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CLAY A. CALDWELL, CFDP Marital Finances.Com
INFORMATION FOR MEN
Marital Financial Issues For Men:
Q. Why do I need a financial specialist, why not just use an attorney?
A. Finances are the most important aspect of any divorce, and they can be very complex. Utilizing a financial professional to
help you understand how the divorce process will impact your finances not only saves you time and expense, it can also
reduce the likelihood of costly litigation. Once your finances are established you will have the option of pursuing alternative
methods of conflict resolution, such as mediation or collaboration. However, even if litigation is a foregone conclusion,
understanding your finances is an essential first step in analyzing all your legal options and deciding which attorney is best
suited to handle your divorce. All divorces have potential financial issues, whether they are contested or not, and using a
financial professional independently or in conjunction with an attorney can be the most cost effective and efficient way to
protect your future.
Q. What if I haven't planned for my divorce?
A. Many individuals filing for divorce now routinely utilize the services of financial professionals well in advance. Those
who ignore the potential financial risks of divorce and fail to properly plan for them typically end up with limited options,
higher expenses, and less satisfaction with the overall process.
Q. What's considered marital?
A. In general, everything earned or accumulated while you were married regardless of who's name it is under, how it is
titled, or who earned it. This includes items such as earned income, business income, marital investment income and capital
appreciation, deferred compensation, retirement benefits, lottery winnings, liability awards for lost income, workman's
compensation, and appreciation of separate assets attributable to marital effort to name a few. In some cases property
purchased in contemplation of a marriage or during premarital cohabitation is considered. Some states even include
premarital separate assets for distribution. Classification of assets can be very complicated, and seeking the advice of a
professional is very important.
Q. What about my business?
A. All or a portion of your business may be marital as well. Business valuations can be very complex however, and a
qualified business appraiser is absolutely essential. The methodology and assumptions used to normalize earnings, determine
capitalization rates and establish goodwill can result in substantially different valuations even among highly certified
professionals. Couple that with the potential for double dipping on valuations for division and future income for support,
and I highly advise you seek the opinion of a specialist.
Q. Can I keep my separate property?
A. In general yes, if you have adequate records of separate property. In most states property you brought into the
marriage, received as a gift or inherited is separate as long as it is not commingled. Appreciation and income is also separate
in most states, as long as you haven't contributed any marital effort or expense to the property. If you've jointly titled a
home with separate funds, in some states it's presumed to be a gift to the marital estate. In other states however, down
payments, improvements and payments that "reduce principal" made from separate assets are reimbursable from the marital
estate...if they can be documented. You should consult with your attorney for details.
Q. How are things split up?
A. In general 50% of Marital Assets and Liabilities is considered the starting point. Community Property, Equitable Division
and "All" States differ...but in general most judges have discretion to consider many factors, including length of marriage,
dependents, separate assets, personal contributions, dissipation, health issues and future employability. Whatever assets or
liabilities you take should be analyzed for tax, liquidity, and potential appreciation.
Q. How does a "Separation" effect my finances?
A. Don't confuse trial or permanent separation pending a final decree with a formal "Legal" separation. Legal separation is
an alternative to divorce. Trial separation with no clear intent to divorce typically does not affect the classification of assets
or debt because the intent is ambiguous...but a "permanent" separation with the intent to divorce can have a very significant
impact on your finances. Some states use your permanent separation date as a "cut off date" for accumulating marital
property. Your permanent separation date could be the date you separate physically, file for divorce, or in some situations
show the marriage is irretrievably broken down. In some states you may still live under the same roof but be considered
permanently separated if the evidence shows "intent" to end your marriage. In any case, once a petition has been filed,
temporary support, custody, and control of marital assets will generally be determined pending a final decree and may
become permanent. These temporary orders, as well as "cut off date" considerations, can have a significant impact on the
outcome of your final decree.
Q. What impact does leaving my house have on my finances?
A. If you are jointly listed on the mortgage you are still jointly responsible for that debt whether you have separated
physically and have no access to the house or not. How your home is titled does not necessarily determine whether or not it
is a marital asset. Keep all records for sources of down payments, mortgage, tax, insurance, and upkeep expenses. Before
you leave, you should have an agreement or order that clearly states who is financially responsible for any expenses such as
taxes, insurance, and mortgage payments while your divorce is pending. Make sure you understand what is tax deductible if
you will be filing separately, how a foreclosure or short sale will affect your marital finances, how you can preserve your
capital gains deduction if the house will not be sold immediately, and how the house is titled for estate purposes. Make
copies of all your records and take a video of all the marital possessions before you leave.
Q. What will I have to pay in Child Support and Maintenance?
A Some states use statutory percentages and others use methods such as the "income shares" model for calculating
minimum contributions. Many states include college expenses and health care as well. The amount you will pay depends on
the details of your case such as number of children, income, expenses, assets, and the ability of each spouse to pay. .
Maintenance in many states is now considered "rehabilitative" and is based on the ability to pay and length of marriage,
health issues and employability factors...just to name a few. Maintenance can take numerous forms, and be structured for
tax or liquidity purposes. Your current and projected future income from all sources will be used to determine your ability to
pay. Unless maintenance has been specifically waived, it is modifiable...so please consult with your attorney!
Q. Will I have to pay temporary maintenance?
A. This depends on the specific circumstances of your case, whether you have children, your spouse works, you have the
ability to pay, and whether or not your spouse can maintain "current lifestyle". In any case this would only be until all
income and expenses can be analyzed and any longer term support is finalized in your divorce! Temporary maintenance is
tax deductible however. Temporary maintenance can have an influence on permanent maintenance awards, so make sure
you have good records of your "normal" income and expenses so a reasonable financial analysis can be done as soon as
possible.
Q. Do I have to pay my spouses legal expenses?
A. It all comes out of the marital estate...which means you are both paying! If there are no marital assets a minimum
contribution may be ordered, based on your ability to pay.
Q. Do I have to pay all the debts?
A. In general all debts incurred while you were married are joint unless proven not to benefit the marital estate. All debts
after separation unless proven to be necessary to maintain the marital estate are separate in most states. Even after your
divorce you are still legally responsible for joint debts to third parties, no matter who was ordered to pay in your settlement.
Get your name off of joint credit cards and refinance debt or marital assets being divided as soon as possible. Filing for
bankruptcy will postpone the division of property but not support payments. After your divorce, support obligations and
settlement notes in the nature of support cannot be discharged in bankruptcy. Beware of unsecured promissory notes
included in any settlement if bankruptcy may become an issue. Bankruptcy laws are complex, and you will need an
experienced attorney.
Q. What about my retirement accounts?
A. All benefits earned while you were married are marital assets and divisible by immediate offset or future payout. Marital
portions of pensions are weighted for total years of service vs. number of years married using a coverture formula.
Accumulated cash benefits from accounts like 401K's use a mathematical formula which factors in any non marital
contributions and appreciation. Valuing and dividing retirement benefits is complicated and has serious tax implications, and
in most cases a Qualified Domestic Relations Order (QDRO) should be drawn by an experienced attorney or para legal
professional to implement the division. Dividing unvested stock options and other deferred compensation is even more
complex and using a financial professional is highly recommended.
Q. What about my insurance policy?
A. Any cash value built up while you were married is marital, you may be ordered not to remove your spouse as beneficiary,
and you may be required to place the policy in trust or transfer ownership to your spouse as security for future support
payments. Make sure you understand the ownership, beneficiary and tax implications.
Q. Should I just quit working?
A. No, many judges will just impute potential earnings and employability from your past history. You should, however,
carefully consider any promotion or transfer that could put you at risk of losing your job if things don't work out, or any
significant business decisions that could positively skew your income. Your current income is used to project future
earnings and support obligations. Modifying support payments if your earnings decline is time consuming and costly.
Q. Anyway I can minimize my costs?
A. Planning ahead is the best advice I can give you, but at some point when you have exhausted all your options...the best
way to minimize your costs is to negotiate an equitable settlement as quickly as possible! Last ditch efforts to defer any
compensation, accelerate any business expenses, transfer or dissipate any assets, etc., will eventually be accounted for.
Incurring any large debts or making any imprudent investments not benefiting the marital estate may be considered
dissipation and subject to reimbursement to the estate. If you try to impede the discovery process by hiding or destroying
documents, you will only invite legal action and additional expense. Hiding any assets will ruin your standing in court if you
are caught! In some states the forfeiture of hidden assets is 100%, not just half!
Disclaimer: This is for informational purposes only and not meant to provide legal advice. Only your legal
representative is qualified to do so.
Q. Why do I need a financial specialist, why not just use an attorney?
A. Finances are the most important aspect of any divorce, and they can be very complex. Utilizing a financial professional to
help you understand how the divorce process will impact your finances not only saves you time and expense, it can also
reduce the likelihood of costly litigation. Once your finances are established you will have the option of pursuing alternative
methods of conflict resolution, such as mediation or collaboration. However, even if litigation is a foregone conclusion,
understanding your finances is an essential first step in analyzing all your legal options and deciding which attorney is best
suited to handle your divorce. All divorces have potential financial issues, whether they are contested or not, and using a
financial professional independently or in conjunction with an attorney can be the most cost effective and efficient way to
protect your future.
Q. What if I haven't planned for my divorce?
A. Many individuals filing for divorce now routinely utilize the services of financial professionals well in advance. Those
who ignore the potential financial risks of divorce and fail to properly plan for them typically end up with limited options,
higher expenses, and less satisfaction with the overall process.
Q. What's considered marital?
A. In general, everything earned or accumulated while you were married regardless of who's name it is under, how it is
titled, or who earned it. This includes items such as earned income, business income, marital investment income and capital
appreciation, deferred compensation, retirement benefits, lottery winnings, liability awards for lost income, workman's
compensation, and appreciation of separate assets attributable to marital effort to name a few. In some cases property
purchased in contemplation of a marriage or during premarital cohabitation is considered. Some states even include
premarital separate assets for distribution. Classification of assets can be very complicated, and seeking the advice of a
professional is very important.
Q. What about my business?
A. All or a portion of your business may be marital as well. Business valuations can be very complex however, and a
qualified business appraiser is absolutely essential. The methodology and assumptions used to normalize earnings, determine
capitalization rates and establish goodwill can result in substantially different valuations even among highly certified
professionals. Couple that with the potential for double dipping on valuations for division and future income for support,
and I highly advise you seek the opinion of a specialist.
Q. Can I keep my separate property?
A. In general yes, if you have adequate records of separate property. In most states property you brought into the
marriage, received as a gift or inherited is separate as long as it is not commingled. Appreciation and income is also separate
in most states, as long as you haven't contributed any marital effort or expense to the property. If you've jointly titled a
home with separate funds, in some states it's presumed to be a gift to the marital estate. In other states however, down
payments, improvements and payments that "reduce principal" made from separate assets are reimbursable from the marital
estate...if they can be documented. You should consult with your attorney for details.
Q. How are things split up?
A. In general 50% of Marital Assets and Liabilities is considered the starting point. Community Property, Equitable Division
and "All" States differ...but in general most judges have discretion to consider many factors, including length of marriage,
dependents, separate assets, personal contributions, dissipation, health issues and future employability. Whatever assets or
liabilities you take should be analyzed for tax, liquidity, and potential appreciation.
Q. How does a "Separation" effect my finances?
A. Don't confuse trial or permanent separation pending a final decree with a formal "Legal" separation. Legal separation is
an alternative to divorce. Trial separation with no clear intent to divorce typically does not affect the classification of assets
or debt because the intent is ambiguous...but a "permanent" separation with the intent to divorce can have a very significant
impact on your finances. Some states use your permanent separation date as a "cut off date" for accumulating marital
property. Your permanent separation date could be the date you separate physically, file for divorce, or in some situations
show the marriage is irretrievably broken down. In some states you may still live under the same roof but be considered
permanently separated if the evidence shows "intent" to end your marriage. In any case, once a petition has been filed,
temporary support, custody, and control of marital assets will generally be determined pending a final decree and may
become permanent. These temporary orders, as well as "cut off date" considerations, can have a significant impact on the
outcome of your final decree.
Q. What impact does leaving my house have on my finances?
A. If you are jointly listed on the mortgage you are still jointly responsible for that debt whether you have separated
physically and have no access to the house or not. How your home is titled does not necessarily determine whether or not it
is a marital asset. Keep all records for sources of down payments, mortgage, tax, insurance, and upkeep expenses. Before
you leave, you should have an agreement or order that clearly states who is financially responsible for any expenses such as
taxes, insurance, and mortgage payments while your divorce is pending. Make sure you understand what is tax deductible if
you will be filing separately, how a foreclosure or short sale will affect your marital finances, how you can preserve your
capital gains deduction if the house will not be sold immediately, and how the house is titled for estate purposes. Make
copies of all your records and take a video of all the marital possessions before you leave.
Q. What will I have to pay in Child Support and Maintenance?
A Some states use statutory percentages and others use methods such as the "income shares" model for calculating
minimum contributions. Many states include college expenses and health care as well. The amount you will pay depends on
the details of your case such as number of children, income, expenses, assets, and the ability of each spouse to pay. .
Maintenance in many states is now considered "rehabilitative" and is based on the ability to pay and length of marriage,
health issues and employability factors...just to name a few. Maintenance can take numerous forms, and be structured for
tax or liquidity purposes. Your current and projected future income from all sources will be used to determine your ability to
pay. Unless maintenance has been specifically waived, it is modifiable...so please consult with your attorney!
Q. Will I have to pay temporary maintenance?
A. This depends on the specific circumstances of your case, whether you have children, your spouse works, you have the
ability to pay, and whether or not your spouse can maintain "current lifestyle". In any case this would only be until all
income and expenses can be analyzed and any longer term support is finalized in your divorce! Temporary maintenance is
tax deductible however. Temporary maintenance can have an influence on permanent maintenance awards, so make sure
you have good records of your "normal" income and expenses so a reasonable financial analysis can be done as soon as
possible.
Q. Do I have to pay my spouses legal expenses?
A. It all comes out of the marital estate...which means you are both paying! If there are no marital assets a minimum
contribution may be ordered, based on your ability to pay.
Q. Do I have to pay all the debts?
A. In general all debts incurred while you were married are joint unless proven not to benefit the marital estate. All debts
after separation unless proven to be necessary to maintain the marital estate are separate in most states. Even after your
divorce you are still legally responsible for joint debts to third parties, no matter who was ordered to pay in your settlement.
Get your name off of joint credit cards and refinance debt or marital assets being divided as soon as possible. Filing for
bankruptcy will postpone the division of property but not support payments. After your divorce, support obligations and
settlement notes in the nature of support cannot be discharged in bankruptcy. Beware of unsecured promissory notes
included in any settlement if bankruptcy may become an issue. Bankruptcy laws are complex, and you will need an
experienced attorney.
Q. What about my retirement accounts?
A. All benefits earned while you were married are marital assets and divisible by immediate offset or future payout. Marital
portions of pensions are weighted for total years of service vs. number of years married using a coverture formula.
Accumulated cash benefits from accounts like 401K's use a mathematical formula which factors in any non marital
contributions and appreciation. Valuing and dividing retirement benefits is complicated and has serious tax implications, and
in most cases a Qualified Domestic Relations Order (QDRO) should be drawn by an experienced attorney or para legal
professional to implement the division. Dividing unvested stock options and other deferred compensation is even more
complex and using a financial professional is highly recommended.
Q. What about my insurance policy?
A. Any cash value built up while you were married is marital, you may be ordered not to remove your spouse as beneficiary,
and you may be required to place the policy in trust or transfer ownership to your spouse as security for future support
payments. Make sure you understand the ownership, beneficiary and tax implications.
Q. Should I just quit working?
A. No, many judges will just impute potential earnings and employability from your past history. You should, however,
carefully consider any promotion or transfer that could put you at risk of losing your job if things don't work out, or any
significant business decisions that could positively skew your income. Your current income is used to project future
earnings and support obligations. Modifying support payments if your earnings decline is time consuming and costly.
Q. Anyway I can minimize my costs?
A. Planning ahead is the best advice I can give you, but at some point when you have exhausted all your options...the best
way to minimize your costs is to negotiate an equitable settlement as quickly as possible! Last ditch efforts to defer any
compensation, accelerate any business expenses, transfer or dissipate any assets, etc., will eventually be accounted for.
Incurring any large debts or making any imprudent investments not benefiting the marital estate may be considered
dissipation and subject to reimbursement to the estate. If you try to impede the discovery process by hiding or destroying
documents, you will only invite legal action and additional expense. Hiding any assets will ruin your standing in court if you
are caught! In some states the forfeiture of hidden assets is 100%, not just half!
Disclaimer: This is for informational purposes only and not meant to provide legal advice. Only your legal
representative is qualified to do so.