Legal and Financial Considerations in Divorce Flashcards
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Read the first 7 Legal and Financial Considerations in Divorce flashcards as text
After divorce, one ex-spouse keeps the house and sells it three years later. To qualify for the $250,000 capital gains exclusion, what must generally be true?
Answer: The seller must have owned and used the home as a principal residence for at least 2 of the last 5 years
The Section 121 exclusion requires ownership and use as a principal residence for 2 of the 5 years before sale.
A divorce decree assigns the joint credit card debt to the husband. If he stops paying, what is the wife's likely position with the creditor?
Answer: She may still be liable because the creditor isn't bound by the divorce decree
Creditors aren't parties to the divorce, so joint account holders stay liable despite the decree.
In an equitable distribution state, how are marital assets divided?
Answer: Fairly, based on factors such as marriage length, contributions, and earning capacity, which may not be equal
Equitable means fair, not necessarily equal, and courts weigh statutory factors.
A client has a spouse who quit a high-paying job just before the divorce to lower child support. What may a court do?
Answer: Impute income based on the spouse's earning capacity
Courts may impute income to a voluntarily unemployed or underemployed parent.
What is a key feature of a valid prenuptial agreement in most U.S. states?
Answer: It generally requires full financial disclosure and voluntary execution
Prenups are generally enforceable when signed voluntarily with fair disclosure, but they can't bind the court on child support or custody.
Which professional is specifically trained to analyze the long-term financial impact of proposed divorce settlements, such as cash flow and tax effects over time?
Answer: Certified Divorce Financial Analyst (CDFA)
A CDFA projects settlement outcomes so clients and attorneys can evaluate long-term financial effects.
Which statement best describes 'discovery' in a divorce case?
Answer: The formal legal process for obtaining information and documents from the other party
Discovery includes interrogatories, requests for production, and depositions to get financial and other information.