CDC Legal and Financial Considerations in Divorce 2 — Questions and Answers
Question 1: A coaching client asks whether she should accept her spouse's offer to keep the house in exchange for waiving her share of his 401(k). What is the most appropriate response from a divorce coach?
- Tell her the house is usually the better asset to keep
- Calculate the after-tax value of each asset and recommend the higher one
- Help her clarify her goals and questions, then refer her to her attorney and a financial specialist such as a CDFA (Correct answer)
- Advise her to reject the offer because retirement assets always grow faster
Correct answer: Help her clarify her goals and questions, then refer her to her attorney and a financial specialist such as a CDFA
Divorce coaches support clarity and decision-making but refer legal and financial advice to licensed professionals.
Question 2: Which of the following states follows community property rules for dividing marital assets?
- New York
- Florida
- Pennsylvania
- Texas (Correct answer)
Correct answer: Texas
Texas is one of nine community property states, along with Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington, and Wisconsin.
Question 3: Under federal tax law for divorce agreements executed after December 31, 2018, how is alimony treated?
- Not deductible by the payer and not taxable to the recipient (Correct answer)
- Deductible by the payer and taxable to the recipient
- Deductible by the payer but not taxable to the recipient
- Taxable to the recipient only if paid monthly
Correct answer: Not deductible by the payer and not taxable to the recipient
The Tax Cuts and Jobs Act eliminated the alimony deduction and income inclusion for agreements executed after 2018.
Question 4: What document is typically required to divide a 401(k) plan between divorcing spouses without triggering taxes for the participant?
- A quitclaim deed
- A Qualified Domestic Relations Order (QDRO) (Correct answer)
- A Form 8332 release
- A durable power of attorney
Correct answer: A Qualified Domestic Relations Order (QDRO)
A QDRO directs an ERISA-qualified plan administrator to pay a portion of the benefits to the alternate payee.
Question 5: A client inherited $80,000 during the marriage and deposited it into the couple's joint checking account used for household bills. What concept may cause this money to lose its separate-property character?
- Coverture
- Dissipation
- Commingling (Correct answer)
- Imputation
Correct answer: Commingling
Mixing separate funds with marital funds can make them difficult to trace and may convert them into marital property.
Question 6: Temporary support ordered by a court while a divorce case is still pending is commonly called what?
- Rehabilitative alimony
- Lump-sum alimony
- Reimbursement alimony
- Pendente lite support (Correct answer)
Correct answer: Pendente lite support
Pendente lite means 'pending the litigation' and covers support until a final order is entered.
Question 7: What is the primary purpose of a financial affidavit (financial disclosure statement) in a divorce?
- To provide a sworn statement of income, expenses, assets, and debts (Correct answer)
- To transfer title of the marital home
- To determine custody arrangements
- To waive the right to discovery
Correct answer: To provide a sworn statement of income, expenses, assets, and debts
The financial affidavit is a sworn disclosure used to evaluate support and property division.
