Planning Beginner: Financial Considerations in Divorce

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Alimony is unearned, tax-free income to the recipient.

True

False

False. Alimony is unearned income, but it is fully taxable.

Child support ________.

Is not taxable to the person who receives it and not tax deductible to the person who pays it

Is paid to the custodial parent, who has full discretion under the law as to how it is spent

Cannot lawfully be spent in any manner that benefits the custodial parent

All the above

Is not taxable to the person who receives it and not tax deductible to the person who pays it. The other two choices are not accurate.

Marital property includes assets you brought into the marriage.

True

False

False. This is separate property.

Which of the following is true regarding alimony negotiations?

It is often wise to seek the services of a financial planner in making financial projections and calculations.

Alimony recipients should keep in mind that they will likely become ineligible to collect state unemployment benefits.

Alimony is determined primarily by reference to factors provided by state law, so the parties have little flexibility in their negotiations.

It is often wise to seek the services of a financial planner in making financial projections and calculations. Very often, attorneys lack the necessary financial expertise.

An advantage of alimony is that in most states the monthly amount is set for life and not subject to change.

True

False

False. In most states, alimony laws typically allow those paying alimony to modify the terms later if circumstances change.