Archive for Financial Planning

Social Wellness Support

Financial Planningon July 11th, 2017No Comments

Written By: Camille Bouvet, CFP®

The word “wellness” is often prefaced with an adjective: for example, physical wellness, financial wellness, or social wellness. If you are unfamiliar with the term, social wellness involves having meaningful relationships and creating a support system that includes family members and friends. This kind of care may include fostering your own social wellness or helping a loved one you support in your social network. No matter the reason for the care, being in such a role may sometimes feel intimidating or overwhelming and discovering resources can be one of the most powerful ways to ease these feelings. In this piece, we share resources that may help you feel more comfortable in a caregiving role.

Your Employee Assistance Program
Your workplace may offer assistance as a benefit and can guide you in determining next steps. You may have access to counseling to help sort through your feelings, put things in perspective, and identify the next best step. They can also point you to other resources in your area such as referrals for eldercare and dependent care. Seek out your human resources department for more information.

Community Assistance
The purpose of most community agencies is to provide services to individuals who need help. Remember that you are entitled to these public services – you’ve earned it by way of your tax dollars and you deserve it!

Not sure what’s the best way to find support in your local community? Start by visiting the AARP’s Home & Family Caregiving-at-Home section and enter your city and state to learn about events, news and resources near you.

You can also visit The Family Caregiver Alliance which aims to support families nationwide caring for adult loved ones with chronic, disabling health conditions. Visit www.caregiver.org to learn about their educational materials such as videos, online classes, and an online dashboard to track your information and locate support.

Eldercare Resources
We have featured several pieces written by eldercare expert, Dr. Jim McCabe on the topics of authentic conversations, housing for aging parents, and how to age well. If you find yourself in a position of providing eldercare, we encourage you to read these articles and other available resources on Dr. McCabe’s Eldercare Resources website.

And of course, don’t forget about the rest of your social wellness support team when in a time of need. We would love to be one of your first calls when you aren’t sure where to start with your social wellness, financial wellness, or anywhere in between! Don’t hesitate to call us and let us know how we can help in planning to care for your loved one.

Finding Financial Independence

Financial Planning, Yeske Buie Millennialon June 29th, 2017No Comments

Written By: Lauren Mireles, RP®

There is no one-size-fits-all definition for the term “financial independence”. In fact, you won’t even find the term in the Merriam-Webster Dictionary. This ambiguity allows for individuals to define the term for themselves. Some may associate financial independence with goals like being on track for retirement or having a sufficient emergency fund while others may see independence as being debt-free, earning enough money to pay your bills and support a loved one, or leaving a financial legacy that is reflective of your values.
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As is the case for independence from government or other entities, achieving financial independence requires commitment and sacrifice and each individual’s journey to financial freedom will be different. So where do you start? Exploring how you define financial independence and reflecting on personal goals is a productive first step as this process may help you identify a destination for your journey. At Yeske Buie, we have a variety of tools* and resources that you may find useful in your exploration and reflection. If any of the following titles interest you, we encourage you to review the tool and consider how the questions may help you define financial independence:
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  • Defining True Wealth: Helps you clarify what is most important to you to provide an effective framework for creating plans and making important life decisions.
  • Designing Your Financial Legacy: Helps you consider what is most important to you and how these values can be reflected in your financial legacy.
  • Financial Satisfaction Survey: Helps you think about and assess how satisfied you are with many aspects of your financial life.
  • My Ideal Week in Retirement: Helps you visualize how you will invest your time in retirement in a way that is meaningful and purposeful to you.
  • Visualize Your Future: Helps you clarify your values and priorities and begin to identify your life goals.
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If you’d like to discuss your answers to these questions or your thoughts on your journey to financial independence, please don’t hesitate to contact us. We’re happy to help you talk through this reflective step, how to convert your thoughts to actions, how to implement the actions, and anywhere in between.
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*courtesy of Money Quotient

Have You Reviewed Your Earnings Record?

Financial Planningon June 29th, 2017No Comments

Written By: Lauren Grove, CFP®

There are many facets of exploration into the Social Security System and the focus is often on when to collect benefits and how much the benefits will be. There are, however, other pieces of Social Security to be reviewed and discussed prior to that time period. In this piece, we’ll focus on one of those: your earnings record.

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What is your earnings record?
Your earnings record is where the Social Security Administration (SSA) tracks your annual earnings (for Social Security and Medicare purposes) and is used to determine your eligibility for Social Security benefits and the level at which they will be paid to you in retirement.
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What is included on the record?
After each year you work and pay taxes into the Social Security System, you will receive a Form W-2 detailing wages for the prior year. The W-2 includes many boxes with information, one of them being a ‘Social Security Wages’ figure that reflects the income subject to Social Security taxes. The Social Security program, officially titled “Old-Age, Survivors, and Disability Insurance (OASDI)”, puts limits on the amount of your earnings that are subject to taxation in a given year. This limit changes each year with changes in the national average wage index and is called the ‘contribution and benefit base’. For 2017 it’s $127,200. A historical list of the contribution and benefit base can be found here.
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So, each year, your earnings are reported to the SSA and added to your earnings record. If your earnings are above the base, only the base amount will show on your earnings record (and you only would have paid Social Security taxes on that base amount). These figures continue to be reported and collected on your earnings record each year.
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How is the record used?
After working and paying Social Security taxes for ten years (or 40 quarters of Social Security ‘credits’), you become eligible for benefits.
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The amount of the benefit you receive at retirement is based on your highest 35 years of income. Per the Social Security Administration’s process, the SSA will look at your earnings figures on your record and index the amounts to reflect changes in wage levels during your working years and ensure your future benefits reflect the changes in standard of living during that timeframe. This indexed amount is known as your Average Indexed Monthly Earnings (AIME).
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The AIME is then used in a formula that determines your Primary Insurance Amount (PIA), or the amount you can expect to receive at Full Retirement Age. This figure is shown on your Social Security Statement and adjusted if you decide to take benefits at different ages (reduced if earlier than Full Retirement Age (FRA), increased if you wait until after FRA). If you’re looking for your Social Security statements, we’ll note that these are rarely mailed anymore, and are easily accessible on your mySocialSecurity account.
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Why does the record matter?
As you can see, the earnings record is the base used to determine future benefits and thus it’s imperative the record is correct to ensure you get all the benefits you’ve worked hard to earn!
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How do I review my record?
The first step to reviewing your record is to create your online account. To do so you’ll need a valid email address, a Social Security number, and a U.S. mailing address. Once you have that information, visit this link and follow the steps to create your account.
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When you’ve created and accessed the account, you will see a link to your Earnings Record. Click that link and review the record. If you see $0 earnings years when you know you had earnings, or figures that don’t quite match what you would expect to see, we recommend you do a deeper review.
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What if I find an error?
First, you’ll need to find proof of the correct earnings figure. This information can be found on a W-2, earnings statement or tax return. Even if you don’t have proof in one of these forms, write down everything you can remember about the earnings – where you worked, when, how much you earned, name and social security number used, etc. Then call the Social Security Administration at 1-800-772-1213 and work with them to get your record corrected.
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It’s very important to contact the SSA as soon as you notice an error as it can take time to correct your record depending on the information you have proving the difference.
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Then what?
Let us know if you have questions or find an error. We will help you in any way we can.
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Once you’ve confirmed your earnings record is accurate (or fixed any existing errors), we suggest the following next steps:
  1. Review your earnings record each year to ensure your earnings continue to be reported accurately (or so you can correct them in a timely manner).
  2. Send us a copy of your most recent Social Security statement via one of these secure methods (as it includes sensitive personal information).
  3. We’ll save the statement for our records and prepare a Social Security Analysis to review your filing options and we’ll discuss with you our recommendation as you near retirement age.
In summary, your earnings record is only one aspect of Social Security, and it’s a big one. It is used to determine a potentially important aspect of your retirement plan and it’s important that the record is accurate and reviewed frequently. In this piece, we shared how and why to do this review. And what to do if you find an error.
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As always, we’re happy to answer additional questions and discuss any and all aspects of Social Security with you at any time.

Vacation Temptation

Financial Planningon June 15th, 2017No Comments

Written By: Ryan Klemm

With the first day of summer less than a week away, it’s likely that you have some kind of vacation or relaxation days on your calendar in the next few months. Depending on how you choose to Live Big®, the vacation may involve a beach rental, a cabin in the woods, or maybe a cottage in your favorite town. If the place is really special, you may find yourself thinking “I wish I lived here!” and daydream about what it would be like to own the property as a vacation home. As always, before making such a big decision, we encourage you to keep a few things in mind to ensure the purchase aligns with your Live Big goals.
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While enjoying the luxury and relaxation of a vacation home sounds enticing, it is important not to overlook the maintenance, use, and financial aspects of owning a vacation home. With proper planning and consideration for the following items, you can feel confident that purchasing a vacation home will add value to your personal and financial life instead of becoming a vacation nightmare!
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  1. Location, Location, Location
    • Because vacation homes are commonly used as places to get away from one’s daily routine, it is important that a person is familiar with a location before making the decision to purchase a residence. Turning on the TV and hearing that West Palm Beach is the place to be doesn’t necessarily mean that it’s the place for YOU to be. When purchasing a vacation home, you will have “locked in” a specific location that you will frequently visit and it is important that you are comfortable and happy while you are there.
  2.  Consider Your “Whys”
    • The first step in getting value from your vacation home is to understand how you would like to use the second home. Is your purchase decision based around using the property as a getaway, having a location for the family to get together or owning an asset that can be shared by your family after your passing? No matter the reason, it is important that your “why” aligns with your financial goals.
      •  For those who desire to transition to their vacation home as their retirement home, it is important to know that if you use the vacation home as a personal residence for two years out of a five year period you will be able to receive the federal exemption on the gains from your home sale up to $500,000 ($250,000 for individuals).
      • If you are purchasing a vacation home solely as a real estate investment, it is important to remember that home values and the value of desired vacation spots fluctuate. There may be a better location to consider purchasing real estate if your purpose in purchasing the home is to maximize the return on your investment.
  3. Tax Implications
    • Like everything else in your financial life, owning a vacation home has tax implications. For example, you can rent out your vacation home for up to fourteen days without reporting the rent received as taxable income. If you rent the property out for more than fourteen days, however, then it will be classified as an investment property and the rent you receive must be reported. Additionally, you can retain the deductions and exemptions for owning the vacation home as long as your occupancy of the property is limited to the greater of fourteen days or 10% of the total days it is rented. If you exceed this limitation the home is classified as your personal residence and you lose the ability to deduct rental expenses and depreciation expenses. A major benefit to owning a second home is your ability to deduct the mortgage interest (in addition to that of your personal residence) up to $100,000.
  4. Cost of Living
    • Because vacation homes are in desirable locations, it is likely that the average home price, maintenance costs, security costs, and insurance will be higher than in a “regular” location.

Making an educated decision that doesn’t cause financial stress can be the start of your path to relaxation and make owning a vacation home a very rewarding life decision. At Yeske Buie, we will help you determine if the purchase fits within the scope of your financial plan, and we also collaborate with your tax planner and estate attorney to ensure that your vacation home does not become a burden to you or your family.

Whether or not you find yourself interested in purchasing the home you stay in while on your next vacation, we hope that you have a safe and enjoyable time that makes you think “I hope this never ends!”.

Health Care Costs in Retirement – Projecting for an Uncertain Future

Financial Planningon June 1st, 2017No Comments

Written By: Zach Bennedsen

Financial Planning is a profession full of unknowns – you don’t know how the market will perform, you don’t know exactly how much you’ll spend in retirement, and you definitely don’t know what your future health will be. In this piece, we explore some of the ways to plan for what we know, and what we don’t know, about health care costs in retirement.

When picturing their financial future, many Clients may not think to consider their health. Overlooking these considerations can be costly, however, as health care costs can have a profound effect on a Client’s net worth. In fact, health care costs are the leading cause of bankruptcy in the United States. One of the reasons health care costs tend to be overlooked is because when you’re working, your employer often offers health insurance. Indeed, there are plenty of decisions to be made regarding employer-provided benefits, and we’ve written about some of them in previous posts. Today, we focus on the issues you may face when getting health care coverage post-working life.

Medicare
For almost all individuals aged 65 and older who are not working, Medicare is the best health care solution. In fact, you may be required to sign up for at least part of Medicare within 6 months of your 65th birthday, or face certain penalties. When building our projections of health care costs at Yeske Buie, we use individual Client data to make the best assumptions we can. Some of the factors that affect the projected cost of Medicare are your Adjusted Gross Income (AGI) in retirement and the area you live in. We build a table to project the cost of all parts of Medicare: Part B (Medical Insurance), Part D (Prescription Drugs), and Medigap (not technically part of Medicare, but a necessary part of a robust health insurance plan). Then, we incorporate this table into your full financial plan. For more information on the components of Medicare, we encourage you to revisit our post Medicare: Making Enrollment Make Sense.

Medicare is a sound insurance plan if you’re planning on working until age 65, but what if you’re planning on leaving the workforce sooner? Luckily, there are few different options for health care coverage when you’re not working, and don’t yet qualify for Medicare.

COBRA
While the name of this program might elicit visions of a large reptile, those thoughts are probably less intimidating than its full name, or Consolidated Omnibus Budget Reconciliation Act of 1985. To avoid that mouthful, we’ll stick with the snake. COBRA allows an employee to extend their coverage from their previous employer for 18 to 36 months, depending on some specific circumstances. The catch is, of course, that the now ex-employee is responsible for the costs of the health care plan. And, the previous employer is allowed to charge the ex-employee up to 102% of the plan’s cost. Luckily, COBRA also covers spouses, children, and other dependents. As such, COBRA coverage is great in a pinch. If you unexpectedly find yourself separated from your employer, you know you can stay covered while you search for better options.

Affordable Care Act
Another option for health care coverage before age 65 is the Affordable Care Act (ACA). The ACA may not exist in its current form forever, but we have no choice but to project using the best current information available. For individuals under 65 who are not working, the ACA is often the best avenue to procure health insurance. Similar to Medicare, we can project the costs of coverage using information like income, location, and number of dependents. We can also project the costs using different levels of co-pays, or how much the insurance company pays for a medical expense. The higher the amount you pay out-of-pocket for an expense, the lower your monthly premium. While you can’t know how often you’ll need coverage, you can make informed choices about what kind of coverage to elect based on your emergency reserves and cash flow.

As you approach retirement, we hope that you’ll be spending your time daydreaming about all of the ways you can Live Big® with your newfound free time, not having nightmares about finding health insurance. If you do find yourself worrying about health care costs, know that we at Yeske Buie are here to think with you as you navigate through the unknowns and moving pieces of health care costs in retirement and will work to help you find the best solution.

National 529 College Savings Plan Day

Financial Planning, Yusuf Abugideirion May 18th, 2017No Comments

Written By: Yusuf Abugideiri, CFP®

Planning for higher education costs is frequently a topic we discuss with our Clients. It can be tricky to decide when and how to start saving  because of the unknown factors that make estimating college costs challenging. We have used this space before to discuss the pros and cons of using a 529 plan as part of one’s approach to saving for college. Today, in honor of National 529 College Savings Plan Day on the 29th of May, we thought it would be worthwhile to revisit the topic to share more on the two forms of plans and our thoughts on the best available plans.

Let’s start by briefly explaining what a 529 plan is. 529s are tax advantage plans that come in two forms – pre-paid tuition plans and savings plans.

  • Pre-paid tuition plans enable the account owner to pay for the beneficiary’s tuition and fees in advance. The benefit of doing so is “locking in” the beneficiary’s education costs at current rates instead of paying them at higher rates in the future. According to CollegeBoard, in-state tuition and fees at public four-year institutions have increased by about 4% per year over the past 30 years; FinAid.org reviewed every 17-year period from 1958 to 2001 and determined tuition inflation rates were between 6 and 9% per year. Looking forward, Savingforcollege.com projects tuition and fees will increase by 5% per year in the coming decades. Yeske Buie takes a more conservative approach and projects that tuition inflation rates will be 7% in the projections we prepare for our Clients.
  • Savings plans, on the other hand, allow for tax-advantage savings for qualified education expenses. Contributions to a 529 grow on a tax-deferred basis and distributions for tuition, fees, books, and other qualified expenses are tax-free.

For our Clients, we generally recommend Utah’s Educational Savings Plan (UESP) because the investment options available through their program enable us to create robust, diverse, low-cost portfolios that are almost a perfect match to what we can construct in our existing Client accounts. Through UESP, we’re able to select Dimensional Fund Advisors (DFA) mutual funds without paying an additional fee (unlike other states’ plans) and we supplement those investments with a few mutual funds from Vanguard, just as we do in our standard portfolio model. While there are other 529 plans that offer DFA mutual funds, none allow as much flexibility in constructing portfolio models as UESP. We also use customized age-based portfolio models to invest the contributions to the accounts – as the child approaches their college years, we notch the stock allocation down and increase the bond allocation to help ensure the funds are available for their expenses when the time comes, not unlike the approach we take with our Clients as they approach retirement.

If you have more questions about how 529s can be used effectively as a college planning tool, please don’t hesitate to reach out to member of our financial planning team. And if you’d like to take an active role in celebrating National 529 Day, Savingforcollege.com is hosting a webinar on Wednesday, May 24th at 1:00pm ET during which industry experts will offer comments and answer questions. The webinar is free; click here for more information.

Three Questions to Ask Yourself When Saving for a Large Purchase

Financial Planningon May 3rd, 2017No Comments

Written By: Camille Bouvet, CFP®

Saving for your next large purchase gives you an exciting goal to look forward to, although it isn’t always easy. Just like pursuing any goal, there are trade-offs to consider.  Unless you’re expecting to win tomorrow’s lottery, asking yourself these three questions can get you thinking about the aspects of a savings plan to help you achieve your goal.

  1.  What’s my starting point after setting aside an emergency fund?
    • Saving for a large purchase requires your commitment. In general, we recommend our Clients set aside three to six months’ worth of take-home pay in cash before considering other financial goals in the event that you experience a change in job or circumstances. Then you can decide how much you can start with. You can learn more about our thoughts on emergency funds and cash flow planning here.
  2.   When do I want to purchase it?
    • Your purchase date will help you determine when it will make sense to start saving and will inform the other trade-offs to consider.
  3. Which saving system works for me?
    • Finding a saving system that works for you is key to establishing and maintaining your saving habit. Some people respond well to automated saving techniques such as directing a dollar amount or percentage of your paycheck to a separate savings account each month. Or you may find it easier to direct an upcoming lump sum such as a cash bonus or tax refund. Consider using a cash flow tracker as a tool to help you stick to your saving goal.

What is your next large purchase? Let us know! We’re happy to talk to you about your options and share our recommendations for how you can save for that purchase.

Cyber Spring Cleaning

Financial Planning, Yeske Buie Millennialon May 3rd, 2017No Comments

Written By: Lauren Mireles, RP®

With six weeks to go until the first day of summer, there’s still time to complete your spring cleaning projects. A typical list of spring cleaning projects likely includes de-cluttering your living spaces and swapping your winter clothes for a summer variety. But when is the last time you “scrubbed” your digital life? Regular maintenance of your digital devices, profiles, and online identity is key to protecting yourself from the “dirt” of phishers and hackers. Below we offer a cyber spring cleaning checklist to add to your remaining your spring cleaning initiatives.

  1. Review your accounts and make it a habit to proactively check them on a regular basis. Make sure to read your Schwab and other financial account statements each month; once you’ve done so, shred them.
  2. Clean out your old email and empty deleted folders. If you need to keep old messages, move them to an archive. You may also consider unsubscribing from newsletters, email alerts and updates you no longer read. A full list of email best practices can be found here.
  3. Turn on two-factor authentication (2FA) on critical accounts like email, banking and social media. Get the 411 on 2FA here.
  4. Refresh your passwords with a structure that is not easy to guess and keep them in a safe location away from your computer. Make unique passwords for important accounts like email, finance and healthcare. Be sure all relevant devices are password, passcode, or fingerprint protected. This includes devices like your phone, tablet, internet router, and more.
  5. Monitor your credit report for early detection of identity fraud. You can learn more about how to conduct A Careful Review of Your Credit Report here on our website.
  6. Own your online presence by reviewing the privacy and security settings on websites you use to be sure they are set at your comfort level for sharing.
  7. Consider enrolling in IdentityForce’s robust and comprehensive service to rest assured that another set of eyes is proactively working to protect your identity, privacy, and credit.

For more healthy technology habits you can adopt this spring and the rest of this year, we encourage you to explore the following posts:

Expert Spotlight: Picking Policies to Meet Insurance Needs

Financial Planningon May 3rd, 2017No Comments

Interview By: Yusuf Abugideiri, CFP®

At Yeske Buie, we believe that successful financial planning captures your life in a big-picture, holistic way. We do this by focusing on the Financial Planning process that includes identifying your goals and resources, establishing steps to harness those resources in pursuit of your Live Big® goals, and implementing and reviewing a plan specifically developed for you. We also do this by engaging with your strategic partners –  the accountants, attorneys, and insurance agents who prepare specific analyses that affect your financial plan.

One of the strategic partners we work with closely in the DC, Maryland, and Virginia area is Kim Natovitz, an insurance associate with over twenty-five years of experience in the industry. Known for her leadership, poise, and excellence at translating complexities into readily accessible explanations for her Clients, Kim excels at supplying them with an incredibly caring and supportive team and going out of her way to remove administrative burdens and obstacles. In this post, Kim shares her expertise on the process and approach she takes as she helps her Clients pick policies to meet their insurance needs.

Yeske Buie: How does your relationship begin with a new Client?

Kim Natovitz: The most important thing we do is collaborate with the Client’s other advisors to really understand what their current financial situation is and what the financial impact would be if they got sick, injured, or died prematurely. Then we look at what coverages they already have in place, where they are in their planning process, and evaluate the planning they’ve already done to make sure those vehicles are performing as they should be.

Yeske Buie: Once you have an understanding of the Client’s needs, what is the next step?

Kim Natovitz: There’s some “housekeeping” work that needs to be done. We look to see if are there existing opportunities of which a Client is not taking advantage, like their employer-provided benefits or a policy through a professional association. Policies provided by an employer can often be obtained at a significant discount because they are group policies. With regards to coverage obtained through a professional association, we spend time reading the contracts carefully because, although they’re generally inexpensive, it can be difficult to receive benefits when the need to file a claim arises. Once we exhaust all of the options a Client can obtain through existing avenues, we look to fill the gaps with products that are available in the market.

Yeske Buie: What do you look for when evaluating insurance policies?

Kim Natovitz: Our process is robust. We look at a number of things, including

  • The Client’s medical history, the state they live in, their hobbies, and other things that make their needs unique – this information ultimately shapes the recommendations because the answers to these questions serve as filters to whittle down the universe of appropriate products
  • Whether one product can do “double-duty”; there are lots of insurance products with great riders that can improve the efficacy of a solution by addressing more than one need (ex. a life insurance policy with a long-term care insurance rider);
  • We will oftentimes go through underwriting with multiple carriers to assess appropriateness, fit, and costs; as the offers come in, we follow up with carriers who may not have been initially interested in providing coverage and see if they’re willing to make a better offer now that someone else has done the “heavy lifting”;
  • Additionally, we look to see if there is someone who can pay the premium on the Client’s behalf (ex. for a Client who needs more disability insurance, we’ll ask if this is an issue that other employees in their organization are experiencing and whether their employer has a willingness to establish a program for the employees).

Yeske Buie: Once a Client selects a policy, what happens next?

Kim Natovitz: Our job is to make sure of two things:

  1. The Client’s coverage stays in force – we help our Clients keep track of their premium payments and will reach out to the Client and/or their advisors if we learn of a missed or late payment to confirm everything is ok and that the policy is still the best fit for the Client’s needs.
  2. When a claim is filed, we work to remove as much of the administrative burden as possible for the Client and their family – we’ll follow up with the carrier on their behalf because we know what to look for and what questions to ask, and we make sure to explain everything to the Client so that they can concentrate their energy on taking care of themselves and their loved ones.

Yeske Buie: What is an interesting observation you can share from your experience working with Clients?

Kim Natovitz: Virtually every Client we’ve worked with can tell us exactly how much life insurance they have, but very few can tell us what would happen if they became disabled or, post-retirement, if they have a plan for what would happen if they needed custodial care as they get older. So, although we spend a lot of time making sure a Client’s life insurance needs are met, we also focus on their disability and long term care insurance needs.

More About Kim Natovitz:

Kim is a member of the Individual Solutions team at TriBridge Partners. She has over twenty-five years of experience in the insurance industry, with a background in individual planning.

Kim Natovitz is the founder and president of The Natovitz Group, which she started in 1992. Known for her leadership, poise, and excellence at translating complexities into readily accessible explanations for her clients, she excels at supplying them with an incredibly caring and supportive team and going out of her way to remove administrative burdens and obstacles.

Kim serves both the Financial Advisor community as well as individual clients, and is constantly increasing her knowledge and education to better serve them. In 2012, Kim received her Certification in Long-Term Care (CLTC) designation providing training.

Professional Affiliations & Education:

  • Chartered Life Underwriter (CLU)
  • Certification in Long-Term Care (CLTC)

To contact Kim, please feel free to connect with our Financial Planning Team or email Kim directly at kim.natovitz@tribridgepartners.com.

Financial Decisions During a Divorce

Financial Planningon April 19th, 2017No Comments

Written By: Ryan Klemm

Dealing with your finances may be the last thing on your mind when going through a divorce, or it may be the first. Regardless of the order, deciding how the couple’s assets will be split is one of the biggest decisions the two parties will face. As such, it is important to have a strong understanding of the financial rules that are applicable during a divorce to help ensure both individuals’ financial stability before the process has been finalized. With this in mind, we share our thoughts on important considerations to keep in mind if you or someone you know finds themselves faced with the financial decisions of a divorce.

One of the most important areas to consider when deciding how to split a couple’s assets is the difference between retirement assets held in employer plans vs. assets held on an individual basis and the applicable tax rules of each account type. As long as the appropriate steps are followed, transfers incident to divorce are tax-free scenarios and will not trigger a transfer of value (recognition of tax). For accounts that are held individually, assets can be separated immediately after the divorce is finalized but should be done so carefully to avoid tax ramifications. For example, if you take a portion of your former spouse’s retirement account(s) and do not direct that amount to an IRA, you will create a tax liability based on your marginal tax rate. A way to avoid this tax liability is to use a direct rollover to transfer the funds from your former spouse’s account to yours. This method will qualify as a tax free transfer as there is no constructive receipt by the receiving party. After this transfer occurs, it is important to know that the receiver assumes the tax responsibility going forward and must adhere to IRA tax rules. For couples who split both pre-tax and post-tax accounts, the receivers can expect to maintain the benefits of the more advantageous tax situation when they start taking distributions during retirement.

When it comes to assets held in employer plans, it can be beneficial to request a Qualified Domestic Relations Order (QDRO) as part of the divorce agreement to establish your legal right to receive a designated percentage of your former spouse’s qualified plan. In the eyes of the law, any retirement assets accumulated by a working spouse during marriage are recognized as earned by both spouses. As employer provided retirement accounts predominately receive the majority of a couples shared retirement funding, it is therefore an important order to consider as part of a divorce settlement.

No matter the account type, one of the first things to be done once the assets are transferred is to update your beneficiary information on all retirement accounts. This update will allow post-death control of where your assets are directed and if left unchanged will most likely revert back to your former spouse.

The second area to pay attention to in regards to assets after divorce is the ability to utilize your former spouse’s Social Security benefits. Federal law mandates that a former spouse has a right to Social Security earnings much in the same way as they view accumulated retirement assets as shared earnings. You are entitled to 50% of your former spouse’s full retirement social security benefit if you were married to your former spouse for more than 10 years, have reached age 62 and have not remarried. The federal law also mandates that if you remarry at any time, you will lose the benefit amount.

At Yeske Buie, our goal in supporting any Client going through the divorce process is to help ensure that the financial assets they receive are handled in the most appropriate and unbiased way. It is our hope that removing the stress of finances from this emotional process will provide some peace of mind to focus on the other considerations that arise at this time. If you have any questions related to the financial decisions during a divorce either for yourself or for someone you know, please do not hesitate to contact us.


“Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourselves, Who am I to be brilliant, gorgeous, talented, fabulous? Actually, who are you not to be? Your playing small does not serve the world. There is nothing enlightened about shrinking so that others won't feel insecure around you. We are all meant to shine. And as we let our own light shine, we unconsciously give others permission to do the same. As we are liberated from our own fear, our presence automatically liberates others.” ~Marianne Williamson