating point in a divorce settlement.
A: Pensions and retirement plans are considered marital assets. In Washington State even the portion you may have earned prior to getting married may also be considered a marital asset. However it is possible to keep your pension and have it offset other assets. This is a part of the analysis process to determine an equitable financial settlement.
A: A QDRO (or Qualified Domestic Relations Order) is the legal document that divides up a qualified pension or retirement account (including 401k's) following a divorce. The Judgment of Divorce is not sufficient to divide up qualified plans, a QDRO is needed. There are many nuances that go into QDRO's as they are dependent upon the specific situation of the pension/retirement account as well as different laws that protect most military and public sector plans. In order to protect your assets, be sure to obtain qualified advice in this area from a specialist.