HSBC Direct 3.00% Savings
ETRADE 3.30% Savings AccountIf you are either getting divorced or thinking of doing so, there are a number of factors to consider when dividing up the marital assets. Generally speaking, the house, cars and retirement assets are the main items to be allocated in most divorce proceedings. However, income, child support and Social Security benefits will also play a role in the settlement process. While child custody may not be a key issue at this point in your lives, paying or receiving alimony can still have a substantial impact on either spouse’s ability to plan for retirement. Each spouse will need to create a separate budget and get their credit reports in order (quite often for the wife, this can mean establishing her own credit.) If the husband has substantial retirement assets, then a QDRO (Qualified Domestic Relations Order) may need to be issued. This edict will dictate to the retirement plan custodian how to divide up the participant’s assets in the plan. There are several different ways that QDROs can be administered; as a lump-sum cash settlement, an income stream paid at retirement or as a direct transfer from the retirement plan into an IRA.
If you have been married for at least 10 years and do not remarry, you can qualify for Social Security benefits based on your ex-spouse’s earnings after you both turn 62, even if the primary wage-earner has remarried or has not retired, and is not receiving benefits yet. Therefore, it may behoove the the spouse that earns less to try and postpone proceedings until after 10 years of marriage (obviously, this may not be a viable strategy in many cases, such as those involving domestic abuse.)
Remember to file your tax return using the single or head-of-household status if your divorce is finalized by year-end. Also, alimony income may be considered earned income, so you may be able to use it to make IRA contributions. Updating insurance policies and beneficiaries is also important. Most modern divorce decrees mandate that children are covered under the higher wage earner’s life insurance policy; who will carry the children under their health and disability insurance must also be decided. If you were covered under your spouse’s group plan, then COBRA coverage will be available for 18 months after the divorce is finalized.
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