Clients are always reluctant to make the effort to provide statements or information going back a number of years. Although your spouse’s income may not have changed significantly over the last number of years, items like bonuses or granting of stock options may have. Reviewing more that one or two years of tax returns, pension statements or benefit plans can be very insightful as many things have a way of changing that can have dramatic effects.
In one case, support payments were being based on a spouse’s income including salary and bonuses. The average of the last 3 years of bonuses that were paid out to a spouse was used in the calculation. Bonuses paid in year 2 and 3 were significantly lower that in the immediately prior year. Upon further review, bonuses paid in the 2 years prior to that were significantly more. Support payments arrived at were much higher because they were now based on the average of the last 5 years rather than the average of the last 3 years. This change in calculating the average bonus provided the client with additional support payments of over $500 /month… a significant difference.
It pays to do your homework.
Eva Sachs CFP® CDFA™ is the founder of Eva Sachs Divorce Financial Consulting, providing advice about all financial issues when facing divorce.
To learn more about Eva click http://thedivorceangels.com/vendor/eva-sachs/
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