Divorce and the Retirement Assets

I recently read an article on SmartMoney.com, which is put out by Fidelity.com that discussed "Divorce over 50: 3 Mistakes to Avoid" by Catey Hill.

The first "mistake" referred to was to ignore the tax consequences of retirement funds. Our office happens to be very knowledgeable regarding retirement accounts because we study the plans for our own clients, and we are also often hired by other attorneys to assist their clients in drafting the documents required to divide the retirement assets.

In order for an employer to give a portion of an employee's pension or retirement account (ex. 401(k), savings plans, etc.) to someone other than the employee, a document that is separate from the divorce decree or settlement agreement must be drafted, submitted to the court, and then sent to the employer. We are often hired to draft such orders, also known as Qualified Domestic Relations Orders, or QDROs. These orders have to address all the provisions of the plan, including but not limited to: the amount awarded, what happens if the employee dies prior to or after they retire, and when the former spouse can begin to collect his or her portion of the pension. You do not always need to wait until he or she retires before you can get your share!

You may think it would be common sense for an attorney to understand the plan and to know what the value of that plan is before they attempt to negotiate a settlement, but this is not always true. We are available to consult with attorneys if they have questions, and advise one party or the other how the terms of the Order could be written to achieve the most favorable result.

If you are getting divorced, and your attorney does not seem to have a handle on how the retirement plan works or what the value of that plan is in today's dollars and in the future, I suggest you call our office before you sign a settlement agreement.

Additionally, if you have been divorced and were awarded a piece of your ex's pension, but you have never seen a QDRO on your behalf, CONTACT OUR OFFICE. We can help.

www.CounselFirst.com or 401-841-5700.

RILS: Low-Income Tax Payer Clinic Perseveres!

I read this story in the Rhode Island Legal Services (RILS) newsletter. This clinic may be useful for our clients and friends, and we have worked with and attended many seminars by Attorney Segovis. If you are interested to find out more about RILS's Low Income Tax Payer Clinic, please call RI Legal Services at 401-846-2264. -Kristy

Low-Income Tax Payer Clinic Perseveres!

With RILS's, help Terese was able to obtain legal guardianship of her two grandchildren who were orphaned when their mother died as a result of domestic violence. Terese was determined to protect the children from their mother's abuser despite having limited means of supporting herself.

Terese's daughter had worked until her death and was entitled to substantial state and federal tax refunds. The daughter also had money in the bank. Terese was told there was no way she could access any of this money without a probate order.

Her Safe Family Unit attorney referred her to RILS's Low Income Tax Payer Clinic (LITC). Attorney Elizabeth Segovis obtained an order naming Terese as the personal representative for her daughter's estate and then assisted her with the IRS.

In the end, Terese was able to recover almost $10,000 to assist her with her grand- children's care.

Military Pensions and Divorce

Our office practices Family Law, and more specifically, we also draft military retirement orders for other attorneys in order to divide military pensions.

Far too often the attorneys do not understand the plan, nor do they understand what they are "giving up" to the other side by not knowing they have options. For example: The parties can divide a pension based on a formula calculated as of the actual retirement date, or use a formula that "freezes" the pension amount at the date of separation or divorce. These options have vastly different results, although there are legitimate reasons why one should more appropriate than another.

We give seminars several times a year and offer to answer questions for attorneys BEFORE the divorce settlement is negotiated. However, despite our efforts, we are rarely approached with such questions.

If you or someone you know is going through or contemplating divorce, the attorney handling the case should be aware of how the military pension works, and they ways in which it can be divided. If the attorney can't explain it, we are here to help. Please call us at 401-841-5700 or visit our website at www.CounselFirst.com. Do not wait until it is too late.

Rebounding Economy Encourages New Divorce Filings

Divorces are on the rise again across the U.S. and in Southern Rhode Island. Economic stability is giving unhappy couples confidence in their ability to support themselves in separate households. Experts credit the rebounding of the real estate market, improving unemployment numbers and the healthy stock market for the increase in new divorce filings. In recent years, many couples have felt forced to remain in unhappy marriages because one or both spouses may have been unemployed or fearful of a job layoff, or because the marital residence may have been an “underwater” property, with no equity to divide in a marital settlement agreement. The recovering economy also results in couples having more disposable income and being able to hire family law attorneys to represent them in long-awaited divorces.

Click here to read last week’s Today Show report on how couples are affording to file for divorce.

http://lifeinc.today.com/_news/2013/05/14/18250438-til-death-or-economic-recovery-do-us-part?lite

Have you been staying in an unhappy marriage because you are worried about your future finances?