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One of the biggest mistakes we see during a divorce is trying to protect a low interest rate at all costs.

At first, it sounds like the obvious choice. But let’s see what it really costs.

The Situation

In 2020, you purchased a home with a $350,000 mortgage on a 30-year fixed loan at 3.25%.

Monthly principal and interest payment: About $1,523

Today: Your home is worth $550,000. You are keeping the home. You must pay your former spouse $100,000 for their share of the equity.

Now you have two options.

Option 1: Keep the Low Interest Rate

To avoid refinancing, you withdraw $100,000 from your retirement account.

Your 401(k) originally had $300,000 invested and has been averaging 6% annual growth.

If you leave the money invested, after five years your retirement account would grow to approximately:

$401,000

But after taking out $100,000, you only have $200,000 invested.

After five years, that account grows to only about: $268,000

The Real Cost Five years later…

Retirement account if you leave it alone: About $401,000

Retirement account after withdrawing $100,000: About $268,000

Difference: Approximately $133,000.

Most people focus on the fact that they “only” took out $100,000.

What they don’t see is that five years later, their retirement account is over $130,000 smaller than it could have been.

That’s the true cost of protecting that low mortgage rate.

Option 2: Refinance

Instead, let’s refinance.

Assume your current mortgage balance is about $304,000 and you borrow an additional $100,000 to buy out your former spouse.

New loan: About $404,000

Interest rate: 6.5%

New monthly principal and interest payment: About $2,556

That’s roughly $1,033 more per month than your old payment.

Yes, the payment is higher.

But your retirement account keeps growing.

The Lesson: Interest rates matter. But they aren’t the only number that matters.

We’ve seen many people make decisions based only on keeping a 3% mortgage, without realizing they may be giving up well over $100,000 in retirement savings over the next several years.

Every divorce is different.

Before you cash out your retirement to protect a low interest rate, make sure you’ve compared the true long-term cost of both options.

Sometimes the loan with the higher interest rate leaves you with more wealth in the long run.

About the Author

Dave Jamison is a divorce mortgage strategist and co-owner of Rainbow Mortgage Inc., an independent mortgage brokerage licensed in Minnesota, Florida, and North Dakota. With more than 26 years in residential lending—including 13 years as an underwriter for Fortune 500 mortgage institutions—Dave brings deep, practical expertise to complex divorce-related real estate matters.

What sets Dave apart is his underwriting foundation. Rather than approaching cases from a sales perspective, he evaluates them through the lens of how loans are actually approved—income calculations, debt ratios, reserve requirements, and documentation standards. This allows him to assess feasibility early in the divorce process, helping prevent refinance provisions that later fail and ensuring agreements align with real-world lending guidelines.

Dave and his wife, Gale, founded Rainbow Mortgage Inc. in 1999, initially serving borrowers with complex financial situations. In 2004, he began specializing in divorce mortgage planning, applying his expertise to support attorneys, mediators, and financial neutrals. Since then, he has spent more than two decades helping collaborative teams structure realistic refinance timelines, evaluate buyout options, and avoid post-decree mortgage breakdowns.

He is particularly skilled in analyzing self-employed income, support income, and multi-property scenarios—areas where legal and financial assumptions often diverge from underwriting standards. Known for his calm, direct, and non-adversarial approach, Dave provides clear, objective guidance that supports durable agreements.

David Jamison
Rainbow Mortgage, Inc.
Ph: 952-405-2090
www.RainbowMortgageInc.com

 

 

 

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In divorce agreements, it is common to see language such as:

“Spouse A shall refinance the mortgage within 90 days and remove Spouse B from liability.”

On paper, that sounds simple.

In practice, it often fails.

As mortgage professionals working alongside collaborative attorneys and financial neutrals, we regularly see well-intended refinance provisions unravel — not because someone refuses to cooperate, but because the refinance was never financially viable under lending guidelines.

The Most Common Reasons Divorce Refinances Fail

  1. Debt-to-Income Ratios Don’t Support the Loan

Post-divorce budgets differ dramatically from pre-divorce budgets.

Even if the payment appears affordable on a cash-flow worksheet, mortgage underwriting follows strict debt-to-income ratios that may produce a different result.

  1. Self-Employed Income Is Calculated Differently

This is one of the most misunderstood areas in divorce planning.

Attorneys and financial professionals often evaluate income based on gross business revenue or owner draws.

Mortgage underwriting does not.

For self-employed borrowers, we use:

  • Net income after expenses
  • Add-backs (when allowable under guidelines)
  • Two-year averages (in most cases)

This can significantly reduce qualifying income compared to what appears on a tax return summary or financial affidavit.

A refinance that seems feasible using gross income may not qualify when evaluated using underwriter-calculated net income.

  1. Support Income Is Not Yet Usable

For conventional and VA financing, lenders typically require:

  • A documented history of receipt (often six months)
  • Consistency
  • Three years of continuance from loan closing

If deadlines are set before those requirements are satisfied, the refinance may be structurally impossible.

  1. Equity and Reserve Requirements

Buyout structures increase loan balances.
Loan-to-value limits may restrict options.

Additionally, many programs require post-closing reserves. Asset division during divorce can unintentionally eliminate the liquidity required for approval.

The Collaborative Opportunity

Refinance provisions fail not because of bad intent — but because mortgage feasibility wasn’t analyzed early enough.

A pre-settlement underwriting review allows the team to:

  • Set realistic timelines
  • Structure viable buyouts
  • Identify alternative options
  • Avoid post-decree surprises

Case Study

We had a client that was getting ready to sign the divorce decree…it was a collaborative case.  The client sent the decree to me prior to signing.  Upon review we noticed that the total income would not support the refinance.   In this case the divorce client was also getting support payments for a total of 10 years.  We were not far off…the solution was to front end load some of the support payments and reduce the overall term of the payout.  The attorneys and the client reviewed the suggestion and were able to make the numbers work and the client was able to get the home refinanced and complete the divorce.

Mortgage strategy integrated early strengthens the durability of the final agreement.

About the Author

Dave Jamison is a divorce mortgage strategist and co-owner of Rainbow Mortgage Inc., an independent mortgage brokerage licensed in Minnesota, Florida, and North Dakota. With more than 26 years in residential lending—including 13 years as an underwriter for Fortune 500 mortgage institutions—Dave brings deep, practical expertise to complex divorce-related real estate matters.

What sets Dave apart is his underwriting foundation. Rather than approaching cases from a sales perspective, he evaluates them through the lens of how loans are actually approved—income calculations, debt ratios, reserve requirements, and documentation standards. This allows him to assess feasibility early in the divorce process, helping prevent refinance provisions that later fail and ensuring agreements align with real-world lending guidelines.

Dave and his wife, Gale, founded Rainbow Mortgage Inc. in 1999, initially serving borrowers with complex financial situations. In 2004, he began specializing in divorce mortgage planning, applying his expertise to support attorneys, mediators, and financial neutrals. Since then, he has spent more than two decades helping collaborative teams structure realistic refinance timelines, evaluate buyout options, and avoid post-decree mortgage breakdowns.

He is particularly skilled in analyzing self-employed income, support income, and multi-property scenarios—areas where legal and financial assumptions often diverge from underwriting standards. Known for his calm, direct, and non-adversarial approach, Dave provides clear, objective guidance that supports durable agreements.

David Jamison
Rainbow Mortgage, Inc.
E: dave@rainbowmortgageinc.com | Ph: 952-405-2090
www.RainbowMortgageInc.com

 

 

 

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By Melissa Miroslavich and Katrina Viegas

As collaboratively trained attorneys, we often find ourselves in a unique position—advocating fiercely for our clients while simultaneously collaborating with the other side to achieve a mutually beneficial outcome. It’s a dance we’ve perfected through our training in the collaborative process and mediation, and it’s a dynamic that serves our clients exceptionally well, especially when it comes to those sometimes-uncomfortable but essential conversations.

You might be thinking, “Uncomfortable conversations? About what?” Well, if you or someone you know is getting ready to say, “I Do,” let’s talk about prenuptial agreements—or as they’re legally known in Minnesota, antenuptial agreements. It’s a topic that often carries a bit of a stigma, conjuring images of distrust or a lack of romance. But what if we told you that, much like thoughtful estate planning, a prenuptial agreement can actually be an act of love and a foundation for a stronger, more financially harmonious marriage?

We recently found ourselves discussing Minnesota’s updated prenup law, which took effect last year on August 1, 2024. As two attorneys who believe in proactive planning, we immediately recognized the opportunity to shed light on how the collaborative process can transform this often-dreaded task into a positive and empowering experience.

Melissa – Let’s Talk About the ‘Why’ – What Exactly is a Prenup, and Who Benefits?

From my perspective as a legal advocate, a prenup is a vital tool for clarity. It’s a private, binding contract that two people of legal age enter into before marriage. It outlines what happens with your assets and debts if your marriage ends due to legal separation, divorce, or even death. I know, you’re thinking nobody gets married expecting to get divorced, but with financial problems being a leading cause of marital breakdown, having these conversations before the ‘I Do’ can actually strengthen the foundation of your relationship.

Katrina – And from the Collaborative Angle, it’s About Financial Harmony, Not Just Protection.

While it offers legal protection, the beauty of a prenup, especially when approached collaboratively, is its power to foster financial harmony. It’s not just about what happens if things go wrong, but about how you manage expectations and communicate about money during your marriage. For all couples, it can open lines of communication. But if you own a business, help with a family farm, or have children from a previous relationship, it’s especially critical to proactively address the needs and wishes of everyone involved—from your soon-to-be spouse to business partners and other loved ones.

Katrina – Minnesota’s Updated Law: The New Rules of Engagement.

As an attorney, I want to make sure people are aware of the latest changes in Minnesota law. Effective August 1, 2024, two big things happened. First, timing is everything. You now need to sign your prenup at least seven days in advance of your wedding day for it to be presumed enforceable. If you sign it closer than that, it’s not automatically valid. So, procrastination is out when it comes to prenups! Ideally, this process begins at least two to six months in advance of your wedding date, sometimes even earlier.

Melissa – And the Collaborative Spirit of ‘Fairness’ is Still Paramount, Even with Legal Shifts.

The second change impacts how ‘consideration’ is determined. While a prenup is a contract that requires some kind of benefit in exchange for entering the agreement, Minnesota now recognizes the marriage itself as adequate consideration for the prenup to be valid. What this means is, as long as all other legal requirements are met, the court won’t automatically scrutinize the prenup for ‘fairness’ to both spouses. However, in the collaborative process, we still work to ensure the agreement actually feels fair to both parties, fostering a sense of mutual respect and understanding that goes beyond legal technicalities.

Melissa – So, How Do We Get This Done?

When clients come to me needing a prenup, I always lay out their options, including a collaborative process or a more traditional process. The traditional path can involve each partner hiring their own attorney, one side drafts the prenup and offers it to the other side, and we negotiate. It can be effective, but sometimes adversarial. An attorney’s priority is to protect their own client’s interests, not the client’s relationship or future spouse.

Katrina – Or, How We Guide You to a Stronger Start: The Collaborative Approach.

And that’s where the collaborative process shines as the preferred path for many couples. Think about it: you’re planning a wedding, a celebration of two individuals joining their lives together in partnership. Why not choose a legal process that supports that same spirit? As collaboratively trained attorneys, we work with you, not just for you, to transform a potentially stressful legal process into an experience that can actually strengthen your relationship.

In the collaborative model, we help you:

  • Co-Create a Shared Vision: We facilitate open and respectful conversations about your financial future, helping you develop a vision for your marriage that aligns with both your individual and shared financial goals.
  • Receive Individualized Guidance in a Supported Environment: Each soon-to-be spouse receives individual legal advice about their rights and responsibilities. This isn’t about one person winning; it’s about both parties understanding their positions and finding common ground.
  • Bring in Financial Expertise: We often work with a collaborative financial professional. They help you identify and understand all your assets, liabilities, and cash flow, ensuring full and transparent disclosure. This level of understanding is key to making informed decisions together.

Ultimately, whether through the collaborative or traditional process, attorneys draft the prenup, seek consensus from both of you, and ensure it’s signed at least one full week before your wedding day. The benefit of the collaborative process is starting with your goals as a couple, and then drafting, not the other way around.

Want to learn more about how the collaborative process can help you navigate this important step before your “I Do”? Contact Melissa Miroslavich or Katrina Viegas for more information about collaborative prenuptial services and to schedule a no-cost consult. Both Melissa and Katrina have been accepted into the Collaborative Law Institute of Minnesota and are honored to serve on its Board of Directors. Katrina is the current Co-President and Melissa serves as Chair of the Public Education Committee.

About the Authors

Melissa Miroslavich is a dedicated and experienced estate planning and collaborative attorney. She expertly guides individuals and families through the often complex processes of planning for the future. With a compassionate and thoughtful approach, Melissa helps clients navigate sensitive matters, including collaborative prenuptial and postnuptial agreements, ensuring their wishes are honored and fostering peaceful resolutions. Her expertise in both legal strategy and collaborative communication makes her a valuable advocate and trusted advisor.

At Miroslavich Law, we understand that planning for the future requires careful consideration and a personalized touch. Whether you’re in the Twin Cities, or the surrounding areas in Minnesota, and need assistance with estate planning, business succession planning or prenuptial agreements, we are here to provide you with clear guidance and support. Contact Miroslavich Law today to take the first step towards securing your future and finding peaceful solutions.

Melissa Miroslavich, Estate Planning Attorney, Mediator
Miroslavich Law PLLC
Email: Info@MiroslavichLaw.com
Website: www.miroslavichlaw.com

Katrina Viegas is a Partner, Collaborative Divorce Attorney and Restorative Family Mediator at the Duluth law firm, Beaumier Trogdon Orman Hurd & Viegas.  She provides legal and mediation services to individuals and families who reside in the Twin Ports region, as well as greater Minnesota and Wisconsin.  Katrina’s 14 years of experience in family law are an asset when working on collaborative prenuptial and postnuptial agreements.  Whether she’s working as an attorney on a collaborative team, or as a mediator, Katrina helps clients have respectful conversations about the hard things with calm guidance and clear boundaries, so clients can make informed decisions without escalating conflict.

Katrina M. Viegas, Partner/Attorney & Rule 114 Family Mediator
Beaumier Trogdon Orman Hurd & Viegas Attorneys at Law, PLLP
Email: kviegas@btolawyers.com
Website: twinportsdivorce.com

 

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If you are going through a divorce, you might be feeling anxious about how to deal with spousal maintenance. Spousal maintenance, also known as alimony, is a payment that one spouse makes to the other after the divorce to help them maintain a similar standard of living as they had during the marriage. The amount and duration of spousal maintenance depend on various factors, such as the length of the marriage, the income and assets of each spouse, the age and health of each spouse, and the earning potential of each spouse.

The stereotypical spousal maintenance case is where one spouse stayed home with the kids while the other spent a decade or more advancing their career and now that there is a divorce the stay-at-home parent is going to fall off a financial cliff (because they have little or no income potential) unless the career spouse helps them out financially.

While it may be tempting to rush through negotiations and reach a quick agreement, taking a methodical approach to budgeting and comparing incomes and expenses can save you time, money, and potential regrets down the line, especially when figuring out spousal maintenance.

The Pitfalls of Cutting Corners:

When faced with the daunting prospect of divorce negotiations, it’s only natural to want to expedite the process. However, hastily reaching an agreement without delving into the intricacies of your financial situation can prove to be penny wise and pound foolish. By avoiding the necessary work and disregarding a comprehensive assessment of incomes and expenses, you risk making uninformed decisions that may later backfire.

Fear as a Driving Force:

One of the main reasons individuals may be inclined to cut corners is the fear of what their spouse might ask for in terms of spousal maintenance. This fear often leads to a desire for a quick resolution, even if it means sacrificing a thorough understanding of your or their financial situation. However, succumbing to this fear can be counterproductive and end up costing you more time, money, and emotional energy in the long run.

The Benefits of Methodical Budgeting:

Who wants to create a budget?  Hardly anyone!  But ask any Family Law Attorney and they will tell you that budgets are the key to figuring out spousal maintenance.  Engaging in methodical budgeting and comparing incomes and expenses can yield numerous advantages during divorce negotiations.

Let’s take a closer look at some of the key benefits:

  1. Informed Decision-Making: By thoroughly understanding your financial circumstances, you gain the ability to make informed decisions regarding spousal maintenance. This ensures that any agreement reached is fair and reasonable, taking into account both parties’ needs and financial capabilities.
  2. Transparency and Trust: Demonstrating a commitment to a methodical approach fosters an atmosphere of transparency and trust during negotiations. By openly discussing and analyzing the financial aspects of the divorce, both parties are more likely to feel heard and respected, leading to a higher likelihood of reaching an amicable agreement.
  3. Long-Term Financial Stability: Rushing through negotiations without a comprehensive understanding of your financial situation may result in an unsustainable spousal maintenance arrangement. Taking the time to carefully evaluate incomes, expenses, and future financial prospects enables you to create a plan that promotes long-term financial stability for both parties involved.
  4. Minimized Legal Costs: While investing time and effort in methodical budgeting may seem time-consuming at first, it can significantly reduce overall legal costs. By proactively addressing financial concerns during negotiations, you reduce the need for repeated revisions and potentially costly legal interventions down the line.

Divorce negotiations are rarely easy, but by embracing a methodical approach to budgeting and comparing incomes and expenses, you can pave the way for a smoother and more satisfactory resolution. Rather than succumbing to the fear of what your spouse may ask for in spousal maintenance, investing the time and effort to fully understand the financial landscape can lead to a fair and reasonable agreement that benefits both parties in the long run. So, take a deep breath, roll up your sleeves, and embark on the journey towards a well-informed and amicable divorce settlement. Your future financial stability is worth the extra effort.

You should consult with a lawyer who can advise you on your legal rights and obligations regarding spousal maintenance. You should also consider working with a financial planner or Certified Divorce Financial Analyst (CDFA) who can help you create a realistic budget and plan for your future. You should also seek emotional support from your friends, family, or a therapist who can help you cope with the stress and anxiety of the divorce process.

By making informed and rational decisions about spousal maintenance, you can achieve a fair and reasonable outcome that respects both your and your spouse’s interests. You can also avoid unnecessary conflicts and drama that can prolong and complicate the divorce process. And most importantly, you can protect your well-being and happiness after the divorce.  Remember, being penny wise and pound foolish rarely pays off in the complex realm of divorce negotiations.

Carl Arnold is an experienced family law attorney and mediator. He currently focuses his practice on Family Law Mediation (including child-inclusive mediation), Collaborative Divorce and Custody Evaluations. His office is in Northfield, Minnesota and he works with people from all over the state using Zoom. Carl has been a long-time member of the Collaborative Law Institute.

Attorney/Mediator, Arnold Law and Mediation LLC, carl@arnoldlawmediation.com
507-786-9999
www.arnoldlawmediation.com

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tax imageIt’s important for divorcees to review and adjust their W-4 payroll withholding or start to make quarterly tax estimates following their divorce. Often, they are so relieved to have reached settlement, they fail to think about these housekeeping items. If divorced in 2018, this is especially important if transferring taxable spousal maintenance. The payor spouse can likely change their payroll withholding to increase their net income. The payee spouse will need to withhold additional tax dollars on their salary or make quarterly estimated tax payments, to account for taxes on the spousal maintenance payments received. If the payor spouse doesn’t adjust their W-4, they may not be able to meet their budget during the year and would probably receive a large tax refund when taxes are filed. If the payee spouse doesn’t adjust their W-4 or start quarterly estimated taxes, they could have a large tax liability when they file their return. Even if there isn’t taxable spousal maintenance, individuals still may need to adjust their withholding. Things that can impact taxes and often require an adjustment are a change in their filing status, pre- tax payroll deductions (retirement contributions, health savings account, health insurance premiums), and itemized deductions such as real estate taxes and mortgage interest. Making these adjustments now will help cash flow match what was projected during the divorce process and save the headache later of a tax surprise.
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TaxAs we move into 2019, it’s helpful to know contribution limits and Social Security changes. Individual Retirement Accounts: The annual contribution limits for traditional and Roth IRA’s have increased to $6,000, a boost of $500 over 2018 contribution limits. The catch-up contribution limit for those age 50 and older remains at $1,000. 401(k)s: The annual contribution limits for 401(k)’s, 403(b)’s, most 457 plans, and the federal government’s Thrift Savings Plan have increased to $19,000, a boost of $500 over 2018 contribution limits. The catch-up contribution limit for employees age 50 or older in these plans stays at $6,000 for 2019. SIMPLE IRA: The limit for SIMPLE IRA’s goes up from $12,500 in 2018 to $13,000 in 2019. The catch-up limit remains the same at $3,000 for those age 50 and older.  Health Savings Accounts: The “self-only” annual contribution limit will increase from $3,450 to $3,500 and the “family” annual contribution limit will increase from $6,900 to $7,000 in 2019. Social Security Updates:
  • Beneficiaries will see a 2.8% increase in payments
  • Maximum taxable earnings will increase to $132,900
  • Maximum benefit at full retirement age increases to $2,861 per month
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clockIt is important to review and discuss tax planning for the year in which a divorce was completed, especially for high earning individuals who receive incentive compensation and plan to be divorced by December 31, 2018. As part of the 2017 Tax Cuts and Jobs Act, many tax law changes became effective in 2018. One change was to the flat tax rate that is withheld by companies on incentive income such as bonus income, commission income, exercised stock options, and vested restricted stock. As of January 2018, the federal rate changed from 25% to 22%. The Minnesota state rate remains the same at 6.25%. Most highly compensated individuals have marginal tax rates above 22%, so tax on the above income types is under-withheld. To avoid an unpleasant tax surprise come April 15th, be sure to address this potential additional tax liability and come up with a plan to handle it. Some options to consider are:
  • Estimate the tax liability now and include and allocate it as part of the property division.
  • Include language to share in the tax liability when return(s) are filed next year.
  • Consider whether it makes sense to load-up itemized deductions from the year to the higher earning spouse to help offset liability (i.e. real estate taxes, mortgage interest, charitable contributions).
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Amazon box manOne of the reasons that divorce is such a challenging life transition is its public nature. A couple might keep their problems private as they try to work through them. But if a rift opens that can’t be mended, the couple will have to share some very difficult news with friends and family as they separate from one another. Few of us will have to reveal emotional personal issues to as wide an audience as Jeff and MacKenzie Bezos recently did. The statement that Jeff released on Twitter suggests that he and MacKenzie are trying to make their split as amicable as possible by usin three insightful ideas that could help anyone struggling through a divorce.
  1. Be open and honest with those closest to you.
“We want to make people aware of a development in our lives. As our family and close friends know, after a long period of loving exploration and trial separation, we have decided to divorce and continue our shared lives as friends.” Couples need privacy as they deal with strains on their marriage. But once a decision is made, clear communication with your family, friends, and each other will be very important. That goes double if any young children are in the picture. The more open a couple is about what’s happening, the easier it will be for you to find the outside support that will help you through this transition. Good dialogue might also help you and your former spouse to focus on the essential tasks at hand, like dividing your assets and updating your essential estate planning documents.
  1. Be grateful.
“We feel incredibly lucky to have found each other and deeply grateful for every one of the years we have been married to each other. If we had known we would separate after 25 years, we would do it all again.” Shame, embarrassment, and guilt are common feelings associated with divorce. Playing the blame game or trying to “win” the divorce can quickly turn all those amicable best intentions into bitter personal and legal issues. Instead, the Bezos statement is a reminder that the end of a marriage – especially a long one – doesn’t erase all of the positive things that came before it. If an amicable divorce is possible in your particular situation, then don’t be ashamed or embarrassed. Cherish those precious shared experiences, like the birth of children, happy vacation memories, the difficult times you helped each other through. Embracing these feelings of gratitude will help ease both you and your partner through this process.
  1. Focus on the positives ahead.
“We’ve had such a great life together as a married couple, and we also see wonderful futures ahead, as parents, friends, partners and ventures and projects, and as individuals pursuing ventures and adventures.” When we work through the $Lifeline exercise, we emphasis that important transitions like retirement, children graduating, weddings, and yes, divorces, are ends in one respect, but also new beginnings. They’re the start of new chapters in your life. That might be difficult to see when the pain of a divorce is still raw. But it’s important to open yourself up to new opportunities when they present themselves. You’re about to start your single life all over again. And yes, it’s scary. It may not be what you wanted. And you may be bitter. But over time, you may be able to see what awaits you on the other end. It could be traveling that you’ve longed for. Maybe you’ll relocate, start a new career, begin new hobbies, and meet new people. You might have more financial resources at your disposal to explore solo than you did when you were younger and unmarried. And you might approach these experiences with a more mature and grateful perspective, enjoying every minute just a little bit more fully. We want to help you through all of life’s major transitions, the positives as well as the challenges. If there’s change on the horizon, make an appointment to come in and review the $Lifeline exercise with us. We can help you plan ahead so that the next chapter of your life is the most fulfilling yet.
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Checklist and pen When a joint investment account is divided, the financial institute will use only one Social Security number to report the earnings and thus only one 1099 will be issued for that account. For example, following their divorce, Dick and Jane divided their joint investment account and transferred their own share into an individual investment account solely in their own name, on November 1st. If the “primary” Social Security number on the joint account is Dick’s, he will receive one 1099 for the joint account earnings earned from January 1st– October 31st and a second 1099 for the individual account earnings earned on his individual account from November 1st – December 31st. And, Jane will receive only one 1099 for the individual account earnings earned on her individual account from November 1st – December 31st. If the goal is to share the tax liability for the joint investment account earnings, this can be accomplished in a few ways.
  • The tax liability is projected during the divorce process and an adjustment is worked into the property division.
  • The spouse who received the 1099 adds the investment income to their tax return and language is added to the decree outlining the agreement on how to share the tax liability at tax filing time.
  • The spouse who received the 1099 can “nominee”the correct portion of investment income to the other spouse by filing a 1099 and 1096 with the IRS and furnishing a 1099 to the other spouse.
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doctor w piggy bankIt’s that time of year again, when the trees become bare and days grow short, that one’s thoughts turn to health insurance. That’s right, the open enrollment window for renewing your existing health insurance plan or shopping for a new plan opens November 1st and runs through December 15th, 2018. For Minnesota residents, shopping for insurance means contacting a health insurance broker to get help in comparing different plans. Or, for those whose income qualifies them for financial help, applying and enrolling on the MNSure website. For those who live in states without their own exchange, plans can be compared on HeathCare.gov, the federal government’s national exchange site. Choosing the right health insurance plan depends on your family’s health and understanding which cost-sharing arrangement works best for you. The cost-sharing arrangement is how much you want to pay monthly for the insurance premium plus how much you are comfortable paying out-of-pocket for a doctor’s visit or medical procedure. You can pay less on a monthly basis for your premium if you are willing to pay more out of pocket for a doctor’s visit or medical procedure. The most prominent cost-sharing component is the plan deductible. This is the amount you pay every year before the insurance company pays its first dollar. Choosing a lower deductible amount and pushing the costs onto the insurance company sooner will result in a higher premium. By choosing the maximum deductible allowed, $7,900 for individual plans and $15,800 for a family plans in 2019, you will pay a lower monthly premium. Picking a high deductible plan with a lower premium may make sense for a healthy person who never needs health services, as well as someone comfortable with paying the out-of-pocket amount. Other ways that insurance plans share the cost is with co-pays and coinsurance. A copay is a fixed dollar amount that you pay every time you visit the doctor. That amount may be $30 with a typical insurance plan but it will be lower or possibly waived for a more expensive plan. Coinsurance is where the cost of a medical procedure is shared. The typical coinsurance arrangement kicks in after you meet the deductible amount. Then, you pay 20%, for example, of costs until you reach the maximum out-of-pocket limit amount. Finally, the out-of-pocket limit is the maximum amount that you will pay. It is the sum of the deductible plus the copays or coinsurance that you pay in any given year. Once you hit this limit, the insurance company pays 100% thereafter. This amount is established each year by the government as part of the Affordable Care Act. As noted above, for 2019, the maximums are $7,900 for individual plans and $15,800 for family plans. Once you understand how cost-sharing works, the cost difference between plans comes down to the services and prescription drugs that the plans cover. All plans are required to cover emergency services, hospitalization and maternity care, as well as mental health and substance-abuse treatment, at a basic level. All plans also cover the cost of an annual check-up and preventive care services (such as immunizations and mammograms) with any level of deductible. More expensive plans will also cover a greater level of preventative services, and higher levels of service, such as brand name drug coverage instead of generic-only drug coverage. So, as you rake up the leaves and pull out the winter coats, take time to review your health insurance plan because health insurance season will soon be here!