General Divorce Advice

[Home'scool]

Disclaimer:   We will be going to a mediator and then I will be hiring a lawyer to review our agreement before anything is signed off

 

I have posted before that my husband and I are getting divorced. For the past 5 months, since we have decided that the marriage cannot be saved, we have still been living together and things have been very amicable. We decided from the beginning we wanted to remain friends for the sake of our children and because we do still love each other, its just that marriage is no longer in the cards for us.

 

Tonight we are getting together to take first stab at how we want to split the finances. Any advice on something I should/could be asking for that I have missed?

 

Here is some general details:

 

- We have been married for  27 years

- Our two daughters are over 18 so there is no child support, but there are parent loans that we took out for college. There is also some credit card debt (around 15K)

- We will be selling our house. The best guesstimate is that we may clear 100K

- He has a 401K, I do not. It has about 500K in it.

- He makes about $230,000 and also gets annual bonuses anywhere from $10,000 - $70,000. I make about $40,000

 

I am planning on asking for 1/2 the house profit, 1/2 the 401K, 1/2 savings, 35% alimony, and 1/2 of any bonuses that he gets.

 

I am thinking I may only get alimony until I reach retirement age, but should I ask for alimony for life? I know judges don't automatically give that anymore but my husband may agree to it.

 

How should I handle debts? I was thinking saying that he takes the debts and I won't ask that he contributes to my 401K, or should it be the other way around? I also need to upgrade my car - how should I work that into the agreement?

 

Anything other suggestions? I don't want to fleece him, but he makes way more than me and will continue to do so. We have been married a long time and I homeschooled for 10 years.

 

 

[Carol in Cal.]

I think you should see an accountant and talk through this stuff.

You want a net present value of the streams of income that you have contributed to his ability to earn, in addition to the splits that you're talking about.

Also make sure you think through, for anything that is promised to you in the future, that you have some provision in case he dies, is disabled, or goes bankrupt. Better yet, get whatever you're going to get now.  It's cleaner that way, plus you don't have to wonder whether it's going to arrive or not.

 

Edited January 19, 2016 by Carol in Cal.

[Seasider]

I agree that it would be worth your nickel to speak with a professional advisor *before* going to mediation or getting just a seal of approval by an attorney.

 

I would make the parent loan repayment his entire responsibility, since it's likely you were granted the loan based on his income rather than on yours.

[Home'scool]

Can you explain "Net present value of the streams of income that you have contributed to his ability to earn"?

[MrsWeasley]

I agree that it would be worth your nickel to speak with a professional advisor *before* going to mediation or getting just a seal of approval by an attorney.

 

I would make the parent loan repayment his entire responsibility, since it's likely you were granted the loan based on his income rather than on yours.

This.

[ErinE]

Can you explain "Net present value of the streams of income that you have contributed to his ability to earn"?

 

Essentially, with inflation, money in the future is worth less than today. That's why a series of $1.5 billion lottery payments over 20 years is only worth $900 million paid all at once.  Depending on state law, you might be entitled to a portion of his salary and bonus, rental income, investment earnings, pensions, or social security payments (less the half of your total income he's entitled to) discounted over his lifetime using an interest rate. Year one income would have a small discount, year two income a larger discount, year three even larger. The sum of all those discounted cash flows is the present value of the income streams.

 

However, this is highly dependent on state law and the underlying financial assumptions. I would speak with a financial adviser experienced in divorce settlements. I would not necessarily use your attorney. I've seen too many divorce settlements where it appeared the attorney rushed to settle as opposed to taking an honest assessment of the financial situation. 

 

Don't forget retirement income beyond the 401k account. Look at social security and pensions.

 

Also, unless you are really comfortable with the outcome, settle for a percentage, not an dollar amount. Make sure you receive all documentation related to asset sales and have your attorney and financial adviser review them before signing.

[Starr]

You are friends now. Things sometimes change. Remember bill collectors can go after money from either party no matter what the courts say.

[G5052]

I'd also consult a tax professional if possible. Friends who have been through this have said that there was a lot on the financial side that they didn't foresee, particularly in splitting assets.

 

If you have income, you should be the one contributing to your retirement accounts. There are tax reasons why that benefits you personally.

 

Certainly you should get part of his 401K and look into other aspects of his retirement income. Currently divorced individuals can get Social Security based on the divorced spouse with the usual age restrictions as long as you don't remarry. Policies on pensions really vary.

 

I know several who requested a "transition" lump sum at the beginning to cover a vehicle and moving out of the family house so that it could be fixed up and sold (the spouse had already moved out).

 

And you don't say if you have your own health insurance or not. That's another big issue that friends have run into. Some employers actually won't allow a divorced spouse to stay on the policy. One friend required that he pay for health insurance for her equivalent to his employer's policy.

[Home'scool]

Right now I am on his health insurance so I will have to make sure that he can either continue to cover me or pay for mine.

 

 

[Starr]

It is better not to finalize a divorce until you are sure you have all the professional advice from a money person and an attorney you can find. You can separate and tell people anything you want but don't sign any papers until you are sure and then take another look. I don't think I've met a person with the lower paying job come out as well as they thought they were, ever.

[Joanne]

I hope it stays amicable.

 

But be prepared if it doesn't.

 

The system, the context, the profundity of the situation all work to make "amicable" elusive in most cases.

 

It's also quite possible you are entitled to more than 1/2 of the stuff due to the income differential.

 

See an attorney.

[Cammie]

Make sure that he is required to have life insurance on his life with you as a beneficiary.  This is to insure the alimony payments.

 

Yes, after 27 years you should ask for life long alimony - especially given the disparity in incomes.

 

Definately don't do anything until a lawyer with a strong background in divorce has reviewed the financials.

 

Are you sure there is no child support for the daughters?  Some states will extend child support "for a child attending school."  You should check.

[Mothersweets]

No advice, but I hope everything goes smoothly for you. :grouphug: :grouphug: :grouphug:

[Ravin]

You should talk to an attorney BEFORE mediation.