Matrimonial Consulting Articles

A Qualified Domestic Relations Order (QDRO) facilitates the transfer of retirement plan assets during a divorce without incurring significant tax penalties. It specifies the portion of the assets to be transferred to the nonparticipant spouse and offers several payment options, including lump-sum distributions, regular payments, or rollovers to another plan or IRA. Proper drafting and court approval are essential for the QDRO's effectiveness, and consulting legal and financial advisors is recommended.

Pursuant to a marital termination agreement from 2008, the husband in Redleaf v. Commissioner deducted $51 million in deferred cash payments to his ex-wife. The U.S. Court of Appeals for the Eighth Circuit Court affirmed that the payments weren’t deductible as alimony under the tax law that was in effect at the time the agreement was executed.

A recent Nebraska divorce case illustrates how differences in experts’ assumptions can have a dramatic impact on valuations.

A question that often arises in divorces cases is: To what extent should goodwill be included in the marital estate? The treatment of goodwill varies from state to state. 

As the strictest measures against the COVID-19 pandemic subside, clients may be eager to cut ties with a spouse — the sooner, the better, especially for more complicated marital estates.

When dividing property in a divorce case, courts in most states distinguish between separate and marital property. Generally, separate property isn’t subject to division, while marital property is. However, a recent Nebraska Supreme Court case highlights how an increase in the value of separate property may sometimes be classified as marital property and, therefore, be subject to division.

Divorce involves complex financial issues. A financial professional can help the parties resolve such matters as divvying up a marital estate and valuing private business interests. 

Courts are divided on whether to allow discounts when valuing business interests in shareholder disputes and divorce cases. Whether discounts are equitable typically depends on state law, case facts and, ultimately, the court’s discretion.

When high net worth individuals file for divorce, both sides have a financial incentive to hide assets owned by their spousal “partnership,” so it is important to inventory the marital estate as soon as possible. 

When divorcing spouses own a private business interest, it complicates the settlement process. In general, the business needs to be valued and then included — either entirely or partially, depending on state law and legal precedent — in the marital estate.