Everything you need to split assets and debts as fairly as possible.
When you're going through divorce, you have to make an overwhelming number of financial decisions. Should you sell the house? What happens to retirement benefits? How will you handle taxes?
Full of sensitive and practical advice, Divorce & Money guides you through the process of making these important decisions. It covers how to:
decide whether to keep or sell the house
protect yourself against misuse of joint accounts and credit cards
avoid tax problems
handle alimony and child support
divide debts fairly
avoid hasty decisions that could hurt you financially
reduce risks to your investments
understand how a court evaluates assets
gain financial stability as a single person
The 8th edition provides the latest tax figures and data, plus expanded coverage of debts and bankrutpcy.
Sooner or later during a divorce, you will discover the one insight that is central to this book and to the successful outcome of your settlement:
Legal reality and financial reality are fundamentally different.
A seemingly simple idea -- but you'd be surprised how long it takes to sink in. To help you understand why this concept is so important, take a few moments to consider the following real-life divorce stories. In each, read the legal reality first. Then, see the true outcome in the Financial reality side.
Legal Reality Financial Reality
Jonathan and Penny were married for five years before they divorced. During that time, Penny frequently ran their credit cards to the limit buying clothing, and had trouble balancing their checkbook.
When they reached the final settlement hearing, Jonathan was greatly relieved when the court made Penny solely responsible for paying the $10,000 in credit card debts she had accumulated during their marriage. The settlement was included in the final divorce judgment, which made Jonathan feel safe.
After the divorce, however, Penny didn't pay off the credit cards, and creditors began hounding Jonathan for the money. Jonathan ended up footing the bills, because a divorce settlement assigning debts -- even one included in a divorce judgment -- cannot change a couple's original joint obligation to their creditors.
Had Jonathan raised the issue before their settlement was finalized, he could have demanded more property in exchange for paying Penny's debts or insisted that they sell some jointly held property to pay off their creditors.
Moral of the story:
Getting something "in writing" from the court doesn't always mean you'll get it for real.
Legal Reality Financial Reality
During their 15-year marriage, Sharon and Bill were committed to building up a good portfolio of stocks and mutual funds for their retirement.
Because Sharon avidly followed the market, she wanted to keep a batch of stocks she had recently purchased and asked Bill to take stocks of equal value, which they had purchased early in their marriage. After negotiating over a few other assets, Bill and Sharon reached an agreement in which each of them would receive the exact same dollar amount in cash or assets at the end of the divorce. The court accepted the terms of their settlement, and the books on their marriage were quickly closed.
Sharon paid attention to basic financial facts that Bill ignored: costs and taxes that decrease the value of an asset.
Sharon wisely picked the stocks most recently purchased. Because these stocks had not increased substantially in value, the taxable capital gains were low. Bill, however, blithely accepted the older stocks, which had gone up a lot in value since the time of purchase. Even at a capital gains rate of 20%, he owed substantial taxes when he sold the stocks. Had he taken the time to calculate his potential tax burden before agreeing to the settlement, he could have suggested splitting the stocks so that each spouse took half of the older stocks and half of the newer stocks.
Moral of the story: A 50-50 settlement isn't always equal.
Lessons in Legal Reality
Ending a marriage with no assets or huge debts is the hard way to learn about divorce. Your lessons do not have to be so costly. You would never try to play basketball with football rules or to cook Chinese food using classic French recipes, would you? Similarly, you must learn to follow the correct "rules" for playing in the legal league versus the financial field.
Synopsis
Everything you need to split assets and debts as fairly as possible.
Table of Contents
Introduction: Your Financial Companion During Divorce
A Note on Same-Sex Marriage and This Book
If You Are Feeling Overwhelmed
How to Use This Book
1. Legal vs Financial Realities of Divorce
Lessons in Legal Reality
Your Best Strategy: Think Financially -- Act Legally
Legal vs Financial Stages of Divorce
2. Financial Realities No One Talks About
In Divorce, Everything Takes Longer and Costs More
When You're Connected to Another Person Financially,You're at Risk
The IRS Is Watching Your Divorce
Cash Is King
You're Playing for Keeps
3. Emotional Divorce: Managing the "Money Crazies"
Reduce Stress Whenever You Can
Safeguard Your Sanity
Watch Out for Sore Spots
Be Prepared for Bad Scenes
Develop a Financially Focused Mental Attitude
Avoid the "All at Once" Syndrome
Manage the Ebb and Flow of Emotions
Don't Let Financial Tasks Overwhelm You
4. The Hardest Part: Is My Marriage Really Over?
5. The Separation: What Happens When One Spouse Moves Out?
The Separation Date
Questions to Ask an Attorney
6. Closing the Books: What Do We Do With Joint Property?
Joint Account Checklist
Questions to Ask an Attorney
7. Getting Help: Who Can I Turn To?
Questions to Consider When Seeking Outside Help
Selecting Professionals to Assist You
8. Financial Fact-Finding: What Must I Know and When Must I Know It?
Advice to the Terminally Disorganized
If You Think Your Spouse May Be Hiding Assets
Don't Forget the "Easy-to-Forget" Assets
The W-2 and the Tax Return
What About the Gifts You Gave Me?
Financial Facts Checklist
Questions to Ask an Attorney
9. Facing the Future: What Must I Plan For?
Major Upcoming Life Events
Anticipated Financial Commitments
Major Goals That Will Cost Money
Where Does the Money Come From?
10. Protecting Against Risks to Life, Health, and Property
Insurance
Property and Estate Protection
Questions to Ask Your Attorney
11. Taxes: How Do I File and Pay?
Get a Rough Estimate of Your Tax Bill
What Status Can Be Used When Filing Tax Returns
When in Doubt, File Separately
What to Know If You File Jointly
Dividing the Joint Tax Liability -- Or the Refund
Tax Issues Involving Temporary Alimony or Child Support
Get Your Tax Agreement in Writing
Questions to Ask Your Tax Adviser
12. Property and Expenses: Who Owns and Who Owes What?
Who Owns What -- Marital Property and the Laws of Your State
Who Knows What -- Using Legal Discovery
Net Worth -- What Do You Own and What Do You Owe?
The Difference Between Assets and Income
Cash Flow -- Where Does the Money Go?
Questions to Ask Your Attorney
13. What Will Happen to the House?
Financial Versus Legal Realities
The House -- Keep It, Transfer It, or Sell It? Now or Later?
Steps Toward Settling the House
Questions to Ask Your Attorney or Financial Adviser
14. Retirement Benefits: Who Gets What?
15. Financial Investments: How Do We Divide the Portfolio Pie?
16. Evaluating Employee Benefits and Stock Options
17. How Will We Divide Debts?
18. Child Support and Alimony: What Might I Pay or Receive?
19. Negotiating and Finalizing the Best Possible Settlement
20. After the Divorce: How Do I Get From "We" to "Me"?
Appendix
Index
Reviews
Los Angeles Times...
"An essential purchase for anyone contemplating a split, because financial decisions made during divorce can have such huge repercussions for both parties."
Steve Crowley, host of “Your Money Report” and author of Money For Life...
"Divorce & Money is precisely the right book to read to keep your property, your rights, plus your sanity during the trying weeks and months that follow divorce."
Newsday...
"Organized like a workbook and written like an advice manual. It reduces the financial complications of divorce into comprehensible strategies."
About the Creator
Violet P. Woodhouse, noted author, lecturer, seminar presenter and consultant to the media in the areas of family law and personal finance, is a foremost authority on the financial and tax aspects of divorce. A practicing family law attorney as well as a Certified Financial Planner and Registered Investment Advisor, she pioneered the development of financial analysis of property settlements for financial planners, and often acts as a consultant to divorcing spouses and their mediator during mediation. Ms. Woodhouse is in private practice in Newport Beach, California, and has authored articles for the state and local bar associations and legal newspapers. Co-author of Nolo's Divorce & Money, she has also written articles for or has been quoted in such publications as the Wall Street Journal, New York Times, Working Woman, Lear’s, Money Magazine and Kiplinger’s Personal Finance Magazine. Worth Magazine has named her one of the top 60 financial advisors in the nation.
