Divorce Finance

What is a QDRO?

February 23, 2023 By Denise French, CVA, MAFF, CDFA, CRPC

A QDRO, pronounced “kwa-dro”, or Qualified Domestic Relations Order, is a court order granting a non-employee spouse the right to part of the retirement benefits their former spouse has accumulated in their company’s retirement plan.

If you are divorcing a spouse with a company retirement plan governed by The Employee Retirement Income Security Act of 1974 or ERISA such as a 401k or a pension plan, you will need a QDRO to receive those funds. The QDRO process has a definitive flow, its own terminology and can take some time to complete. We will walk through an example of a couple where the husband works at ABC Company and the wife is receiving a portion of the ABC Company 401k from her husband. In this example we will walk through the process from settlement in mediation to QDRO funds receipt to give the reader a better understanding of QDRO terminology, how the process works and the timeline.

QDRO Terminology

Terminology with QDRO’s is important but thankfully, fairly straightforward:

Plan: This is the specific retirement plan to which the order applies. You need a QDRO for each plan. For example, if you are divorcing an ExxonMobil employee, you could be awarded a portion of ExxonMobil 401k and the ExxonMobil pension plan. Those are two different plans and two different QDRO’s will be needed. (Note there are other plans at ExxonMobil for certain employees such as Restricted Stock Units and Supplement Pension Plans – those are not ERISA plans and do not need QDROs but have their own issues we will cover in a separate article).

Participant: This is the individual who will be assigning his or her benefits to an alternate payee. This is the spouse who works for the company and whose name the plan is under.

Alternate Payee: This is the individual (usually a former spouse) who will receive the benefits.

Address of Record: The address on the QDRO form for the alternate payee and the participant is what will be used by the QDRO department to communicate with you. It is critical to have the correct address listed as this is how you will receive communication.

Description of Benefits

The order must clearly articulate the benefit to be assigned to the alternate payee. The order could use a flat dollar amount or a formula.

Here are two examples:

Flat dollar amount: $500,000

Formula: 50% of the participant’s vested account balance as of January 1, 2023, adjusted for any investment gains or losses, stock splits, dividends and/or interest from January 1, 2023 through the date of distribution.

In a turbulent market such as 2022, this is a critical element to understand. If you were awarded 50% of a 401k balance in April of 2022 which was invested in growth stocks, and then didn’t take receipt until August of 2022 – that balance may be much lower over the time period. Likewise, if you only owned oil and gas stock during that same time period, you may be very happy you were awarded gains and losses as the account could have grown considerably. We cannot over-emphasize the importance of considering investment performance as there is a lag between the determination date (January 1, 2023 in the above example) and the date the benefits are actually set aside for the alternate payee (August of 2023 in our example below).

It’s important to understand if you are receiving a flat dollar amount or a percentage split and if the percentages include gains, losses, interest, and dividends. (And no, you will not usually get an opposing attorney to agree that you only participate in the gains but not the losses.)

Which option is better? Well, that depends. When and if we suggest flat dollar amounts in QDRO’s it is because the parties have usually agreed to a set amount as part of an overall division and for a specific purpose – like paying off debt or purchasing a new house. Our concern is always if you are awarded a set dollar amount, what happens if the market falls and those dollars do not exist months later when the QDRO order is completed? That becomes an issue.

Awarding the alternate payee a portion of the account on a percentage basis with gains, losses, dividends and interest from the date of division to the date of distribution is certainly more prevalent in our experience. This is more prevalent as both parties participate fully in the risk or reward of the markets from the time of division until the funds are distributed.

QDRO Timeline – April Division to August Receipt of Funds

It takes several months from the date of division to the date of receipt. Let’s continue with our example. Jane and John went to mediation on April 2. In mediation, the parties agreed on a settlement which awarded Jane 52% of the ABC Company 401k of her spouse John. They signed a Mediated Settlement Agreement or MSA which was final and binding on April 2. The next day the wife’s attorney calls a QDRO firm and asks them to draft a QDRO’s for this settlement.

It then took until May 15 for the decree to be finalized. The attorneys had to draft the decree, agree on the language in the drafting and then set a court date to finalize the divorce with the court. This all required effort and time. During that time a QDRO firm created a QDRO for the 401k, sent the QDRO’s into ABC Company’s custodian for preapproval and it came back approved. The parties were officially divorced on May 15 via a “prove up” in court. The divorce decree and the QDRO were all entered together and signed by the judge.

The wife paid extra for the QDRO company to pick up the QDRO in the clerk’s office and send it to ABC Company after a judge’s signature was secured. The county clerk is not responsible for this, the QDRO firm is not automatically responsible for this – the receiving party is responsible. Sometimes the QDRO firm who drafted the QDRO will do this, but you must confirm with them. It is not automatic and usually involves an extra fee. In this example the wife paid an extra $100 to the QDRO firm and they picked up the signed QDRO from the county clerk’s office and sent it to the company which manages ABC Company’s 401k.

About 30-45 later, ABC Company sends a letter to the wife’s address of record notifying her the QDRO has been received and is being reviewed. Now the alternate payee or former wife can call ABC Company and discuss the QDRO with them. However, ABC must still review the QDRO and confirm it is accurate. If you had a QDRO firm prepare your QDRO and send it in for pre-approval, this should not be an issue. In our example, let’s assume the letter was received by Jane on June 25.

ABC Company must still review the QDRO which takes another 30-40 days. On approximately August 2 in our example ABC sent a second letter to the alternate payee for the 401k QDRO letting her know the QDRO is approved, an alternate payee account now exists and they provide distribution options.

In this example, the division of assets was decided on April 2, but the account was not available until August for the former wife.

Distribution

Although this step frequently occurs at the same or immediately following the account segregation, it is important for the plan to follow the normal distribution process. In other words, the alternate payee must be provided with the necessary disclosures and then must submit the regular distribution request forms. Most plans include language that allows the alternate payee to take a distribution right away, but some plans limit that ability until the participant would otherwise be able to take a distribution. When distributions are permitted right away, it is our experience that the alternate payee is usually eager to do so.

Taxes

When an ex-spouse receives a cash distribution of plan benefits pursuant to a QDRO, he or she is responsible to pay the associated income tax. You are taxed on these funds at your ordinary income rates as if you had a job which paid you the same amount.

One key difference is that a cash-out distribution from a QDRO is not subject to the 10% early withdrawal penalty. For example, going back to Jane Smith, she is 45 years old. If she were to take funds out of a pre-tax retirement account to use as cash, she would pay tax on the proceeds in addition to a 10% penalty. However, if the cash withdrawal is from the QDRO funds directly, the 10% penalty is not applied. Let’s assume Jane needs $100,000 to establish an emergency fund, pay divorce debt and buy a new car. She would take $100,000 of her QDRO in cash and pay taxes based on her marginal tax bracket that year. The remainder of her QDRO funds could be rolled into an IRA in her name alone without any tax liability due today. Divorces can be messy, and financial negotiations can make an already heated situation reach a boiling point. We find it is helpful to have someone who understands this process and can guide you. If you have QDRO questions, please schedule a strategy session with us to discuss what your next step should be. We can not only help you receive your QDRO funds but we can help you map out a plan for how much tax you should send to the IRS, how much you need in cash and an investment strategy for the funds you move into your own account through our partner investment firm.

High Stakes, High Net Worth:

January 18, 2023 By Melissa Provence, CDC, DCC

Why hiring a Certified Divorce Financial Analyst can make or break you

By: Melissa Provence CDC,DCC

When it comes to divorce, more than emotion has to come into the equation. High net worth couples can have a particularly difficult time. They have saved all their lives and now face losing a portion of those savings. When it comes to dividing high net worth estates, a highly skilled Certified Divorce Financial Analyst (CDFA) is one of your best lines of defense.

Planning for more than tomorrow:

Oftentimes fiscal decisions are thrown to the wayside due to the emotional effects that divorce can have on a couple. The role of a CDFA is to look at your estate with more than a short-term band aid to get you back on your feet. They work with you during and after your divorce to help you make financial choices when best serve you now and in the future.

Many clients have never dealt with investments like 401K’s, RSU’s, and pension plans. These are complex investments which can greatly impact your retirement. What are the tax implications down the road when dividing the assets awarded to you in your divorce? Does a 50/50 split become a 70/30 split when considering tax effect on your estate? These fact sets are often presented to the client so they can make sound financial decisions. A seasoned CDFA will take an all-encompassing approach to assist you in making wise financial choices.

CDFA’s Role in Your Divorce:

You may be wondering why you wouldn’t just use a financial planner. CDFA’s are often financial planners who also have specialty training and experience working in the divorce financial realm.

CDFA’s will work with you to organize and help you understand your finances. Collecting years of financial data, researching separate property, and division options for the estate.

Let’s not forget parenting after divorce. Who is paying for college? What will child support look like? What about children’s car expenses? These and others are topics a CDFA can review with you, your mediator, and your attorney.

Dissolution of a marriage, not your net worth:

At Divorce Strategies Group, we do divorce differently. Denise French founded the company in 2014 after her own divorce disaster. She had spent a six-figure price tag and a few years of her life trying to close one chapter and begin a new one. After she was divorced, Denise desired to build a company based on creating a better divorce experience. She is highly trained in the areas of high net worth divorces, divorce tax, separate property tracing, executive compensation in divorce, and pension plans. We don’t just facilitate the last stages of the negotiation. We walk with you every step of the way.

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Ending a marriage? Don’t get divorced from financial reality in the process.

January 11, 2022 By Denise French, CVA, MAFF, CDFA, CRPC

Sound financial planning may be the last thing on your mind when divorcing but it may never be more valuable. A lawyer may be your first call when you decide you want a divorce. A financial advisor knowledgeable about divorce matters should be your second

In many cases, a divorce has more impact on a person’s current and future financial well-being than any other event in their lives. Sound financial planning may be the last thing on your mind when your marriage ends — particularly if it ends in conflict — but it may never be more valuable.

Divorce happens in an emotionally charged environment. While in this state of mind, you are making financial decisions which will affect the rest of your life. It is critical to have a knowledgeable financial advisor on your divorce team walking along side you and your attorney. Financial planners will give you the overview of financial guidance while your attorney will explain the law and guide you with legal decisions.

In general, for everyone except the very wealthy, divorce will hurt your standard of living. Two households are more expensive to maintain than one, and if one person in the marriage has been a stay-at-home parent, there is less income and assets to go around. In addition, unless your marriage was short-lived and is ending amicably, you have no children and little marital assets and income, you should consult both a lawyer and financial advisor.

Online divorces are dirt cheap but a good idea only for very simple circumstances with mutually acceptable terms. Mistakes made in a divorce settlement have long-lasting financial effects.

Five key issues to consider in divorce

1. Mediation versus litigation:

A divorce settlement mediated with a collaborative approach has major advantages over litigation for the divorcing family. It typically costs less and has higher compliance rates than with litigated settlements. It often requires much less time and emotional turmoil.

More importantly, it can save a parent’s ability to co-parent minor children after the divorce. The biggest potential downside is that if the mediation doesn’t work, you’ll end up in court anyway prolonging the ordeal.

2. Budget for the long-term:

A clear understanding of your long-term living expenses is crucial to negotiating support payments and a settlement you can live with. That’s particularly so for parents who retain primary custody of children.

Larger expenses such as tutoring, special needs, extracurricular activities, vehicle purchases and insurance, senior trips and college are among the future expenses which need to be addressed in a settlement. Ideally, child-support payments should be protected by term life insurance.

When you come to the negotiating table, it is critical to think about your expenses not just two to three years after divorce but ten and fifteen years out. The more you can discuss about current and long-term needs — particularly if there are children involved — the better.

3. Watch your assets:

Marital assets are not all created equal. A savings account with $100,000 is worth much more than a joint retirement account that will eventually be taxed or illiquid equity in a home of that amount. Make sure you consider the liquidity and after-tax value of all assets and the different risks that they present.

Holding onto the family home could be a very heavy financial burden. While it may be a source of comfort in a difficult time, it could come back to haunt you. Mothers with custody of children often understandably want to keep the house. Then they come to us, and we walk them through the costs to upkeep the home and a plan to do so, if possible. We also find it valuable to have older homes inspected to uncover are any potential large costs ahead such as termite damage, foundation repair or major plumbing repair.

If there are more complicated marital assets such as private equity, restricted stock, business interests or even cryptocurrency holdings, an advisor is essential to evaluate and advise on those assets.

4. Mind your taxes:

Like everything else in life, divorce settlements have big tax implications. Understanding how different assets and income streams are taxed is crucial to the equitable division of assets.

It is also important to be aware of less obvious items such as pre-paid taxes which may have been paid already out of the marital pot but could be refunded to or used by a former spouse or tax-loss carry forward benefits if a large amount of non-qualified brokerage funds are owned.

5. Update your life:

The key things to address when your divorce settlement becomes final include updating your will, powers of attorney, beneficiaries, and other estate-planning documents to reflect your changed circumstances.

If you have been out of the workplace for an extended period, think about whether you need to return to it and if you need training to help you get back to work. If you need training, it is wise to research how much it will cost and negotiate for that in your divorce. It’s hard telling a stay-at home parent that they should go back to work but in some cases they really should. A person’s largest asset may be their earning capability. It can help you add to your nest egg and enable a better retirement.

A knowledgeable, experienced divorce financial planner can show you where you will be with or without returning to the workforce and if you are working, help you readjust your retirement plan to get back on track.

Divorce Strategies Group, LLC is a full financial planning firm for those engaging in divorce with a forensic accounting arm. We understand the laws as they relate to finance in divorce, and we understand financial planning. In conjunction with our sister firm, French Financial Group, we can help you walk through divorce and emerge with a strong financial plan for your future. Please call us at 281-505-8177 or reach us online to schedule your complimentary consultation today.

Retaining Your Assets in Divorce

June 28, 2021 By Denise French, CVA, MAFF, CDFA, CRPC

After years of working with those going through divorce, we have found individuals with two factors really thrive during divorce. Those who have (1) knowledge of the relevant facts and (2) realistic expectations are the most ‘successful’ in their divorce. Without accurate accounting of your finances, you may find that you cannot afford your life, or you could jeopardize the retirement that you have worked so hard for. Conversely, you may find you have more than enough in assets to maintain your lifestyle, and you are secure financially. With higher-than-realistic expectations you may spend thousands of dollars (or hundreds of thousands) only to find a fair division is 50/50 (or 53/47 but not the 80% you wanted). For those going through a “gray divorce” or spouses who have worked at home, the financial ramifications can be even more significant for either mistake.

Hurt feelings and fear often combat rational thought – which we totally understand – we were the same way. Divorce is scary! With that in mind, we have created 7 tips to help those in divorce walk away with your financial future intact after you go your separate ways.

Budget your Post-Divorce Lifestyle.

Living separately can be scarier than living together – even if you were miserable! To ease the fear, remember knowledge is power. It is imperative to know your monthly income and expenses. This is particularly important if one spouse has been paying the bills and managing the household finances alone.

Figure out your immediate needs and go from there. At Divorce Strategies Group we walk couples through their post-divorce budget early in the divorce process. It is important that clients know realistically what they can spend each month following the divorce. This sets them up for a secure financial future and gives them peace of mind. It can also help you negotiate from a position of power, not fear.

Manage Costs During the Divorce

A typical litigated Texas divorce ranges between roughly $20,000 to $40,000 or more. That is no small chunk of change to most couples. We have been witness to divorces costing $60,000, $80,000 and more (reference unrealistic expectations and lack of knowledge above).

One way to mitigate the financial fallout of divorce is to choose early mediation over litigation. Mediation is a process in which a mediator helps divorcing couples reach an amicable settlement. The mediator facilitates communication between the parties to promote settlement and understanding between them. Mediation addresses child custody, child support, visitation, spousal support, and property division. The mediator does not act as a judge, attorney, or financial advisor, but assists the spouses in reaching a voluntary agreement. At Divorce Strategies Group our Mediation Process involves a team of experts that will work with you and your spouse to negotiate a divorce settlement that won’t break the bank.

The issue many attorneys, rightly so, have with mediation is it is done without guidance of someone who understands the law or someone who understands how finances work relevant to divorce. These are both valid concerns. We have seen couples negotiate a “do it yourself” divorce only to find they owe thousands later due to mistakes or someone lost out of hundreds of thousands because the agreements were not able to be legally completed (such a restricted stock plan) or the property documentation (such as a pension plan) was not completely correctly, thus the agreement is not enforceable.

To make sure you do it right, we include a Family Law Mediator Attorney with a Divorce Financial Expert to provide the right guidance to you the first time. Visit Divorce Strategies Group for more information on our process.

Eradicate Debt

If you have joint debt with your soon-to-be ex-spouse, it is best to pay it off before finalizing the divorce.

Shared debts remain both party’s obligation in the eyes of a lender, even if the divorce settlement says only one spouse is responsible for paying it back. If the responsible spouse fails to make the payments, any defaults will show up on the other spouse’s credit history.

If the debt cannot be paid off pre-divorce and becomes only one spouse’s responsibility, the other should continue to have access to the account’s history to make sure it is being paid as agreed. Better yet, have an attorney create an enforcement action in which you can take over the property or some other property if you are not able to be removed from the debt and your spouse, who was assigned the debt, fails to pay. An attorney can help you make payment of the debt in your name contractual or binding in some other format. Debt in divorce can be tricky It is wise to seek legal and financial guidance if you are dealing with large amount of debt or a significant debt (like a home mortgage).

Kids are Expensive

Kids can cost a lot, especially when you have not budgeted their future needs into the equation. Be sure to consider things like cars, car insurance, private school tuition, day care costs, summer camps, extracurricular activities, and even smaller things like school lunch accounts and back to school shopping. These costs add up over time.

If you have children close to graduating from high school, it is important to be very clear about what each parent is willing to cover in college costs or any other expenses. Another discussion to have is who will cover health care costs for your children after they graduate high school. Who will the insurance fall under, who will pay for it, and how will out-of-pocket costs be covered from the time your child graduates from high school until they are fully on their own as a working adult? Family courts do not cover this time period, but parents sure do, and contractual agreements can be made between the parties regarding this no man’s land of time for older kids needs.

Divorce during Retirement

Gray divorce is defined as divorcing couples who are 50 and older, and they are on the rise. These couples have their own unique situations and needs for the future. There may be annuities, retirement plans and life insurance policies. We have had couples retire during the divorce which also brings a multitude of tax issues.

One way to facilitate a smooth transition after divorce is to hire a Certified Divorce Financial Analyst. We work closely with couples during and after divorce to make sure they understand the assets they own, what income can be derived from investments and help them build a firm financial foundation.

Divorce for those over 50 is a critical life situation and likely the biggest financial transaction of your lifetime. Your divorce could determine your lifestyle for the remainder of your years. This is not to scare you, it is just important to have counsel if you are in this situation.

Receiving the Assets You Were Awarded

A common assumption people have during a divorce is they automatically own an asset the court has awarded to them. Just because you were awarded the asset, does not mean you now own it. There is a process to walk through after the divorce to take ownership and control of the property you were awarded weather that property was a home, a brokerage account, a bank account, or a retirement fund. Divorce Strategies Group members can walk you through the steps you need to take to claim the assets you were awarded. This is very important to do as soon as possible so your spouse cannot improperly move or hide funds you were awarded. It is also important to complete the Qualified Domestic Relations Orders (QDRO’s) while your attorney is involved as these need to be filed with the courts and all parties (you, your ex-spouse and your attorneys as well as the judge) need to sign it.

Plan for Peace of Mind

The goal we have for all our clients at Divorce Strategies Group is financial peace of mind. When working with us, you will know what bills you need to pay every month and how much of your disposable income you can spend. You can spend your money in freedom because you know you have a plan for your budget, taxes, and investing. We can also help you adjust your financial plan if you experience new significant life changes.

Planning and budgeting are not fun concepts, but the fruits of these labors can provide a lot of fun (and security) in your future!!

Schedule a complimentary consultation with Divorce Strategies Group today. No matter what phase of the process you are in – just starting, in the midst of divorce and have financial questions or wrapping it up and looking ahead toward your future. We are here to help you thrive after divorce and move on to the next phase with confidence, strength and hope.

Oh, Divorce Debt. How Can I Ever Repay You?

May 26, 2021 By Denise French, CVA, MAFF, CDFA, CRPC

Q: My husband and I have a lot of assets—but we also have a lot of credit card bills. Everyone talks about dividing assets in a divorce settlement, but there’s not much said about debt. How does that work in terms of who pays what?

A: You’re so smart to ask this question! Most people don’t realize that during divorce, dividing debt is just as important as dividing assets. Although most states handle property and debt division differently, you can expect debt under a national contract (like with Visa) to be pretty consistent. (Pssst. See our friendly Texas Family Law Code about debt and divorce for specific details).

Here are a few tips to help you get started….

Credit card companies are blind. They don’t care if you’re divorced; they just want to get paid. Broadly put: You are responsible for whatever is in your name. If you have several joint accounts, it’s best to pay those accounts with marital assets and either remove your spouse’s name or remove your name so that there is only one owner going forward. The fees for these transactions are small compared to the headache and hassle of keeping tabs on an account you no longer control (but are on the hook for).
The cleanest option for mortgage debt is to sell the house and split the money. If that’s not a viable option, one spouse can “buy the other out” with a buyout refinance (if you want to keep the home you would, ideally, be able to qualify for a loan on your own). This will not ever be mandated by your divorce decree (even the great state of Texas cannot make a third party lender accept you).

If a refinance cashout isn’t on the table, one of you can stay in the house while both of you remain on the mortgage. Instead of a clean break from the debt, your spouse would have a “Deed to Secure Assumption,” which can be drafted by an attorney, to provide a layer of protection for the person who isn’t living in the home. This arrangement isn’t for everyone, but it can be the easiest option in tight markets. Details of this type of deed should be discussed with your legal counsel.
Timing matters, in terms of when the debt was incurred. If debt was incurred before the marriage, then it belongs solely to the spouse that created that debt. If incurred during the marriage, then both spouses are equally responsible. There may be special situations where debt was incurred as a result of paramour activity or “wasting” of marital assets. If that is the case, then an attorney can help you fight that battle during the pendency of your divorce.

Now is the best time to get a handle on what you owe to whom. To cover both: Run a credit report on yourself and ask your spouse to do the same. This free report gives a current and comprehensive snapshot of where you are with your debt, as well as your credit score—both will come in handy when it comes to negotiating the terms of your divorce.

In addition, we recommend calling every credit card company you have an account with to verify who is actually responsible for the account and who is just an authorized user. You want to gather all the information you can today in order to protect yourself in the future.

And don’t forget—we can help! Contact Divorce Strategies Group for a complimentary consultation to see how we can help you sort through the maze of divorce finance.

Cryptocurrency in Divorce

May 4, 2021 By Denise French, CVA, MAFF, CDFA, CRPC

Coinbase (COIN) went public recently and had the attention of the investment world. Coinbase is a financial technology company that focuses on offering its retail users the ability to buy, sell, and own crypto and digital assets like Bitcoin, Ethereum, Litecoin, Doge Coin, and other currencies on the block chain. Coinbase reported they have more than 50 million retail users.

The popularity of cryptocurrencies has skyrocketed over the last decade. You can’t watch Bloomberg or CNBC or any other financial news outlet without crypto being discussed. Significant wealth has been created for individuals owning crypto assets as well. On April 16th, 2020 Bitcoin was $7,354. On April 15th, 2021 Bitcoin was $63,214.

Some experts believe we are in the very beginning of a long bull market with crypto currencies and at some point the “crypto standard” will replace our current “gold standard”. Financial advisors are struggling with how to offer these assets to their clients as a liquid, compliance approved vehicle is not readily available from a trusted source. This is all rapidly changing. Some experts estimate by the end of 2021 crypto currencies will become common place in portfolios as large financial institutions begin offering them.

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Determining the Value of Cryptocurrency

Naturally, as a Divorce Financial Advisor, I began thinking how these types of assets were going to impact divorce settlements. In addition to Coinbase, investors can buy cryptocurrencies through companies like PayPal, Cash App, Robinhood, and Blockify. These relatively new types of investment vehicles should be examined very carefully by client’s getting divorced, attorney’s negotiating a settlement, and financial experts working for clients. In addition, sometimes divorces take 6 or 9 months or even a year to finalize. With any asset as volatile as Bitcoin, you will want to make sure the marital balance sheet is updated before any financial agreement is reached. Imagine the change in value of a Bitcoin holding from my example above. If Joe and Sally are getting a divorce and filed 4/16/2020 and he owned 3 Bitcoin valued at $22,062. A year later, and now that same Bitcoin is worth $189,642.

Analyzing cryptocurrency holdings in a marital estate is going to become more and more common moving forward. It will be crucial for the client, the attorney and the financial expert to work together to examine the potential impacts of taking the crypto asset versus giving it to their soon to be ex-spouse.

Determining the tax consequences will be a major issue as well. What is the tax impact if the crypto asset is sold? Were there any crypto assets sold in the year of the divorce? There could be a huge forgotten tax bill if you are not careful! Investors must report capital gains or losses from sales of cryptocurrencies on Form 8949 and Schedule D just like buying and selling property or stock. However, according to an article in the February issue of Financial Planning, titled Crypto Creates New Hurdles for Financial Advisors This Tax Season, many firms only send out the gross proceeds of the Crypto asset sales. It is the investors responsibility to figure out their own cost basis. This can create many hurdles when determining a marital estate. This information is crucial to determine the impact of how the crypto asset should be split.

If you are handling crypto assets in your divorce contact us to help you navigate these waters to avoid costly mistakes and tax issues down the road. Schedule your complimentary consultation today.