A Financial Q&A with New Jersey Divorce Advisors LLC Founders Bryan Koslow CFP®, CDFA™ and Jodi Carter CPA

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With 50% of all marriages ending in divorce, the founders of New Jersey Divorce Advisors, LLC have provided expert advice on some of the most common questions a divorcing couple has.

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Bryan Koslow, MBA, CFP®, CDFA™ & Jodi Carter, CPA

The financial professional plays a crucial role in every step of the divorce process

The United States, as a whole, has the fifth highest divorce rate in the world, according to the global statistics published in the United Nations Statistics Division’s Demographic Yearbook. To put it in perspective, in the U.S. there are 7.3 marriages per 1,000 people every year and 3.6 divorces per 1,000 people every year. In other words, close to 50% (49.3%) of all marriages end in divorce. New Jersey Divorce Advisors, LLC Founders Bryan Koslow and Jodi Carter were recently interviewed regarding some of the more commonly asked questions about divorce finance.

It’s one thing to know these statistics, and quite another to have to deal with them on a more personal basis. That’s why, after witnessing too many clients, family, and friends go through the divorce process without proper guidance, Bryan Koslow founded New Jersey Divorce Advisors LLC, along with Certified Public Accountant (CPA), Jodi Carter. Koslow is a Certified Financial Planner™ (CFP®), and a Certified Divorce Financial Analyst (CDFA™). As a CDFA™, Koslow assists couples determine the short- and long-term financial impact of any proposed divorce settlement. Leading the Matrimonial Accounting Division of New Jersey Divorce Advisors, Carter uses her tax and accounting background to help clients and their attorneys navigate the complex financial and tax implications of both marriage and divorce. Here these two professionals take time out of their busy schedules to answer some of the most common questions about divorce:

Q: Divorce seems so ugly, does it have to be that way?
Koslow: When you see people getting divorced on TV or in the movies, you’re likely seeing a litigated divorce. It’s contentious, heated, and very expensive. Litigated divorces can drag on for years, and often result in settlements that make neither side happy. Families can be torn apart, and everyone involved usually suffers. Mediation and Collaborative Divorce are methods of Alternative Dispute Resolution (ADR) that seek to minimize the adversarial nature of divorce, provide families with an outcome that is amenable to both sides, and control the costs of the process. While each spouse would typically retain their own attorneys, a neutral expert such as a financial planner or accountant may be brought in to examine the financial aspects of the divorce.

Q: What is the role of the financial professional?
Carter: The financial professional plays a crucial role in every step of the divorce process. Often, a CDFA™ will be utilized to prepare the Case Information Statement(CIS) or a marital lifestyle analysis. A CPA will provide recommended distributions of assets to minimize tax liabilities and maximize the use of available tax deductions and credits. A CFP® will create a plan showing the projected impact on retirement, college savings, or cash flow and make recommendations about how assets should be invested after the divorce. In situations where there are complex financial holdings or where one spouse is self-employed, a financial expert may be hired to conduct a forensic analysis or business valuation.

Q: How do we compile all of the financial information?
Carter: The process starts with the preparation of a Case Information Statement, also known as a Financial Affidavit or Statement of Net Worth. This is a document that captures the family’s assets, liabilities, income, and expenses. The financial information within the CIS is used by the Court as a basis for determining alimony and child support. At the heart of the CIS is the household budget during the marriage, and a projected budget for each of the spouses once the divorce is finalized. We use the projected budgets to determine the answers to frequently asked questions such as “can I keep the marital residence.”

Q: What is going to happen with my health insurance?
Koslow: Health insurance, particularly for families with children, is often a primary concern. In the event of divorce, the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) provides up to 36 months of health insurance for a spouse. Keep in mind, however, that the spouse is often required to pay the health insurance costs under COBRA including an administration fee.

Q: How do we divide our retirement accounts?
Koslow: Retirement accounts come in many different forms. There are 401(k)s, defined-benefit pensions, defined contribution pensions, traditional IRAs, Roth IRAs, 403(b)s, 457 plans, SEPs, Simple IRAs, and profit sharing plans. The rules for dividing or rolling over retirement plans differ depending on the plan type. For example, to divide a defined contribution pension plan, you will need a Qualified Domestic Relations Order (QDRO). The QDRO needs to be written in accordance with the plan guidelines and submitted to the plan administrator for execution. An IRA, on the other hand, does not require a QDRO but could result in early withdrawal penalties and tax liabilities if not rolled over properly. The decisions made for the settlement agreement that relate to the retirement plans should be considered carefully with the advice of a financial professionals.

Q: Who pays the bills during the divorce?
Carter: During the divorce process, couples are encouraged to maintain the status quo. Major changes to budget items should be avoided, and bills should be paid as they had been during the marriage. For this reason, often the couple will remain living together until the divorce is finalized. If it is not practical to remain in the home together, or if the higher earning spouse unilaterally decides to stop paying bills, the Court may impose a temporary order for support known as Pendente Lite. Like many aspects of the divorce process, determining a proper amount for Pendente Lite requires a detailed assessment of the household budget. If Pendente Lite is set too high, there may be little incentive for the receiver of support to finalize the divorce. Conversely, if the Pendente Lite is set too low, the payer may look to stall the process.

About NJDA

New Jersey Divorce Advisors, LLC is a financial consulting and planning firm specializing in the financial aspects of divorce. By analyzing the unique situation of each client, the firm structures equitable settlements and creates a plan for the client’s future. The firm, founded by a Certified Public Accountant and Certified Financial Planner™, provides clients a comprehensive financial assessment that includes tax analysis, financial planning, retirement and estate planning, and insurance recommendations. The firm may be utilized in Divorce Mediation, Litigation, or Collaborative Divorce.

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