Dr. Judith Gerhart, CFP
Certified Divorce Financial Analyst 
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Third Step to Splitting the Money
October 10, 2008
3. WATCH OUT FOR TAX TRAPS.
“Vested stock options, 401(k) plans, IRAs and the like need to be unscrambled and possibly there will ensue some transfers: the IRAs directly; 401(k) and other ‘qualified plans’ by way of a Qualified Domestic Relations Order (QDRO). The action taken depends on the tax consequences of the various means or modes of asset division,” says DuCanto, who pioneered the application of tax law to matrimonial law in the 1950s – and divorce attorneys to this day follow his now famous plan to gain tax advantages for their clients in divorce settlements.
Your share of the assets could be substantially whittled away by taxes and penalties. Be sure you choose an attorney who understands tax consequences and involve your CPA in the process early on. “There are financial planning firms and CPA firms that specialize in divorce planning and/or litigation support, but the time to start that planning is as soon as the decision is made to divorce,” says Dylan Ross, CFP and owner of Swan Financial Planning in New Jersey.
“Give your financial advisor your attorney’s business card and vice-versa,” advises Michael Reid, CPA and owner of Reid Financial Group. “Encourage your attorney to call you before calling your advisor, in case you can answer questions quickly. Only have your advisor contact your attorney to ‘briefly clarify matters that you don’t understand’ to save on legal and advisor bills. These two professionals will provide checks and balances on each other.”
By: PAM BAKER
Posted by Judith Gerhart on October 10, 2008 | Permalink | Post a comment
