afcpe 2012 ffnancial aspects of divorce for military families-all slides
DESCRIPTION
Workshop by Gutter-Bird-O'Neill at AFCPE 2012TRANSCRIPT
Financial Aspects of DivorceAn eXtension Webinar for
Military PFMP Professionals
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
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)
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
Topics• Housing and Fore closure• February 2, 2012 11:00 AM Eastern • http://learn.extension.org/events/427
• Talking With Kids about Money• February 23, 2012 Time 2:30 PM Eastern• http://learn.extension.org/events/441
• Implications of Relatives Raising Children While Parents Are Deployed
• April 5, 2012, 2 PM Eastern• http://learn.extension.org/events/458
• Financial Aspects of Divorce• April 12, 2012, 11:00 AM Eastern• http://learn.extension.org/events/456
• Home Ownership: When Is The Right Time?• May 8, 2012, 2:30 p.m. Eastern• http://learn.extension.org/events/509
• 9 Skills of Couples Communication About Money• June 26, 2012, 2 p.m. Eastern• http://learn.extension.org/events/529
• Retire Ready: Financial Planning for Later Life• July 10, 2012, 2 p.m. Eastern• http://learn.extension.org/events/530
• Thrift Savings Plans: Retirement Planning for Military Families
• July 25, 2012, 1-2:30 p.m. Eastern• http://learn.extension.org/events/563
• Income Tax Return Filing Issues for Members of the Armed Forces
• August 28, 2012, 12:30-2 p.m. EASTERN• http://learn.extension.org/events/588
• Basic Money Management• September 25, 2012, 11 a.m. Eastern• http://learn.extension.org/events/61
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
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
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.
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 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
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
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
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?
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)
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
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
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
Negotiation Planning GridMy goals in terms of property division are:
My spouse’s goals in terms of 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 are:
My spouse’s goals in terms of children are:
Common “Hot Buttons”Men (and Employed Women): Pension and voluntary savings accounts (e.g., Thrift Savings Plan)•Emotionally tied to previous work history•“I [busted my butt, went to war, defended my country, risked my life, etc.] and she/he wants half of my pension. I don’t think so”
Women: Keeping a house and child custody•Tied to desire for stability for self and children•BUT…”home attachment” may not be as much an issue for military spouses used to frequent moves
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
Property Designations
Marital 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
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
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
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
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
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
Staying vs. MovingCost of Staying in Home
– Monthly PITI
– Gas and electric
– Water and sewer
– Garbage pick-up
– Yard work
– Homeowner fees– Maintenance and repairs (1%
of market value)
– Other
Total Monthly Cost: $_____
Costs of RentingMonthly Costs
– Rent– Utilities– Other
Total Monthly Cost: $_____One-Time Costs
– Moving– Deposits– Utility hook-ups
Total One-Time Cost: $_____
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
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/SB10001424052970203961204577269460305366188.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
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
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
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
Key Divorce Documents • Deeds to real estate• Mortgage papers• Tax returns (last 5 yrs)• Paycheck stubs (last 8)• Bank statements • Bills for living expenses• Proof of other income (e.g.,
unemployment, disability)
• Documents showing debt• Insurance policies
• Pension/retirement savings plan documents
• Business tax records• Inheritance documents• Insurance settlement
documents• Net worth statement• Household budget• Evidence of adultery
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/tabid/115/itemId/2229/Default.aspx
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
Topic Suggestions Are Welcome
Please send ideas for topics or speakers to [email protected]
Questions?