MOST FREQUENTLY ASKED QUESTIONS ABOUT DIVORCE SETTLEMENTS

Keep in mind that no two cases are the same. You need to seek individual advice in order to determine how the specifics for your case may impact your specific needs.

Q. How do I know I am getting a fair settlement?
A. Pennsylvania is an equitable distribution state. This means the settlements are meant to be fair, not necessarily 50/50. Settlements may be comprised of asset distribution, alimony, child support and debt assignment. All these components may be divided in a way that seems best suited to both spouses, but perhaps not equally. A Certified Divorce Financial Analyst, may be necessary to assist you in obtaining the most optimal settlement.Q: What is a Certified Divorce Financial Analyst (CDFA)?A: A CDFA is an experienced financial professional who is trained to analyze the specific financial issues in divorce. They are members of the Institute for Divorce Financial Analysts, the premier national organization dedicated to the certification, education and promotion of the use of financial professions and planning in the divorce arena.
Q. Do I need an attorney?
A. Whether you litigate, collaborate or mediate, we recommend that you always use a family law attorney to protect your legal rights.
Q. Will I be able to receive alimony?
A. Maybe. There is alimony in Pennsylvania and it is based on the length of the marriage, the need of the payee and the ability to pay by the payor, and a CDFA can help determine both. Once the need and ability to pay is established, then a CDFA will determine how much is needed, tax effect it and determine how long alimony is needed for.
Q. How do I know which assets are the best ones to keep?
A. Not all assets are created equal and some assets may have more of a beneficial effect on your financial future. Assets such as businesses and retirement accounts continue to grow. Other assets may require money for their upkeep, such as a home and automobiles, and those costs must be considered in the overall settlement. Certified Divorce Financial Analysts are experienced in assessing these situations.
Q. Will I lose my pension?
A. Pensions and retirement plans are marital assets if earned during the marriage. However, it is possible to keep your pension and have it offset with other assets.
Q. Should the custodial parent keep the house?
A. This is a great question, and it's one of the most important overlooked questions. While the answer is sometimes yes, there also may be times when the answer is no. It's important to pinpoint exactly what it will cost to maintain the home, factoring in taxes and inflation and expense of upkeep. An analysis must be performed to determine if there is enough money to stay comfortable in the home and pay all the bills without being overextended. Once that has been determined, the advisability of retaining the home must be compared to that of giving up other assets (such as liquid accounts, retirement plans, etc.). Finally, all decisions need to be weighed against current economic and stock market conditions. Certified Divorce Financial Analysts are trained to help people answer this question before they commit to a settlement that cannot be changed.
Q. What if I bring a house into the marriage that is in my name only, and I add my spouse's name to the deed?
A. In this case, the whole house could be considered marital property. You might have made a "presumptive gift" to the marriage and should consult with a family law attorney to discuss your options.
Q. Is my IRA considered marital property if it's in my name only?
A. Everything acquired during the marriage, no matter whose name it's in, is typically considered marital property. In some states, the increase in value of separate property could also be considered marital. If you are going through a divorce, it would be important to evaluate the financial drawbacks to having your IRA included in the list of assets you retain, post divorce. Remember, the funds in the IRA cannot be accessed before age 59 1/2 without paying a 10% penalty for early withdrawal. Note: Inheritances and gifts may be considered to be separate property.
Q. I have never worked. Can I get Social Security?
A. If your spouse has worked and if you have been married for 10 years or more, and you don't remarry, you are entitled to one-half of your spouse's Social Security or your own, whichever is higher. Your spouse still retains 100% of his/her Social Security benefit. This is an automatic guarantee and therefore it is not a negotiation point in a divorce.
Q. How do we figure how much child support should be paid?
A. Pennsylvania has Child Support Guidelines that are mandated by the State. However, the Guidelines get tricky when one (or both) spouses is an independent business owner who can control their wages. In this situation, it typically helps to bring in a financial or tax expert who can help determine the true potential income of the each spouse.
Q. Do we have to go to court?
A. Only if you can't reach an agreement. Then, a court date is set and a judge hears the case. Less than 2% of all divorce cases go to trial in the United States.
Q. What is a QDRO and why do I need one?
A. A QDRO (or Qualified Domestic Relations Order) is the legal document that divides up a qualified pension or retirement account (including 401k's) pursuant to a divorce. The Judgment of Divorce is not sufficient to divide up the qualified plans; a QDRO is needed, preferably before the divorce is final. There are many nuances that go into QDRO's to make it an advocating (versus neutral) document. In order to protect your assets, be sure to obtain qualified advice in this area from a specialist. Janet Bouma teaches QDRO's nationally and can help you and your attorney make sure your QDRO represents your intentions.







MOST FREQUENTLY ASKED QUESTIONS ABOUT CDFAs

Q. What is a Certified Divorce Financial Analyst (CDFA)?
A. A CDFA is an experienced financial professional who is trained to analyze the specific financial issues in divorce. They are members of the Institute for Divorce Financial Analysts, the premier national organization dedicated to the certification, education and promotion of the use of financial professions and planning in the divorce arena.
Q. I have an attorney. Why do I need a
Certified Divorce Financial Analyst (CDFA)?
A. The financial ramifications of divorce can be devastating. Often missing from the divorce process is financial expertise. A CDFA can forecast both the short-term and long-term effects of the settlement. By using a CDFA, both spouses have a clearer view of their financial future. CDFA's help attorneys determine alimony needs of one spouse and the corresponding ability to pay by the other; help the client make financial sense of proposals; provide expert witness testimony in trials and arbitrations.
Q. What exactly does a CDFA do?
A. They confidentially examine your personal property, retirement assets, investment accounts, current earnings, future earning capacity, expenses. They consider alimony, tax implications, health care costs, cost basis of your investments, and the value of your business or partnership. They work with your attorney and/or mediator and analyze your equitable distribution proposals. Through the use of unique divorce software, they are able to illustrate to you, your spouse and your attorneys the short-term, and more importantly, the long-term financial effects of the settlement proposal. They illustrate all asset divisions and cash flow projections until your age 90. With proper planning and expert help from a professional specializing in financially equitable divorce settlements, you can increase your chances of arriving at a settlement that fully addresses your long-term financial needs.


Q. At what point in the divorce process should we contact your divorce financial planning department in order to work with a CDFA?
A. Some of you may want to consult with a CDFA before you contact an attorney, if you want to have an understanding of the financial aspects of your divorce before you start legal proceedings. Some of you may even feel that you cannot afford to get a divorce, and meeting with a CDFA can help you clarify financial concerns.
Q. I am currently working with an attorney. Is it too late to work with a CDFA?
A. Not at all. If you have a proposal on the table, a CDFA can analyze the proposal through the use of unique divorce software; you and your attorney will then be able to determine whether or not the proposal is acceptable to you. If not, or if you don't have any proposals, our experienced divorce team will, based on the information you and your attorney provide, create initial or alternative proposals. Our role is to assist your attorney and you; we consider ourselves a valuable component of your divorce team.
Q. Can both spouses work with you, or does it have to be just one?
A. If you want to possibly save time and money, it is ideal for us to work with both spouses—we call this financial mediation. We meet with both of you to determine what type of an asset split would be acceptable, and we use that split as a starting point for our financial proposals. By utilizing our divorce software, you can see, in black and white, what you are agreeing to and whether or not it is carrying out your intent—in other words eliminating the guesswork of whether or not you will be OK. If both spouses are cooperating, less time will be spent on devising acceptable proposals; and less time = less money. Each of you should be consulting with your attorney throughout the process in order to make informed decisions. After you reach agreement, your attorneys will review the proposal from the standpoint of your legal rights and one of them will write the proposal into a settlement agreement.
Q. We want to mediate our divorce. Can we still use a CDFA?
A. Absolutely. We can either work with you and your spouse to illustrate the short-term and long-term effects of your equitable distribution proposals, or you can engage us to coach you and advocate for you throughout the process. Either way, we will illustrate your various proposals in our divorce software so you and your spouse can see the potential short-term and long-term ramifications, and not just guess on the outcome. Our model is a great tool for your negotiations!
Q. How do I contact you?
A. Call or email to set up your initial complementary consultation. We have offices in Station Square, Avalon, and Upper St. Clair.


Q. What happens next?
A.

You tell us the particulars of your case and we show you examples of financial divorce plans At the end of the appointment, you will probably have an idea of whether or not you want to work with us. If you do, you complete our data form, income and expense sheet, retainer agreement (at home or in our office). We then devise various equitable distribution financial proposals. We show them to you first for your input and approval. We then present them to your attorney for his/her input. You and your attorney decide how you want to present them to the other side.
Q. Are there other services you provide besides Equitable Distribution Proposals and Illustrations?
A. Yes. Our Certified Business Valuators will value your business or practice, prepare a written report and testify in court, if necessary. Our CPAs provide tax advice, value stock options and prepare tax returns. We also prepare net spendable income calculation reports for spouses who are self-employed—to be used as the basis for child support, spousal support and alimony calculations. We assist attorneys in drafting Qualified Domestic Relations Orders and Pension Valuations.


Q. Can I use your services after I receive my settlement?
A. Absolutely. As part of our divorce financial planning service, we offer you the opportunity to participate in post-divorce financial planning. We will send you a data form and ask you to complete it based on your newly acquired divorce assets. We will examine your spending needs, individual insurance and estate planning needs, help you plan for your children's college education, and help you plan, or stay on course, for your retirement years.

© by J. Bouma & Associates, LLC