Disclosures: A.M. Financial provides supporting financial information, evaluation and analysis to be utilized by the client and the client's selected attorney if directed, during the process of their divorce.  Services provided in regards to this agreement are solely fee-only and do not involve investment or security advice or insurance transactions.  All information is financial in nature and should not be construed or relied upon as legal or tax advice.  A.M. Financial IS NOT AN ATTORNEY AND DOES NOT PROVIDE LEGAL OR TAX ADVICE.  Individuals are encouraged to seek competent legal and tax advice from professionals who specialize in divorce and tax laws in their respective state.

Investment advisory services offered through WealthSource Partners, LLC ("WSP"), a registered investment adviser.  Amy Mahlen (CRD #4692263) is an Investment Adviser Representative of WSP.  Registration with the U.S. Securities and Exchange Commission does not imply any certain level of skill or training.The statements and opinions expressed by A.M. Financial are those of Amy Mahlen and do not represent the views and/or opinions of WealthSource Partners, LLC ("WealthSource") or any other associated or affiliated person of WealthSource. Furthermore, the statements and opinions expressed are for informational and educational purposes only and should not be construed as legal, tax, accounting or investment advice. All statements and opinions are current only as of the time made and are subject to change without notice.  A.M. Financial and WSP are independent and unaffiliated entities.

This website is a publication of A.M. Financial. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Content should not be viewed as personalized investment advice or as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. A professional adviser should be consulted before implementing any of the strategies presented.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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Property Division Values, Part 2: Non-Retirement Assets

December 11, 2017

When dividing assets in divorce most people, individuals, mediators and attorneys alike, tend to focus on the property division spreadsheet.  Current values of assets are listed along with outstanding debt balances that are deemed to be marital.  Typically, above all else, the focus and end goal is to split property 50-50.  With so much emphasis on this spreadsheet that dictates the remainder of your financial future, is there anything missing that could dramatically skew the end results?

Ignoring the financial components of a divorce settlement and the effect on your future is similar to playing slot machines in Vegas - hope to win, but there is a chance you will leave with a lot less than you came with and anticipated losing.  In the first part of this series, retirement account valuation blunders were addressed when utilizing a 50-50 division approach.  Here, we will examine non-retirement investments and what factors can alter the outcome down the road.  Home equity and rental property will be outlined in upcoming posts.


Part 2: Non-Retirement Investments

Investments outside of the retirement category vary widely from checking accounts, certificates of deposits (CD), brokerage or mutual fund accounts, land, rental property, commodities such as gold, fine art, antique car collections, business ownership, etc.  Are they all created equal?  Or are they apples and oranges?  Each asset previously listed is unique. The growth potential and place in an overall investment strategy differs drastically.  Although these investments are not tax sheltered like retirement accounts, they are still subject to taxes in a different manner. 

When utilizing a 50-50 division of property approach during settlement, is awarding a $100,000 CD to Anna and $100,000 worth of Amazon stock to John realistic to rely upon for post-divorce results?  Shortly after finalization, John sold the Amazon stock and used the proceeds to purchase a new home.  The following April, he had an additional $12,000 tax bill because the stock was purchased 10 years prior for $20,000, so he realized a $80,000 capital gain that created a $12,000 tax bill.  Anna was able to use her $100,000 for tuition to go back to school and help her parents with medical expenses over the following two years while only incurring $100 in additional taxes – a big difference!


However, if Anna and John didn’t have current cash needs the end results would look very different in 10 years.  Anna was never involved with the finances and making those types decisions made her nervous.  During the next 10 years she left the $100,000 in a CD that ended up being worth $101,004 (based on today’s interest rates).  John had a brother who worked at Amazon who encouraged John to keep the Amazon stock.  Without purchasing additional Amazon stock, after 10 years it was worth nearly $260,000 because it grew an average 10% per year – more than a 150% difference!