Fair Financial Settlement

[tommcc111]

What is the name of your state? CT

After 23 years, my wife and I are ending our marriage. I 'm looking for advice on a fair settlement. Here are my fianancial specifics:

I make $90K a year, she makes $35K
My 401K is at $170K, her's is at $13K
I'm 52, and if I were to retire at 55, my pension would be $2K per month
Our house is worth $350K, with a morgage balance of $199K
We have 3 kids, ages 16, 19, 21....two of which are currently in college.

I'm giving her the house and just about half my pension.
I will be paying all the college bills for the kids.
I will be paying approx. $189 per week child support for the next two years.
I'm getting an inheritance of approximately $140K from the sale of my deceased father's house. Of this $140K, I'm paying off some debt's my wife and I have. The left-over of approx. $$70K will be split 80/20.

My questions are on a fair alimony and pension division.

1. Seeing how she is getting the house, what would be a reasonable alimony payment, and for how long?

2. Is she entitled to half of my pension? If not, what is she entitled to?

Thank you!

Regards,
Tom

 

[LdiJ]

What is the name of your state? CT

After 23 years, my wife and I are ending our marriage. I 'm looking for advice on a fair settlement. Here are my fianancial specifics:

I make $90K a year, she makes $35K
My 401K is at $170K, her's is at $13K
I'm 52, and if I were to retire at 55, my pension would be $2K per month
Our house is worth $350K, with a morgage balance of $199K
We have 3 kids, ages 16, 19, 21....two of which are currently in college.

I'm giving her the house and just about half my pension.
I will be paying all the college bills for the kids.
I will be paying approx. $189 per week child support for the next two years.
I'm getting an inheritance of approximately $140K from the sale of my deceased father's house. Of this $140K, I'm paying off some debt's my wife and I have. The left-over of approx. $$70K will be split 80/20.

My questions are on a fair alimony and pension division.

1. Seeing how she is getting the house, what would be a reasonable alimony payment, and for how long?

2. Is she entitled to half of my pension? If not, what is she entitled to?

Thank you!

Regards,
Tom

In my opinion she cannot afford the house. Even with child support and alimony I don't think that she could qualify for enough of a mortgage to refinance the house, nor to realistically make the house payments. The house really needs to be sold and the proceeds split. She has an income of 35k, you are going to be giving her about 10k a year in child support and even with another 20k a year in alimony (which would be high) I still don't think she could qualify for a 199k mortgage.

If a judge were to decide, your inheritance would be your own separate property. You would each be responsible for 1/2 of the debts that accrued during the marriage, and you would each be entitled to 1/2 of the assets that accrued during the marriage, which would include your respective 401ks. The pension may also be a marital asset if its vested.

You are stating that you have 70k in debt. If you choose to assume the entire debt, you could do so in exchange for 35k of assets that would normally be hers.

Example:

You sell the house and each get 75k
Her half of your 401k is 170/2 = 85
Your half of hers is 13/2 = 6.5k 85 - 6.5k is 79.5k to her
All other marital property would also have to be divided.

Her half of the debt is 35k

So, she would get assets assets totaling 154.5k and be responsible for debts of 35k
If you assume all of the debt, that reduces her share of the assets to 119.5k You could divy that up however it made sense. If you wanted to use your inheritance to pay her off, instead of splitting your 401k, you could do that. If you wanted to give her the entire thing from the sale of the home, you could do that too.

Realistically, in today's market the house may not sell at what you feel its value is, and selling expenses would also have to be taken into consideration, so that could lower the overall figures. If any of the debt would be considered as separate debt that could also change the figures.

As far as alimony is concerned, you have been married long enough and your incomes are different enough that its likely you will pay at least some short term alimony. Unfortunately there are no real formulas to used to estimate alimony. Your attorney would be a better source of information.

Seriously though, she really cannot afford to keep the house.

 

[tommcc111]

In the long term, she won't be able to afford the house. My intention was to help her stay in the house until my 16 year old graduates from high school. A combined alimony and child support payment of $1800 would cover a 30 year mortagage payment. But like you said, I'm not sure if she would qualify for a mortgage.

Back to one of my original questions, how much of my pension is she entitled to?

Thanks!

 

[LdiJ]

In the long term, she won't be able to afford the house. My intention was to help her stay in the house until my 16 year old graduates from high school. A combined alimony and child support payment of $1800 would cover a 30 year mortagage payment. But like you said, I'm not sure if she would qualify for a mortgage.

Back to one of my original questions, how much of my pension is she entitled to?

Thanks!

It depends on the nature of the pension and whether or not its vested. You really need to discuss that one with your attorney.

 

[nextwife]

Your inheritance should not be comingled into the mix. It is seperate property, and the marital debt belongs to both of you. Keep the inheritance apart and seprate.

 

[LdiJ]

Your inheritance should not be comingled into the mix. It is seperate property, and the marital debt belongs to both of you. Keep the inheritance apart and seprate.

I agree, but once they have an agreement in writing, or an order in writing, then there is no reason why he can't use the cash from his inheritance to do what's needed, rather than dipping into his 401k. It won't hurt anything at that point.

 

[nextwife]

I agree, but once they have an agreement in writing, or an order in writing, then there is no reason why he can't use the cash from his inheritance to do what's needed, rather than dipping into his 401k. It won't hurt anything at that point.

He is assuming more opf the debt AND the college costs as it is. And probably alimony. What if he becomes ill, loses his job or ability to earn at the same level, or disabled and cannot bear the majority financial burden any longer?

He should NOT use his inheritance to ppay off anything until after the divorce is final, and then it should be his share of the debt.

 

[tommcc111]

Actually, the inheritance is not even available yet. The money will come from the sale of my Dad's home. My sister and I will be splitting that. And with the way the market is, who knows how long it will take to sell the home. What I didn't mention, though this may not make a difference is, that I was separated for about a year prior to my Dad passing.

 

[LdiJ]

Actually, the inheritance is not even available yet. The money will come from the sale of my Dad's home. My sister and I will be splitting that. And with the way the market is, who knows how long it will take to sell the home. What I didn't mention, though this may not make a difference is, that I was separated for about a year prior to my Dad passing.

An inheritance is separate property whether you are married or not when you receive it....as long as you don't comingle it with martial property.

 

[LdiJ]

He is assuming more opf the debt AND the college costs as it is. And probably alimony. What if he becomes ill, loses his job or ability to earn at the same level, or disabled and cannot bear the majority financial burden any longer?

He should NOT use his inheritance to ppay off anything until after the divorce is final, and then it should be his share of the debt.

That makes no sense Nexie...

So you are saying that he should withdraw 401k money (taxable) to pay off the other half of the debt, instead of inheritance money (not taxable)? Or are you saying that he should not assume her half of the debt, should let her have her full half of the assets instead, and hope she pays her half of the debt?

Neither of those options sounds very wise to me.

 

[nextwife]

That makes no sense Nexie...

So you are saying that he should withdraw 401k money (taxable) to pay off the other half of the debt, instead of inheritance money (not taxable)? Or are you saying that he should not assume her half of the debt, should let her have her full half of the assets instead, and hope she pays her half of the debt?

Neither of those options sounds very wise to me.

They should work out a settlement as if no inheritance exist. An of course he should NOT withdraw retirement funds to pay debt. Once he gets his inheritance, after divorce, he can pay off any of his debts that he wishes. He'd be foolish to, on top of agreeing to assume all the extra burden of paying for college, and likely alimony, use his inheritance to pay her share of debt. He cannot presume he will alwys be healthy, well, making as much money, etc and able to carry so much more financial burden. His inheitance would more wisely be mostly kept in reserve for him. I can't help but see his age (similar to mine) and note that my dad was disabled, and passed at 52. Look at how Ted Kennedy was well one day, and suffering a brain tumor the next. There should NEVER be "non-modifiable" alimony, IMHO, unless one can experience "un-modifiable" health!

 

[LdiJ]

They should work out a settlement as if no inheritance exist. An of course he should NOT withdraw retirement funds to pay debt. Once he gets his inheritance, after divorce, he can pay off any of his debts that he wishes. He'd be foolish to, on top of agreeing to assume all the extra burden of paying for college, and likely alimony, use his inheritance to pay her share of debt. He cannot presume he will alwys be healthy, well, making as much money, etc and able to carry so much more financial burden. His inheitance would more wisely be mostly kept in reserve for him. I can't help but see his age (similar to mine) and note that my dad was disabled, and passed at 52. Look at how Ted Kennedy was well one day, and suffering a brain tumor the next. There should NEVER be "non-modifiable" alimony, IMHO, unless one can experience "un-modifiable" health!

You misunderstood what I was suggesting. I told him that he had the option of assuming the total debt (and giving her less of the assets)....and that if he wanted to keep his 401k more or less intact, he could use the inheritance money to pay off the debts. I was suggesting a way for him to shuffle around HIS separate/after the divorce property. Once the divorce is final ALL of his property will be separate property, so he should shuffle it the way that minimizes the tax burden.

I was absolutely NOT suggesting that he assuming a greater portion of the marital debt, unless she received a lesser portion of the marital assets, in exchange.

 

[Bali Hai]

They should work out a settlement as if no inheritance exist. An of course he should NOT withdraw retirement funds to pay debt. Once he gets his inheritance, after divorce, he can pay off any of his debts that he wishes. He'd be foolish to, on top of agreeing to assume all the extra burden of paying for college, and likely alimony, use his inheritance to pay her share of debt. He cannot presume he will alwys be healthy, well, making as much money, etc and able to carry so much more financial burden. His inheitance would more wisely be mostly kept in reserve for him. I can't help but see his age (similar to mine) and note that my dad was disabled, and passed at 52. Look at how Ted Kennedy was well one day, and suffering a brain tumor the next. There should NEVER be "non-modifiable" alimony, IMHO, unless one can experience "un-modifiable" health!

You are 100% right of course. BUT, the family laws don't give a sh!t about the mans health, in other words they are saying "tough **** you married her!! We all know that family law has evolved to protect women and children, in that order!!

 

[Bali Hai]

They should work out a settlement as if no inheritance exist. An of course he should NOT withdraw retirement funds to pay debt. Once he gets his inheritance, after divorce, he can pay off any of his debts that he wishes. He'd be foolish to, on top of agreeing to assume all the extra burden of paying for college, and likely alimony, use his inheritance to pay her share of debt. He cannot presume he will alwys be healthy, well, making as much money, etc and able to carry so much more financial burden. His inheitance would more wisely be mostly kept in reserve for him. I can't help but see his age (similar to mine) and note that my dad was disabled, and passed at 52. Look at how Ted Kennedy was well one day, and suffering a brain tumor the next. There should NEVER be "non-modifiable" alimony, IMHO, unless one can experience "un-modifiable" health!

That would be a nice way to handle things, but, if it goes to the judge, the inheritance will CERTAINLY be factored when property settlement and alimony are decided!!

 

[nextwife]

That would be a nice way to handle things, but, if it goes to the judge, the inheritance will CERTAINLY be factored when property settlement and alimony are decided!!

No, it should not. Legally:

A. He doesn't have iot, and the total creditor claims against this iinheritance cannot be known yet.

B. It is NOT marital or co-mingled funds. It is seperate property, AND SHOULD NOT BE CALCULATED INTO THE SETTLEMENT IN ANY WAY. When SHE gets an inheritance, betcha she's not going to offer to pay any of HIS debts off!