Workshop by Gutter-Bird-O'Neill at AFCPE 2012

1. Financial Aspects of Divorce
An eXtension Webinar for
Military PFMP Professionals

2. 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

3. 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)

4. 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

5. Topics
• ​
Housing and Foreclosure • 9 Skills of Couples Communication About Money
• February 2, 2012 11:00 AM Eastern • June 26, 2012, 2 p.m. Eastern
• http://learn.extension.org/events/427 • http://learn.extension.org/events/529
• Talking With Kids about Money • Retire Ready: Financial Planning for Later Life
• February 23, 2012 Time 2:30 PM Eastern • July 10, 2012, 2 p.m. Eastern
• http://learn.extension.org/events/441 • http://learn.extension.org/events/530
• Implications of Relatives Raising Children While • Thrift Savings Plans: Retirement Planning for Military
Parents Are Deployed Families
• April 5, 2012, 2 PM Eastern • July 25, 2012, 1-2:30 p.m. Eastern
• http://learn.extension.org/events/458 • http://learn.extension.org/events/563
• Financial Aspects of Divorce • Income Tax Return Filing Issues for Members of the
• April 12, 2012, 11:00 AM Eastern Armed Forces
• http://learn.extension.org/events/456 • August 28, 2012, 12:30-2 p.m. EASTERN
• http://learn.extension.org/events/588
• Home Ownership: When Is The Right Time?
• May 8, 2012, 2:30 p.m. Eastern • Basic Money Management
• http://learn.extension.org/events/509 • September 25, 2012, 11 a.m. Eastern
• http://learn.extension.org/events/61

6. 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

7. 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
• Facebook

8. 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.

9. Who Attended?
Live: 166 Recorded: 107

10. 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

11. 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

12. 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

13. 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?

14. 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)

15. 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

16. 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

17. 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

18. Negotiation Planning Grid
My goals in terms of property My spouse’s goals in terms of
division are: 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 My spouse’s goals in terms of
are: children are:

19. Common “Hot Buttons”
Men (and Employed
Women): Pension and Women: Keeping a
voluntary savings accounts house and child custody
(e.g., Thrift Savings Plan) •Tied to desire for stability
•Emotionally tied to for self and children
previous work history •BUT…”home
•“I [busted my butt, went to attachment” may not be
war, defended my country, as much an issue for
risked my life, etc.] and military spouses used to
she/he wants half of my frequent moves
pension. I don’t think so”

20. Property Designations
Separate 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

27. Staying vs. Moving
Cost of Staying in Home Costs of Renting
– Monthly PITI Monthly Costs
– Rent
– Gas and electric
– Utilities
– Water and sewer – Other
– Garbage pick-up Total Monthly Cost: $_____
– Yard work One-Time Costs
– Homeowner fees – Moving
– Maintenance and repairs – Deposits
(1% of market value) – Utility hook-ups
– Other Total One-Time Cost: $_____
Total Monthly Cost: $_____

28. 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

29. 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/SB10001424052970203961
204577269460305366188.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

30. 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

31. 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

32. 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

33. Key Divorce Documents
• Deeds to real estate • Pension/retirement
• Mortgage papers savings plan documents
• Tax returns (last 5 yrs) • Business tax records
• Paycheck stubs (last 8) • Inheritance documents
• Bank statements • Insurance settlement
documents
• Bills for living expenses
• Net worth statement
• Proof of other income
(e.g., unemployment, disability) • Household budget
• Documents showing debt • Evidence of adultery
• Insurance policies

34. 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/tabi
d/115/itemId/2229/Default.aspx

35. 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

36. Topic Suggestions Are
Welcome
Please send ideas for topics or
speakers to msgutter@ufl.edu
Questions?