CDFA flashcards
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33 cards. Read the term and the definition here. The deck at the top of this page is optional.
- QDRO
- Qualified Domestic Relations Order: a court order that assigns part of an ERISA retirement plan to an alternate payee, such as a divorcing spouse, and must meet plan and ERISA requirements.
- Community property state
- A state where marital property is generally owned equally by both spouses and divided equally at divorce; examples include California, Texas, Arizona, and Washington.
- Equitable distribution
- The majority-state approach to dividing marital property fairly rather than automatically equally, weighing factors such as marriage length, earning capacity, and contributions.
- Separate property
- Property owned before marriage or acquired by gift or inheritance during marriage; it generally stays with the owning spouse unless commingled or transmuted.
- Commingling
- Mixing separate funds with marital funds, which can convert separate property into marital property or create a tracing burden to prove the separate portion.
- Alimony tax treatment
- For divorce instruments executed after December 31, 2018, alimony is neither deductible by the payer nor taxable to the recipient under the Tax Cuts and Jobs Act.
- Child support tax treatment
- Child support payments are never deductible by the paying parent and never included in the recipient parent's taxable income.
- IRC Section 1041
- Transfers of property between spouses or incident to divorce are generally non-recognition events; the recipient takes the transferor's adjusted basis.
- Coverture fraction
- The marital portion of a pension: months of marital service divided by total months of service at retirement, applied to the accrued benefit.
- Defined benefit pension
- A retirement plan promising a set benefit at retirement, usually based on salary and years of service; divided in divorce by QDRO using shared or separate interest.
- Present value formula
- PV equals future value divided by (1 plus the discount rate) raised to the number of periods; used to compare deferred settlement payments.
- Capitalization of earnings
- A business valuation method dividing normalized earnings by a capitalization rate that reflects risk and expected growth.
- Enterprise goodwill
- Goodwill attached to the business itself, such as brand and customer base, which is generally divisible as marital property in divorce.
- Personal goodwill
- Goodwill tied to an individual's reputation, skill, or relationships; many courts treat it as separate property rather than divisible marital property.
- Imputed income
- Income a court assigns based on earning capacity when a party is voluntarily unemployed or underemployed, rather than using actual reported income.
- Lifestyle analysis
- Reconstructing actual spending from bank and credit records to test reported income and establish the marital standard of living for support purposes.
- Income shares model
- A child support formula where each parent's share of combined income determines their share of the total support obligation, adjusted for parenting time.
- Pendente lite orders
- Temporary court orders issued during a divorce case covering support, custody, and restraining provisions until the final decree.
- UCCJEA
- Uniform Child Custody Jurisdiction and Enforcement Act: a model law adopted by states to determine which state has jurisdiction over child custody, usually the home state.
- Prenuptial agreement
- A contract before marriage that can set property and support terms at divorce; enforceability requires voluntariness, disclosure, and no unconscionability.
- Collaborative divorce
- A process where both parties and their attorneys sign an agreement to settle without litigation and disqualify the attorneys if the process fails.
- Mediation
- A non-binding process using a neutral third party to help spouses reach a settlement; the agreement becomes binding only when signed.
- Discovery
- The pretrial exchange of information through interrogatories, document requests, depositions, and subpoenas to gather financial and other evidence.
- COBRA after divorce
- A federal law allowing continuation of health coverage after certain events, but divorce may terminate dependent eligibility, so alternatives must be modeled.
- Divorced spouse Social Security
- A divorced spouse may claim on an ex-spouse's record if married at least ten years, is unmarried, and meets age requirements, without reducing the ex-spouse's benefit.
- Alternate payee
- The person named in a QDRO who receives a portion of a retirement plan benefit, typically the divorcing spouse, with tax treatment specified in the order.
- Transfer incident to divorce
- An IRA transfer made under a divorce decree or court order that is tax-free and not treated as a taxable distribution to the transferring spouse.
- Marital balance sheet
- A CDFA tool listing assets and liabilities, classifying each as marital or separate and liquid or illiquid, with values at the chosen valuation date.
- Valuation date
- The date used to value assets for division; it varies by state and may be the separation date, filing date, or trial date.
- Head of household
- A tax filing status for an unmarried or considered-unmarried taxpayer who pays more than half the cost of maintaining a home for a qualifying person.
- Scope of practice
- The boundary of the CDFA role: financial analysis and education only, with legal advice, document drafting, and tax opinions referred to attorneys and CPAs.
- Testifying expert
- A financial expert designated to offer opinions in court; their work product and communications may be discoverable, unlike a consulting expert's.
- After-tax comparison
- Converting pre-tax retirement balances to after-tax values by applying an assumed tax rate, so settlement options can be compared on equal footing.