Climbing Out of the Hole (With Help)
JANE DOE STORY OF THE MONTH
There’s a side to our Jane Doe stories that you don’t see—and that’s a good thing. It amounts to “all of the financial challenges we help to take off of Jane’s plate… and thus yours.”
This month’s Jane Doe did not want to divorce. After a 27-year marriage, the breakup hit her extra hard. She hadn’t worked for years: her career in the healthcare industry had been cut short by a disability. Instead of opting to receive monthly disability payments, she’d used a big lump-sum payout to pay off the mortgage on the house back then. But the house was community property, and the husband ended up with half of the equity when it was sold post-divorce. Jane was left as a stay-at-home mom, with one older child at home (the other was in college), and a bleak outlook for simply making ends meet or ever being able to own a home again. Her spousal maintenance was not going to be sufficient to get her through retirement.
When we first met with Jane, she was a broken woman: reeling from the divorce, still suffering from her long-term disability, and unable to earn a living and support her older child at home. She was too emotionally overcome to even sign the final divorce paperwork for the paralegal when it arrived, post-mediation. The attorney had to step in and hold Jane’s shaking hand herself.
One thing we’re good at is finance. We explained to Jane that the way out of her predicament is to have a plan. And we helped her create one. We can do that for anyone, at any income level. We understand how it works, what to include, and what to trade off.
Six months later, you’d barely recognize Jane. She used her plan to reinvent herself (leaning on us, and not her attorney, for this help), and was confidently applying for a new job. When her older child tried to play her by threatening to go “live with dad,” she offered to drop him off, which changed his tune. Later, a notice arrived from the IRS, which didn’t faze her. She
forwarded it to her ex-.
We did this for Jane. We can do this for your clients, too
FINANCIAL TIP OF THE MONTH
In our last newsletter, we talked about the little-known exception, under IRC §72(t)(2)(C), for avoiding a ten-percent penalty when taking a payout from a qualified retirement plan. The exception applies to divorce.
Still, there are rules to follow. To avoid the penalty:
- The non-employee spouse must be awarded a portion of the account under a Qualified Domestic Relations Order.
- The distribution must be made to the non-participant spouse and not the employee spouse.
- The distribution must be made from the plan before it is rolled over to an IRA account.
- Only one distribution is allowed.
THERE REALLY IS A FREE LUNCH
We would like to bring a nice, tasty lunch to your office! It gets better: We’d like to teach you things about the financial side of divorce that fly under your radar—and help you earn up to three hours of CLE credit in the process!
Simply give us a call at (480) 378-2383 (or send an email to carma.hall@bridgefinancialstrategies.com) and say, “Hey! We’d love to take you up on that lunch-and-learn opportunity!” There’s no obligation. Call us today!
