Divorce is a very emotional and draining process that can lead to financial pitfalls without careful planning for the future. Here is a short checklist of some of the significant financial considerations that should be addressed before a divorce agreement is executed:
Clear definition of cohabitation and how it would affect future alimony payments.
Child support beyond emancipation-especially for children with special needs or for college graduates returning home.
Funding and payment of the children’s child care, after school activities, camps, medical insurance and medical costs (including braces); vacations, college education including transportation, off campus housing and post graduate work; cars, luxury items, family parties (including weddings).
Tax considerations relating to real estate ownership transfers and the selling of the marital home, alimony and child support payments, dependency deductions, child care credits and higher education tuition credits.
Payment of professional fees relating to the divorce process.
Proper execution of Qualified Domestic Relations Orders or QDROs.
Assignment or retention of life insurance benefits to cover divorce obligations in the unlikely event of the passing of the obligated spouse.
Before executing divorce and property settlement agreements, careful consideration should be given to these points and other specific or personal financial issues that may affect the future. Without such consideration, additional time and legal costs may be incurred to re-visit issues in court with possible resultant financial hardships.
Richard Hoffman, CPA is a partner in the Livingston, New Jersey accounting firm of Levine, Jacobs & Company, LLC and a member of the firm’s matrimonial and litigation support department. The department’s expertise provides services relating to matrimonial disputes, including accounting, lifestyle analyses, business valuations, mediation and negotiation and forensic auditing. Levine, Jacobs & Company, LLC has worked with prominent matrimonial attorneys throughout the State of New Jersey.