The Financial Half of a Divorce Deserves Its Own Professional

Your attorney handles the legal process. We handle the math underneath it, working to show what a proposed division is actually worth after taxes and what it means for the years after the paperwork is finished.

The Decisions With the Longest Reach Happen Before the Decree

Most people meet with a financial advisor after a divorce is final, when the terms are set and the options have narrowed considerably. The decisions that shape the next twenty years, which assets you take, how retirement accounts are divided, whether the house stays with you, are made before the signature.

Divorce financial planning in Arkansas is worth starting while those choices are still open. We do not provide legal advice and we do not participate in the negotiation. What we do is analyze the numbers so you and your attorney are working from a clear picture, and so you can evaluate an offer knowing what it delivers rather than what it appears to say.

Equal on Paper Is Not Always Equal After Taxes

A settlement can allocate assets into two columns that aim to balance the total figure, with the goal of potentially improving the financial situation of one party. The reason is that different assets carry different tax treatment and different carrying costs, and the stated value rarely reflects what you can actually spend. The differences we look for:

• Pre-tax retirement accounts, which are worth less than their balance once distributions are taxed
• Roth accounts, which generally carry no future income tax on qualified withdrawals
• Taxable brokerage accounts, where embedded gains determine what a sale would cost
• Real property, where taxes, insurance, maintenance and any mortgage continue after the decree
• Deferred compensation or employer stock, where vesting and basis complicate the value considerably

Rebuilding a Plan on One Income

The second half of this work begins after the decree, and it is where most of the relationship actually happens. Rebuilding a retirement plan in your fifties or sixties on a single income is a real planning problem, and it is a solvable one. Starting over is not the same as starting from nothing.

We look at what you have now, what income the assets may support, what a realistic retirement date looks like and what adjustments could change that answer. One item worth knowing early: if your marriage lasted long enough and you meet the other requirements, you may be able to claim a Social Security benefit based on your former spouse's earnings record, and doing so does not reduce what they receive. Many women never learn this option exists.

The Mechanics That Cause the Most Expensive Mistakes

These are the items that show up repeatedly in the situations we review, several of them years later when they are harder to fix. We work through each one alongside your attorney rather than in place of them.

Splitting a 401(k) or pension generally requires a qualified domestic relations order, a separate document from the divorce decree that instructs the plan administrator how to divide the account. It has its own requirements and timeline, and an incomplete or unfiled order is one of the more common problems we see after the fact.

Dividing employer retirement plans

IRAs are divided differently from employer plans and do not require the same order, though the transfer must be structured correctly to avoid being treated as a taxable distribution. The paperwork looks routine and the consequences of getting it wrong are not.

Dividing IRAs

Keeping the home is often the most emotionally weighted decision in the process, and the one with the least visible price tag. We look at the mortgage, taxes, insurance, maintenance and eventual capital gains treatment against what those same dollars would do in retirement accounts.

The true cost of keeping the house

The tax treatment of alimony changed with federal legislation and now depends on when the agreement was executed, which means older assumptions frequently do not apply. Child support and spousal support are treated differently from each other, and both affect the income picture we build your plan around.

How support payments are taxed

Losing coverage through a spouse's employer is a significant expense that often gets addressed late, particularly for anyone not yet eligible for Medicare. Continuation coverage, marketplace plans and employer options each carry different costs worth pricing before the settlement is finalized.

Health insurance after the decree

Retirement account beneficiary designations, life insurance beneficiaries, account titling and estate documents do not update themselves when a marriage ends. This is quiet, unglamorous work, and it is also the item we most often find still undone years afterward.

Beneficiaries and titling

Questions About Working With Us During a Divorce

This information is general in nature and is not intended as tax or legal advice. Old Fort Wealth Management does not provide legal services. Please consult your own tax or legal professional concerning your individual situation.