Interesting Info You Can Read Over a Single Cup of Coffee!

Julie A. Kern, CPA®, CFP®, CDFA®

Julie Kern, CPA, CFP®, CDFA®

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In this issue:

How do you settle a divorce case when there are multiple real estate properties?
Settlement Assurance Review
AFI service

How do you settle a divorce case when there are multiple real estate properties?

When affluent couples divorce, the affluence is often a product of multiple real estate holdings. I see a lot of these cases; I’m sure you do, too.

These are some of the most complicated apples-to-oranges asset-valuation challenges there are. I should know: I’m a CPA, a CERTIFIED FINANCIAL PLANNER® professional, and a Certified Divorce Financial Analyst® professional.

I recently worked a case in which there were multiple real estate properties. My client was the divorcing woman. The couple had co-owned a number of single-family rental homes. For convenience’s sake, let’s say there were ten of them; plus, I need to be discreet.

In a perfect world, each party would get five houses. But you know that that’s not the case.

In fact, there are so many moving, and inter-related parts here, that I found it was best for my client—and for her attorney—for me to create a real estate properties score card. It simplified things as much as possible, and assigned a final subjective score, on a 1 to 10 scale, based on all of these different factors, for each property:

Its cash flow generation as a rental. This includes the dollar amount of the rental income generated each month, not to mention the consideration of whether the property is actually rented and not vacant.
The capital gains that could come from selling it. (Of course, there’s the 1031 exchange option to avoid that tax if you swap the equity into a new property—but that’s just kicking the can down the road.)
The equity in the property.
The party on the loan: If the mortgage was held jointly, the woman would now have to re-finance it, singly… at a different rate. With a new 30-year term. And would she even qualify for that mortgage, given her income? And what if there’s a real-estate downturn in the future and paying tenants dry up? Would she have enough liquid assets to ride that out?
The remaining mortgage term. One of the properties in this case, for example, only had about $50k left to be paid off.

So I created a “weighted average” for each of the ten properties, and also advised the woman of the future tax implications, post-divorce. Which 1) she appreciated, and 2) her lawyer was thankful for, because it would be off his plate.

And this is just one case. I’ve got others, featuring real-estate partnerships with passive ownership… promissory notes… commercial and business properties… private REITs… vacation homes…. you name it.

Botton line: None of this qualifies as “divorce law.” It’s all arcane, nerdy numbers puzzles which absolutely need to be solved in order for the case to be settled equitably—and for you to keep your case load moving forward.

Let me help your client—and you—on that next complicated case. I’ll make it as easy as possible. Just Contact me to get started.

Settlement Assurance Review

For every time you’ve been faced with a complex case—such as one with a lump-sum spousal-maintenance payout, or a complicated asset mix with hidden tax implications—and told your client, “You should talk to your tax or financial advisor,” I have a new service for them… and you.

It’s simple. When you and your client are considering a settlement, I can review it from a financial-expert perspective, for a nominal fee, and “bless it” (or not) before you go to court or mediation. The Settlement Assurance Review scrutinizes your client’s divorce settlement terms before finalization, providing:

Equitability analysis: A detailed evaluation to ensure the proposed settlement terms are fair and well-balanced.
Tax impact assessment: Identification and explanation of any potential negative tax implications.
Risk mitigation review: Detection of any hidden financial risks or liabilities that could impact your client’s financial well-being, post-divorce.

During these reviews, I often discover hidden negative tax implications and other undesirable outcomes and risks that would be detrimental to your client. This can significantly reduce your liability exposure, while giving your client added confidence, and making you look even better in the process!

By partnering with us, you can confidently assure your clients that their financial interests are fully protected and their settlements optimized for both fairness and financial clarity.

Contact me and I can help you easily get your clients started with this.

AFI service

Seeing how often improperly-completed AFIs can frustrate attorneys like you, I’ve created an all-new service: I’ll help your divorcing-women clients complete their AFI, within one week of getting the supporting documents (bank and credit-card statements, etc.). And I’ll do it for them for a flat fee of just $495.

So they—and you—will have a good, solid AFI that opposing counsel can’t poke holes in, for a flat fee, in fast time.

Contact me today to get started!