Life Stages Planning


When a split becomes eminent and you're in the process of a divorce, it is hard to set emotions aside and think preparing yourself financially, but it is important to do so. This can be especially important if you are a non-working spouse or are the spouse that hasn’t traditionally been involved with the finances. Advice can come from many different sources, especially friends that have previously been through a divorce, but everyone situation is different, and it is important to speak with your attorney and financial planner for guidance throughout this process.

  Before a Divorce  


This includes bank records, credit cards statements, tax statements, insurance documents, employee benefit plans, loan information, estate planning documents retirement plans, and any other documents tied to your finances.

  • Although the common belief is to remove an ex-spouses as beneficiary on any account as soon as possible, it is best to consult with your divorce attorney before making these changes.

  • Make copies of these documents and give them to your attorney.


If you are certain that divorce in inevitable, it is important to start tracking all household income and spending. This will help your attorney determine an equitable way of splitting up assets and liabilities.

  • The more information that you have the better - records from previous years could help smooth out any inconsistencies found in just 1-year worth of spending.

  • Doing so could help in determining whether child or spousal support is necessary.

  • It is ok to include non-reoccurring expenses, such as home maintenance and vacations.

  • Also think about future spending, especially if you have children. Expenses such as day-care, after school activities, car insurance, private school, or college tuition.

  • Tracking your budget can also help you determine your future expenses after your divorce is finalized. Some expenses may fall off while other will be added.

  • Ultimately, it is important for you to have a plan so that you can remain financially stabile throughout this tough time.


Don’t make any large purchases – these types of purchases could end up causing complications throughout the divorce process.

Don’t move out of your home – before deciding to move out it is best to consult with your attorney.



Start putting money aside – many divorces cost more than expected, which is why being proactive will alleviate the financial pressure.

Set up a P.O box – this will help you prevent missing important documents if you decide to move out.

Hire an attorney – if there is any chance that you feel that the divorce will end up being contested and having to go to court, it is important to get an attorney involved ASAP.

  • Their guidance could help you get your fair share and help you navigate the legal complexities.

  • Speak with several attorneys before selecting one. Look for someone that you feel comfortable with, but also has experience in cases similar to yours.

  Costs of Divorce  

  • Contested Divorce = $15,000 per person

  • Uncontested Divorce = $250 -$500 overall

  • Mediation = $5,000 overall

  • Collaboration = $3,000 per lawyer

  • Court Trial = $25,000 per person

  • Divorce Attorney = $200/hour

    • Low Budget = $75/hour

    • Highly Specialized = $650/hour

  During & Post-Divorce  


  • Depending on your situation, you may receive or pay ongoing support throughout the divorce process. If this is the case, liquidity is going to be key.

  • Prioritize tapping into the accounts that incur the least amount of penalties such as savings, money markets, and CDs.

  • Consult with your CPA and/or financial planner before liquidating retirement accounts to better understand tax consequences and IRS penalties.

  • Other considerations such relocation cost as well as any other cost attributed to you setting up your new life should be accounted for.


  • A legal instrument used to transfer ownership interest in real estate property from one spouse to another. It is most commonly used when one spouse wants sole ownership of the marital home.

  • Allows for transfer to occur regardless of existing liens on the property

  • An alternative solution to selling the property and incurring unnecessary fees from realtors and title companies


  • Depending on how the assets are divvied up, you may need to purchase new home and auto insurance policies on those assets.

  • Apply for medical insurance for you and your dependents in the event you were previously covered under your ex-spouse’s plan.

  • COBRA allows you to continue coverage for up to 36 months, but it is wise to start shopping your options ASAP so that coverage continues thereafter.

  • Re-evaluate life and disability insurance coverage.


  • When one of the parties in a divorce owns stock options or a business, there’s a good possibility that their annual salary fluctuates year-to-year.

  • Comprise a formula to handle the inconsistencies in income and find a neutral person to audit the appropriate documents to determine that your financial rights are being honored.

  • The settlement should determine who owes taxes and how they owe them irrespective of who receives compensation.


Liquidating Assets

  • Capital gains from the sale of stock.

  • Early withdrawal penalties from IRAs, 401(k)s, 403(b)s, and other retirement plans.

  • Depreciation recapture and capital gains taxes from the sale of rental real estate.

Alimony tax considerations

  • The TCJA changed the rule on alimony payments and they take effect for divorces that are settled after December 31, 2018. Alimony payments are no longer tax deductible to the payee and no longer counted as income to the spouse receiving the payments.

  • For agreements made December 31, 2018 and before the old tax law still applies, but they must still meet the same previous guidelines. So, it is business as usual for the entire time period that is stated in the agreement.


  • If the agreement was settled before December 31, 2018 and there is a modification it must specifically state that it is adopting the TCJA treatment for the new law to apply.

Child Support tax considerations

  • Child support payments are not deductible by the parent who is making payments and they are not considered as income for the parent that is receiving child support payments.

  • Depending on the court order, either parent can take a dependency exemption on each child.

  • If the parents can’t come to an agreement the court will create a schedule in which each parent can use the child dependency tax deduction.

  • Exceptions can include that if one parent will not experience a tax benefit for claiming the exemption or if one parent has a history of missing child support payments.

  • Parents that fail to pay child support face garnishment of their tax refunds.


It is important to know and understand the benefits that you and your spouse are entitled to. Your Human Resources department can sometimes aide in this process.

Most common situations to consider:

  • Deciding which health insurance plan the children are covered under.

  • Division of any pension plan and retirement plan assets via a Qualified Domestic Relations Order.

  • Whether or not to exercise any stock options.

  • How to split up Health Savings Accounts (HSAs) and Flexible Savings Accounts (FSAs)

  • Updating beneficiaries on work provided life insurance coverage and retirement accounts.


A QDRO is a court order that recognizes the right of a third party (such as an ex-spouse or child) to receive benefits from a qualified retirement plan. The person who holds the plan is called the participant and the ex-spouse or child that is the beneficiary is usually called the alternate payee.

  • These are used in the divorce process to split up assets located in retirement plans, which include 401(k) plans, 403(b) plans, pensions, and other qualified plans.

  • This can used for child support, alimony or martial property rights to a spouse, former spouse, child or any other dependent of the plan participant.

  • They can be issued by a judge or a state agency that has the authority to issue judgements.

  • There are typically two different ways these funds are distributed:

    • Shared payment approach – splits the benefit payments between participant and alternate payee.

      • This approach is used when the participant is already retired and receiving a stream of payments from an annuity or pension.

    • Separate interest approach – Divides the participant’s retirement benefits in half.

      • The alternate payee can either take a distribution out as a lump sum or they can hold it in the account and have the right to receive the portion of the retirement benefit later.

      • A distribution from a QDRO will not be taxable if it is rolled over into the alternate payee’s IRA or other qualified account.

      • If it is not rolled over and taken as a distribution it will be subject to ordinary income tax, but it will not be subject to the 10% early withdrawal penalty.



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