Financial Aspects of Divorce An eXtension Webinar forMilitary PFMP Professionals
Financial Security for All CoP• eXtension.org• eXtension Financial Security for All  Community of Practice• Significant co...
Military Family Learning Network • Multiple CoPs   – Such as: Child care, Family Development,     Network literacy • And o...
Military Family Learning Network• Personal Finance Project goals:  – Provide on-going professional    development to enhan...
Topics•                      ​    Housing and Foreclosure                            •   9 Skills of Couples Communication...
Why Web Conferences?• Engaging venue to reach larger  audiences for  – Educational outreach  – Professional development• P...
Marketing•   FSA Membership•   State lists of agents•   Department of Defense and the MFLN•   Partners assisted too!    – ...
Making it Interactive• Use Adobe Connect• Audience can hear presenters, see a  picture, follow presentation or view  other...
Who Attended?Live: 166    Recorded: 107
Disclaimer• The intent of this Webinar is to provide accurate,  research-based information• The Webinar in no way purports...
Webinar Agenda• 10-Question Pre-Test• Divorce and Military Families• General Divorce Financial Planning• Military Divorce ...
Divorce Process• Very fact based (case-by-case basis)• Range of factors considered by courts• NO “magic formula” for the a...
Divorce and Military Families• Divorce rates higher for military families than  for general U.S. population• 3.7% in 2011,...
Common Divorce Financial Issues• Division of real property (e.g., house, land)• Division of personal property• Division of...
Common Divorce Non-Financial          Issues• Where the children are going to live• Who will make decisions about the chil...
Military-Specific Divorce Issues• Federal laws (SCRA, USFSPA)• Military paychecks (e.g., BAH allowances)• Jurisdiction for...
Smart Negotiation Strategies• Know what YOU want• Know what your spouse wants• Listen to the other side  – Learn things to...
Negotiation Planning GridMy goals in terms of property       My spouse’s goals in terms ofdivision are:                   ...
Common “Hot Buttons”Men (and EmployedWomen): Pension and            Women: Keeping avoluntary savings accounts     house a...
Property DesignationsSeparate Property  – Acquired before marriage and NOT co-mingled  – Gift from someone other than spou...
Property DesignationsMarital Property  – All property acquired by EITHER or BOTH    spouses during the marriage (and befor...
Community Property States• Most property acquired during a marriage  is owned jointly and divided at divorce  (except gift...
Value of Property• Fair Market Value (FMV)- price at which an  item could be sold (e.g., garage sale, eBay)• Depreciated V...
Debt Repayment• No matter WHO charged WHAT, a joint  account means BOTH spouses are legally  responsible to creditors for ...
Tax Considerations• Child support is neither deductible by the  payor nor included in the income of the  recipient• Alimon...
Proceeds From Sale of a Home $_____ Estimated sales price        Selling expenses:            $_____ Realtor commission   ...
Staying vs. MovingCost of Staying in Home       Costs of Renting  – Monthly PITI              Monthly Costs               ...
Military Divorce Process• Combination of state laws and guidelines  (e.g., child support) and federal laws• Servicemembers...
Military Divorces• Couples with marriages of all durations  – 20+ year careerists with substantial benefits     • WSJ (3/1...
Military Pensions• USFSPA permits states to treat “disposable  retired pay” as marital property and divide it in  a divorc...
More About Military Pensions• 10-10 test for DFAS to trigger garnishment of  a military pension (like a civilian QDRO)  – ...
Other Military Benefits at Divorce• Non-military spouse loses ID card/installation privileges  (e.g., medical, commissary,...
Key Divorce Documents• Deeds to real estate               • Pension/retirement• Mortgage papers                      savin...
Divorce Finance Resources• Association of Divorce Financial Planners:  http://www.divorceandfinance.org/• Institute for Di...
Evaluation•   100% of respondents indicated the subject matter was what they    expected•   100% of respondents indicated ...
Topic Suggestions Are       WelcomePlease send ideas for topics orspeakers to msgutter@ufl.edu          Questions?
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AFCPE 2012 fFnancial Aspects of Divorce for military families-all slides

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Workshop by Gutter-Bird-O'Neill at AFCPE 2012

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AFCPE 2012 fFnancial Aspects of Divorce for military families-all slides

  1. 1. Financial Aspects of Divorce An eXtension Webinar forMilitary PFMP Professionals
  2. 2. Financial Security for All CoP• eXtension.org• eXtension Financial Security for All Community of Practice• Significant content – Frequently Asked Questions – Programs and Resources• Online Learning – Web conferences – Began as chats
  3. 3. Military Family Learning Network • Multiple CoPs – Such as: Child care, Family Development, Network literacy • And our Team Personal Finance Training the Personal Finance Managers (PFMs)
  4. 4. Military Family Learning Network• Personal Finance Project goals: – Provide on-going professional development to enhance the DoD baseline program – Programs be accessible to Military PFMs at installations around the world – Opportunity to earn Continuing Education Units (CEUs) to maintain AFC credential – Create or enhance community among PFMs
  5. 5. Topics• ​ Housing and Foreclosure • 9 Skills of Couples Communication About Money• February 2, 2012 11:00 AM Eastern • June 26, 2012, 2 p.m. Eastern• http://learn.extension.org/events/427 • http://learn.extension.org/events/529• Talking With Kids about Money • Retire Ready: Financial Planning for Later Life• February 23, 2012 Time 2:30 PM Eastern • July 10, 2012, 2 p.m. Eastern• http://learn.extension.org/events/441 • http://learn.extension.org/events/530• Implications of Relatives Raising Children While • Thrift Savings Plans: Retirement Planning for Military Parents Are Deployed Families• April 5, 2012, 2 PM Eastern • July 25, 2012, 1-2:30 p.m. Eastern• http://learn.extension.org/events/458 • http://learn.extension.org/events/563• Financial Aspects of Divorce • Income Tax Return Filing Issues for Members of the• April 12, 2012, 11:00 AM Eastern Armed Forces• http://learn.extension.org/events/456 • August 28, 2012, 12:30-2 p.m. EASTERN • http://learn.extension.org/events/588• Home Ownership: When Is The Right Time?• May 8, 2012, 2:30 p.m. Eastern • Basic Money Management• http://learn.extension.org/events/509 • September 25, 2012, 11 a.m. Eastern • http://learn.extension.org/events/61
  6. 6. Why Web Conferences?• Engaging venue to reach larger audiences for – Educational outreach – Professional development• Presentations are archived for additional viewing• Post test supports CEU process integrity
  7. 7. Marketing• FSA Membership• State lists of agents• Department of Defense and the MFLN• Partners assisted too! – NIFA (Thank you Susan) – Thank you Ken McDonnell, Director, American Savings Education Council (ASEC), Employee Benefit Research Institute• Twitter – @mikegutter – @moneytalk1 – @dollardecisions• Facebook
  8. 8. Making it Interactive• Use Adobe Connect• Audience can hear presenters, see a picture, follow presentation or view other materials• Can ask questions via chat box• Can respond to questions via chat box• Respond to poll questions to give real- time feedback that can be seen by all.
  9. 9. Who Attended?Live: 166 Recorded: 107
  10. 10. Disclaimer• The intent of this Webinar is to provide accurate, research-based information• The Webinar in no way purports to render legal, financial, or other professional services• Viewers should consult an attorney that specializes in military divorces if legal advice or other expert assistance is required
  11. 11. Webinar Agenda• 10-Question Pre-Test• Divorce and Military Families• General Divorce Financial Planning• Military Divorce Financial Planning• Key Documents Needed in a Divorce• Resources for PFMPs
  12. 12. Divorce Process• Very fact based (case-by-case basis)• Range of factors considered by courts• NO “magic formula” for the appropriate division of assets (“equitable” does not mean “equal”)• Decisions made within state guidelines (e.g., child support and community property)• Federal and state laws must be followed
  13. 13. Divorce and Military Families• Divorce rates higher for military families than for general U.S. population• 3.7% in 2011, up from 2.6% in 2001 – WSJ Article: http://kienkerlaw.com/global_pictures/Divorce%20Splitting%20Up %20a%20Rich%20Military%20Pension.pdf• Divorce rate for women in the military is double that of men – Highest among military women with civilian husbands – One reason: more support services for wives?
  14. 14. Common Divorce Financial Issues• Division of real property (e.g., house, land)• Division of personal property• Division of savings/investments• Division of debts• Will anyone pay alimony (spousal support)• Arrangement of child support payments• Income tax exemption for dependents• Post-divorce insurance coverage (e.g., life, health, disability)
  15. 15. Common Divorce Non-Financial Issues• Where the children are going to live• Who will make decisions about the children and their well-being – Physical custody: where children live (overnights) – Legal custody: decision-making authority• Where and when the other parent can visit the children
  16. 16. Military-Specific Divorce Issues• Federal laws (SCRA, USFSPA)• Military paychecks (e.g., BAH allowances)• Jurisdiction for filing divorce• Child support process and compliance• Child custody and visitation decisions• Pension rights• Military benefits
  17. 17. Smart Negotiation Strategies• Know what YOU want• Know what your spouse wants• Listen to the other side – Learn things to further your interests• Have a fall-back plan• Never agree to anything that is unacceptable• Get it in writing
  18. 18. Negotiation Planning GridMy goals in terms of property My spouse’s goals in terms ofdivision are: property division are:My goals in terms of support are: My spouse’s goals in terms of support are:My goals in terms of my children My spouse’s goals in terms ofare: children are:
  19. 19. Common “Hot Buttons”Men (and EmployedWomen): Pension and Women: Keeping avoluntary savings accounts house and child custody(e.g., Thrift Savings Plan) •Tied to desire for stability•Emotionally tied to for self and childrenprevious work history •BUT…”home•“I [busted my butt, went to attachment” may not bewar, defended my country, as much an issue forrisked my life, etc.] and military spouses used toshe/he wants half of my frequent movespension. I don’t think so”
  20. 20. Property DesignationsSeparate Property – Acquired before marriage and NOT co-mingled – Gift from someone other than spouse – Personal injury awards, NOT co-mingled – Inheritances, NOT co-mingled – Designated in a prenuptial agreement as separate property
  21. 21. Property DesignationsMarital Property – All property acquired by EITHER or BOTH spouses during the marriage (and before the signing of a separation agreement or the commencement of a divorce REGARDLESS of the name in which property is held – Community property is another term for marital property in nine states
  22. 22. Community Property States• Most property acquired during a marriage is owned jointly and divided at divorce (except gifts and inheritances)• Joint ownership is automatically assumed• AZ, CA, ID, LA, NV, NM, TX, WA, WI
  23. 23. Value of Property• Fair Market Value (FMV)- price at which an item could be sold (e.g., garage sale, eBay)• Depreciated Value- FMV as calculated from depreciation schedules for specific property• Replacement Value- Cost to replace or purchase a new item
  24. 24. Debt Repayment• No matter WHO charged WHAT, a joint account means BOTH spouses are legally responsible to creditors for debt repayment• Creditors don’t care about divorce decree terms…they just want to be repaid!• Ask creditors to close joint accounts – Try to convert to or reopen as individual account• Got doubts? Request duplicate statements or online access to monitor ex-spouse’s compliance
  25. 25. Tax Considerations• Child support is neither deductible by the payor nor included in the income of the recipient• Alimony (spousal support) is taxable to the recipient and deductible as an adjustment to the payor’s gross income (to calculate AGI)• Avoid attempts to “disguise” child support as alimony
  26. 26. Proceeds From Sale of a Home $_____ Estimated sales price Selling expenses: $_____ Realtor commission $_____ Fix-up costs $_____ Amount required to pay off loans(s) $_____ Real estate transfer taxes $_____ Other sales costs $ ______ Estimated selling costs $_______Estimated proceeds from sale
  27. 27. Staying vs. MovingCost of Staying in Home Costs of Renting – Monthly PITI Monthly Costs – Rent – Gas and electric – Utilities – Water and sewer – Other – Garbage pick-up Total Monthly Cost: $_____ – Yard work One-Time Costs – Homeowner fees – Moving – Maintenance and repairs – Deposits (1% of market value) – Utility hook-ups – Other Total One-Time Cost: $_____Total Monthly Cost: $_____
  28. 28. Military Divorce Process• Combination of state laws and guidelines (e.g., child support) and federal laws• Servicemembers Civil Relief Act (SCRA)- Active duty service member can request a 90-day stay of divorce action; can be extended (but not forever) if military duties interfere with participation• Uniformed Services Former Spouse Protection Act (USFSPA)- Allows (but does not require) local courts to treat military retired pay as marital property and divide it in a divorce action
  29. 29. Military Divorces• Couples with marriages of all durations – 20+ year careerists with substantial benefits • WSJ (3/10/12): Divorce: Splitting Up a Rich Military Pension • Air Force Lt Colonel with 30 years of service gets a pension of $72,288 • http://online.wsj.com/article/SB10001424052970203961 204577269460305366188.html – Young service members in first/second enlistments• Older couples: pension is very valuable asset • Enlist at 18, retire at 38, receive pension with COLAs for next 30? 40? 50? years • No minimum retirement age
  30. 30. Military Pensions• USFSPA permits states to treat “disposable retired pay” as marital property and divide it in a divorce settlement – Monthly retirement pay minus qualified deductions• Does NOT automatically entitle a former spouse to any of service member’s benefit• If > one divorce, direct payments to ex- spouses should not be > 50% of retired pay• “First come, first served” basis
  31. 31. More About Military Pensions• 10-10 test for DFAS to trigger garnishment of a military pension (like a civilian QDRO) – Married for at least 10 years – 10 years of creditable service by member – Must request DFAS to garnish retired pay• Consider delaying divorce if close to 10 years• If can’t meet 10-10 test, court can still award part of pension but military spouse is responsible for making payments
  32. 32. Other Military Benefits at Divorce• Non-military spouse loses ID card/installation privileges (e.g., medical, commissary, PX) once divorce is final – Exception: unmarried 20-20-20 former spouse – 20-20-15 spouse qualifies for medical benefits for one year from date of divorce or annulment but has no commissary and PX privileges – Children maintain commissary/PX privileges; ex-spouse may request privileges to buy items for children• Military housing must usually be vacated within 30 days after SM stops residing there – Installation commander may make interim decisions
  33. 33. Key Divorce Documents• Deeds to real estate • Pension/retirement• Mortgage papers savings plan documents• Tax returns (last 5 yrs) • Business tax records• Paycheck stubs (last 8) • Inheritance documents• Bank statements • Insurance settlement documents• Bills for living expenses • Net worth statement• Proof of other income (e.g., unemployment, disability) • Household budget• Documents showing debt • Evidence of adultery• Insurance policies
  34. 34. Divorce Finance Resources• Association of Divorce Financial Planners: http://www.divorceandfinance.org/• Institute for Divorce Financial Analysts: https://www.institutedfa.com/• FPA (Financial Planning Association): Getting a Divorce: http://www.fpanet.org/LifeCrisis/GettingaDivorce/• Military Money: When Love is a Battlefield: http://www.militarymoney.com/MilitaryLife/rights/tabi d/115/itemId/2229/Default.aspx
  35. 35. Evaluation• 100% of respondents indicated the subject matter was what they expected• 100% of respondents indicated the presenters were knowledgeable and helpful• 89% of respondents indicated amount of material presented was about right for the allotted time.• 97% of respondents indicated they will apply this knowledge in their jobs• 97% of respondents indicated the difficulty level was appropriate• 100% of respondents indicated the webinar stimulated their interest in the subject• The number of respondents indicating that they knew quite a lot about the topic increased 58% after the webinar
  36. 36. Topic Suggestions Are WelcomePlease send ideas for topics orspeakers to msgutter@ufl.edu Questions?

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