WE discussed the benefits of divorce last week. Let’s discuss drawbacks this week.
It’s typical for one working spouse to carry medical insurance for the whole household. One spouse may lose coverage and end up paying for the whole cost of new healthcare insurance which can be very expensive.
IRA for non-working spouse:
A working spouse can contribute up to $6,000 in an IRA for a non-working spouse, plus $1,000 if 50 or older. Divorced individuals cannot avail of this benefit. The two must file jointly and be married.
Retirement benefit issues:
In a divorce, the non-working spouse loses the advantage of getting contributions to his or her spousal individual retirement account and spousal Roth IRA.
Spouses are generally the automatic beneficiary for a 401(k) plan; they need to sign a waiver to allow someone else to receive those funds. After divorce, one can change the beneficiary as one pleases, when one pleases.
Control over business entities:
You give can end up losing control over a business that you founded. Your spouse gets 50% and could create problems for you overrunning it. Your spouse can vote against you in critical business decisions.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at firstname.lastname@example.org.