Nolo's Essential Guide to Divorce - Emily Doskow [124]
Social Security
Social Security isn't considered property subject to division. But the South Dakota Supreme Court has held that one spouse's Social Security benefits could be indirectly considered as an offseting factor in dividing property. Other states have reached the opposite conclusion. If your marriage lasted less than ten years, you don't need to think about Social Security issues-you're not entitled to receive either survivor or retirement benefits based on your relationship with your spouse.
If the marriage was longer than ten years, you're 62 or older, and your former spouse is entitled to or receiving benefits, you can collect retirement benefits on your former spouse's Social Security record, at least until you remarry. If you get married again, you will lose the right to collect on your former spouse's record unless the second marriage ends, too, in which case you regain your right to collect. If you're close to the ten-year mark when you decide to divorce, think about waiting a bit to get the final divorce judgment, so that the ten-year period will have passed.
Money Now and Later
If you and your spouse start dividing your assets and debts and find that it looks like one spouse will need to pay a sizable chunk of cash to the other, it can cause cash flow problems.
For example, imagine that your spouse wants to keep the house, which has equity worth $70,000. Your spouse also keeps a car worth $10,000 and you keep the more valuable car, worth $20,000. You also keep your entire brokerage account, worth $20,000. You divide all your other assets equally. That means you're getting assets worth $40,000 and your spouse is getting assets worth $80,000. To make everything come out evenly, your spouse will have to pay you $20,000-half of the difference, so that each of you gets $60,000 in assets.
To avoid taking money out of the house, your spouse asks you to accept a payment of $10,000 now and a promissory note for the rest of what you're owed, which will be paid over several years. Do you give your spouse a break by accepting the note?
Start with the fact that money now is worth more than money later. There's the risk that you won't get paid at all, of course, and you also must consider inflation and the time value of money (what you lose by not having the money to invest). If you're inclined to be cooperative-and by all means, do so if you're able to-do a couple of things to take care of yourself. First, make the loan for as short a term as possible. Second, don't hesitate to ask for a reasonable rate of interest, so the money will be worth as much to you over time as it would be now.
Learn the time value of money. There are standard formulas for determining the time value of money, and you can use free calculators at www.tcalc.com to figure the present value of the proposal your spouse is making. There's also a present value chart in Divorce & Money: How to Make the Best Financial Decisions During Divorce, by Violet Woodhouse with Dale Fetherling (Nolo).
Types of Spousal Support and How Long They Last .............................................286
Temporary Support While the Divorce Is Pending ...............................................286
Short-Term and Rehabilitative Support ......................................................................287
Long-Term or Permanent Support ................................................................................287
Reimbursement Support ....................................................................................................288
How Courts Set the Amount of Support .....................................................................288
Need and Ability to Pay ......................................................................................................289
Earning Capacity .....................................................................................................................289
Fault ..............................................................................................................................................290