• About Cathy
  • Divorce
    ▼
    • Divorce Financial Planning
    • Divorce Process Options
    • Collaborative Divorce
    • Mediation
    • Divorce FAQs
  • For Professionals
    ▼
    • Training for Professionals
    • Consulting
  • Classes
    ▼
    • Divorce Options Classes
    • Trusts & Estates Options Classes – coming soon
    • Trusts & Estates Process Choices
  • Initial Meeting
  • Blog
  • Vermont
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Cathy Daigle LLC

Financial Divorce Consulting

Contact Us
408-354-9354
408-354-9354
Notice: My office is OPEN for business. I am using video conferencing tools such as Zoom for meetings.
Read More…
  • About Cathy
  • Divorce
    • Divorce Financial Planning
    • Divorce Process Options
    • Collaborative Divorce
    • Mediation
    • Divorce FAQs
  • For Professionals
    • Training for Professionals
    • Consulting
  • Classes
    • Divorce Options Classes
    • Trusts & Estates Options Classes – coming soon
    • Trusts & Estates Process Choices
  • Initial Meeting
  • Blog
  • Vermont
You are here: Home / Blog / What Do You Need to Know About Divorce, Money and Taxes?

What Do You Need to Know About Divorce, Money and Taxes?

April 3, 2020 By Cathy Daigle

wedding rings and $100 bills

When people divorce, how to deal with money and taxes can be two of the most contentious topics of discussion. One of the advantages of the Collaborative Divorce process is the opportunity to work with a neutral financial professional who helps spouses look at the financial big picture as they work to reach agreement. Couples want to know how to allocate the family finances in a way that can support two households. This requires making some important financial decisions as part of and during the divorce process.

Who Keeps the Family Home?

Who stays in the family home is often a big topic. Each spouse is connected or attached to the home in different ways for different reasons. Each has rationale around why they should be the one to retain possession of the home. There are no cookie-cutter approaches for solving this problem. Some considerations and key factors include:

  • Overall Family Finances. How stable are the finances? Can he/she afford to keep the home? Will the home need to be sold for cash flow purposes or for the marital property to be divided fairly?
  • Is there a way for both spouses to downsize without compromising lifestyle and lifestyle of the children too much?
  • What is the possibility of finding housing in a different geographical area where cost-of-living is less?
  • How might household income be increased and expenses be managed differently with two homes?

Divorce and Tax: Importance of the Certified Divorce Financial Analyst

Income tax laws frequently change. For example, the payment of spousal support (alimony) is no longer deductible at the federal level, although it is still deductible in California. Similarly, the spouse who receives spousal support is no longer required to claim the amount as income on their federal tax return, but is required to claim the income on their California return.

Given stated goals, it is important to look at ways to minimize income taxes and optimize cash flow for the family. What is the best way to allocate income and child dependency exemptions to help optimize cash flow?

Certified Divorce Financial Analysts (CDFAs) bring value-added financial planning to the divorce process. As a neutral team member working with spouses together, CDFAs help to explore creative ideas in a safe neutral setting.

Modeling a financial plan to test settlement ideas in advance of decision making may help both spouses to better assess:

  • Is this affordable?
  • Is this fair?
  • Is this what I expected?
  • Am I willing to live with it?

CDFAs help to look at different angles of the financial settlement so that, from a tax point of view, the plan strives to be financially efficient. Having a financial professional involved is key to helping families make more informed financial decisions. This results in a more durable divorce agreement.

Filed Under: Blog

Primary Sidebar

Cathy L. Daigle, CFP®, CDFA®

Cathy Daigle, LLC

P.O. Box 504
Los Gatos, CA 95031

Contact 408-354-9354
Contact Us 408-354-9354

From the Blog

What Do You Need to Know About Divorce, Money and Taxes?

wedding rings and $100 bills

When people divorce, how to deal with money and taxes can be two of the most contentious topics of discussion. One of the advantages of the Collaborative Divorce process is … [Read More...]

Footer

Cathy L. Daigle, CFP®, CDFA®

Cathy Daigle, LLC

Office Address

20 S. Santa Cruz Ave.
Los Gatos, CA 95031
(no deliveries)

Mailing Address

P.O. Box 504
Los Gatos, CA 95031

408-354-9354

Our firm does not provide legal or tax advice.
Be sure to consult with your own tax and legal advisors before taking any action that would have tax and/or legal consequences.

Disclosure

Web Disclosure - Above, we offer direct access or "links"  to other internet websites.  These sites contain information that has been created, published, maintained, or otherwise posted by institutions or organizations independent of Cathy Daigle, LLC.  Cathy Daigle, LLC does not endorse, approve, certify, or control these websites and does not assume responsibility for the accuracy, completeness, or timeliness of the information located there.  Visitors to these websites should not use or rely on the information contained therein until consulting with an independent professional.  Cathy Daigle, LLC does not necessarily endorse or recommend any commercial product or services described at these websites.

  • LinkedIn

Collaborative Divorce California

Copyright © 2023 - All Rights Reserved

· · ·

Web Design by The Crouch Group · Log in