CDS Post-Divorce Planning & Support Flashcards
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Read the first 6 CDS Post-Divorce Planning & Support flashcards as text
What is a Qualified Domestic Relations Order (QDRO) and why is it important post-divorce?
Answer: A legal order that divides retirement plan benefits between divorcing spouses without triggering early withdrawal penalties
A QDRO is a court order that legally divides qualified retirement plan benefits between divorcing spouses, allowing the transfer without early withdrawal penalties or immediate tax consequences.
After a divorce is finalized, which beneficiary designations should be reviewed and updated immediately?
Answer: Life insurance policies, retirement accounts, and any payable-on-death accounts
Life insurance, retirement accounts, and payable-on-death accounts pass directly to named beneficiaries and bypass the divorce decree, so they must be updated promptly after divorce.
What is the primary purpose of an alimony (spousal support) order post-divorce?
Answer: To help the lower-earning spouse maintain a reasonable standard of living and achieve financial independence
Alimony is designed to address economic disparities between spouses and help the lower-earning spouse maintain financial stability while working toward self-sufficiency.
Which type of alimony is typically awarded for a set period to allow the recipient to become financially self-sufficient?
Answer: Rehabilitative alimony
Rehabilitative alimony is time-limited support intended to help the recipient spouse gain education, training, or work experience to become financially independent.
Under the Tax Cuts and Jobs Act (TCJA) of 2017, how is alimony treated for tax purposes for divorces finalized after December 31, 2018?
Answer: Alimony is not deductible for the payer and not taxable income for the recipient
For divorces finalized after December 31, 2018, the TCJA eliminated the alimony deduction for the payer and removed the income inclusion requirement for the recipient.
What does COBRA coverage allow a divorced spouse to do regarding health insurance?
Answer: Continue the former spouse's employer-sponsored group health insurance for up to 36 months at their own cost
COBRA allows a divorced spouse to continue coverage under their ex-spouse's employer group health plan for up to 36 months, though they must pay the full premium plus an administrative fee.
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