WALKER & COMPANY - FOR THE CLIENT

WALKER & COMPANY is typically hired by an attorney(s), mediators or Judges to help with the financial issues involved in divorce. Hopefully, one of the above will be recommending our name to you to provide assistance in your case.

In a divorce, there are two divisions that occur. The first is a legal division of the parties and the second is an economic one. Other than in child custody issues, when people cannot settle their case and end up in court, they will be arguing about something financial in nature. That is why the services of a forensic family law CPA are frequently needed.

Just as you would want to have a attorney or mediator experienced in divorce matter, you should also want a forensic CPA who is experienced in these matters.

The following is a checklist which may be helpful to those who are going through divorce.

This checklist reflects the opinions of Mr. Walker and is based on his experience over the years working in the area of marital dissolutions in California only. It is not meant as a substitute for seeking the help of a qualified family law attorney and forensic family law CPA.

Your divorce results in a document called a "Marital Settlement Agreement." Try to push the emotional parts of your divorce aside and think of this agreement as a business contract, because that is what it is. It is probably the most important business contract you have ever entered into. You are dividing up your marital estate and, in addition, there may be support issues involved in the future.

Here are my checklist suggestions from an accountant's viewpoint:

	Hire your own family law attorney as soon as possible, even if you want to handle your own divorce or go through mediation. Think of your attorney as your coach and advisor. Remember, first and foremost, that your divorce is an important legal matter.

	Make an inventory of all assets and liabilities. List the cost basis of the assets and estimated fair market value of each. Start thinking of how you might want to divide them.

	Make copies of all documents and statements to support values and title ownership on the above list of assets and liabilities. The inventory list and these supporting documents provide you and your attorney with a starting point for a division of community assets. Keep checking your list against statements in the daily mail that you and your spouse receive to make sure you have accounted for everything.

	Don't hide assets from your spouse. Such action often results in costing you more in the long run.

	Try to work with your spouse to reach an agreement on the property division that you inventoried above, as well as matters concerning your children.

	Look for advice from your attorney. If you and your spouse cannot ultimately agree, then your divorce could end up being more costly, or decisions could be left to the court that you and your spouse may not agree with.

	It is difficult to be in agreement with your spouse on everything in a Marital Settlement Agreement. Instead of arguing every point, try to look at the overall agreement to see if it is acceptable and fair. There will always be things you like and some things you do not. It may not be worth arguing about some of those areas you are not in agreement on. Ask your advisor (attorney) for guidance in this area.

	Using an experienced mediator in family law matters may help you work out an agreement, which may save you time and money. This may include using a neutral accountant to value a family business or professional practice and other marital assets such as stock options.

	Be aware that the courts value assets at their current fair market value and generally do not take into consideration the tax basis of the assets. There could be significant deferred tax liabilities attributable to an asset.

	Don't forget to discuss with your spouse how tax returns will be filed during the divorce process period, including the taxability of temporary or permanent support payments and the claiming of itemized deductions. Taxable support may require quarterly estimated tax payments to be made by the recipient. The payor may be able to reduce his or her withholding for this anticipated tax deduction. Consider getting income tax projections prepared during this period. There are some good tax planning opportunities and you need to know which ones apply to you, so seek the advice of a qualified forensic family law CPA.

	Remember, to be deductible by the payor, alimony must be per written agreement (divorce or separation agreement). Therefore, voluntary payments during the divorce process period are not deductible to the payor spouse and are not taxable to the payee spouse.

	If you have a complex case with each party just working with their attorney, do not forget to address in writing the tax consequences to each party regarding reimbursement issues and Epstein Credits.

	Part of your attorney costs may be deductible. Be sure to check this out with your tax preparer and get itemized billings to support any deductions.

	Check with your attorney about changing the beneficiary on life insurance policies and retirement accounts. Also check with your attorney about updating your will.

	Don't forget to include in your inventory list of assets and liabilities, the contents in the safe deposit box.

	The California courts have specifically held that Social Security benefits are separate property. However, this relates only to primary Social Security rights. There is another class of benefits called "derivative benefits," which are payable to the non-working spouse after retirement following a ten-year marriage. It is important that these benefits be reserved in the marital settlement agreement. We have included under related links the web site to contact Social Security.