Social Security Statement in Divorce Financial Planning?

Social Security

An individual’s Social Security Statement can be a valuable resource in your divorce financial planning. Make sure to gather copies of the most recent statements available and we can help you uncover a wealth of financial knowledge.

1. Earnings and employment history.

The Social Security Statement is a great place to look for historical employment earnings. It is valuable to understand the earnings history and trajectory of both parties in a divorce. If tax returns and other documentation are being with-held by your spouse the Social Security statement can provide a valuable baseline.

2. Estimated retirement and disability benefits for long term, post divorce financial planning purposes.

Understanding the long term cash flow is very important when negotiating a financial settlement. Having details of the Social Security administration’s estimated benefits can help me understand your future cash flow and plan more effectively for the future.

3. If there is a public pension.

A worker who participates in California State Teacher’s Retirement System (STRS), California Public Employees Retirement System (PERS) and many other governmental retirement systems may not have paid into the Social Security system. Some may pay into Medicare but not Social Security. You can see this if the worker’s statement has wages in the Medicare taxed earnings column but not the Social Security column. Using the Social Security statement we can uncover the existence of a previously undisclosed pension.

4. Derivative benefits available to a former spouse.

In a marriage over ten years you can receive derivative benefits on the record of your former spouse. The derivative benefit is equal to one half of the former spouse’s benefit which can be found on their annual statement. This is useful for long term planning and can be important in long term spousal support negotiations.

5. Social Security and Medicare tax details.

We often need to estimate incomes for negotiation purposes. A common mistake occurs when the 6.2% Social Security tax is applied to the worker’s entire income. Instead the tax should be applied up to the maximum wage base for Social Security taxes. If you apply the tax to $300,000 of income the net, after tax income will be understated by over $10,000 per year.

6. Possible application of Government Pension Offset Provision (GPO) or Windfall Elimination Provision (WEP).

Those workers mentioned in #3 above may find themselves subject to the GPO or WEP and end up receiving less benefits than they expected if not careful. It is always important to understand how these government provisions affect an individual in divorce. The Social Security Statement even talks about them in the bottom right hand corner of page 2 in it’s current lay-out.

7. Existence of tax deferral vehicles such as deferred compensation plans and retirement accounts.

If the numbers reported under Medicare wages don’t match those reported in the Social Security earnings column there may be tax deferral vehicles like deferred compensation plans that are being used. The worker may also have simply hit the wage base maximum after which Social Security taxes are no longer incurred but Medicare taxes are.

8. Misreported income.

In California an individual involved in divorce proceedings must file a declaration of disclosure detailing their income and expenses and sign it for accuracy under penalty of perjury. This doesn’t keep people from reporting incorrect figures. If the Social Security Statement doesn’t match what is reported on the declaration there better be an explanation.

The Social Security Administration is provides an online version of taxpayers’ statements. The online version is now available at

Your Wellspring Divorce advisor can uncover a lot from simple and easily available documentation. Imagine what we can find with a complete and accurate set of financial documents.

First meeting with divorce attorney: How can I prepare?

divorce attorney

You can save a lot of money on attorney fees if you are organized and provide your divorce attorney with concise and complete information.  Here are some tips on how to prepare for your first meeting with divorce attorney.

Be prepared to discuss your marital problems with your divorce attorney but keep it concise and honest.

  • The longer you talk about the the lies, affairs and financial disagreements that ended your marriage, the longer your meeting will take and the more it will distract from the legal aspects and business transaction of your divorce proceedings. Talk to your mental health professional if you need a more emotional connection. Talk to your financial expert if you need assistance understanding the family finances and planning for your future. Do your best to simply state. Why, in your honest opinion, your marriage has come to an end.
    • Romantic infidelity?
    • Financial infidelity?
    • Financial Disagreements?
    • Life review?
    • No longer in Love?

An idea of what you want to get out of the divorce proceedings financially.

  • If you do not know what you want; Wellspring Divorce Advisors can build a plan for your financial future and communicate the results with powerful analysis and reports.
  • Some examples
    • Keep the House – Can you afford it?
    • Financial Security – What does this mean to you?
    • Long term spousal support
    • Not to go back to work
    • Children’s college education paid for
    • Financial autonomy
    • Purchase a new home

You should bring the following information to your first meeting:

  • Family information, including the names and birth dates for yourself, your spouse, and your children
  • The date and place where you were married
  • Current employment information for you and your spouse
  • An estimate of financial status including
    • Income (current pay-stubs and last three years tax returns would be best)
    • Expenses (if you have a budget bring it, if not let us know and we can help you prepare one)
    • Assets and Debts (account statements for mortgage, 401K, brokerage accounts, bank accounts, credit cards)


We suggest meeting with a Wellspring Divorce Advisor before or immediately after your first meeting with divorce attorney. We will help you put together a complete and detailed picture of your family finances before the attorney heads down the path of expensive formal discovery. We can also help you choose the right attorney and divorce process if you do not yet have one.

6 Financial Steps to Preparing for Divorce in 2017

financial steps

Are you planning to divorce in 2017?

Take a look at our recommendations for 6 Financial Steps to Preparing for Divorce in 2017.

1. Keep an eye on the mail-box.

Every financial document that hits your mailbox in the month of January is worth your time. You should gather Bank and Brokerage account statements showing year end balances and the year end spending summary sent out by most Credit Card companies. You may also start to see tax documents being sent.

If you aren’t sure whether the document is pertinent to your Divorce in 2017, keep a copy anyway just in case. Financial knowledge will equal power for your Divorce in 2017. The more you can get now the more prepared you will be to advocate for yourself and obtain the most financially advantageous settlement possible in the new year.

2. Make copies of all financial files in your home.

This includes 5 years of tax returns, Brokerage and Bank account statements, business ownership documents such as partnership agreements and wills and trusts. Again, if you have any reason to believe the financial document will be important to your Divorce in 2017; you should keep a copy. It is always better to be over-prepared.

3. Educate yourself about your divorce options.

We believe most couples can resolve their differences outside of court. Make an appointment with a Wellspring Divorce Advisors advisor who will educate you about the process options available for your Divorce in 2017. Staying away from the court system will save emotional and economic resources and should result in a more advantageous financial settlement.

4. Consult with a lawyer or two or three or four.

Your Wellspring Divorce Advisors professional can refer you to many high quality divorce lawyers in your community. Concentrate your search on attorneys who specialize in Family Law. You wouldn’t go to your primary care physician for a tonsillectomy so don’t go to your real estate attorney for your divorce.

5. Develop a budget for your Divorce in 2017.

Divorce is hard on the checkbook. You will have expenses of two households, expenses to set up that second household such as furniture and furnishings. If you already have a family budget you can use this as a guide to start your individual divorce budget. If you don’t have one, begin by looking at the bank and credit card statements you gathered in steps 1 and 2.

First get a feel for the recurring expenses like mortgage and utilities then make estimates of discretionary expenses like dining out and entertainment after averaging a couple of months’ worth of real data gathered from the statements.Finding a way to maintain some level of a similar lifestyle during the divorce proceedings is not easy for most but this is a time for you to be comfortable, not feeling destitute.

Wellspring Divorce Advisors is experienced in creating budgets and available to assist clients in developing a budget for their Divorce.

6. Open a credit card in your individual name.

If you do not yet have a credit card in your name alone we suggest you apply for one immediately. It is common for one party to lose access to cash after filing for divorce. If you do not have cash you cannot pay the professional help you need to protect yourself in the divorce process.

Try Capital One for a good starting point. They usually provide good rewards such as airline or cash back on their cards as well as good size credit limits. Aim for $20,000 of total credit card limits. Be careful not to spend too freely on the cards and try to stick to just using them for professional fees if possible.

Financial Crisis Still Causing Complications in Finances of Divorce

Four years later we are still encountering financial complications of our 2008-2009 financial crisis in divorce proceedings. Many bank and brokerage companies were forced to merge during the crisis. Morgan Stanley merged with Smith Barney. Bank of America merged with Merrill Lynch. Wells Fargo took over Wachovia and Lehman Brothers went out of business.  On top of the logistical problems; many people lost a lot of money. Here are three complications to watch out for.

1. During mergers many firms changed client account numbers. I have seen more than one occasion where a Marital Settlement Agreement was written with two different account numbers for the same account. Even worse, the two different account numbers might be treated differently. One awarded as separate property and the other to be divided.

2. During the crisis itself many investors lost large sums of money in their investment accounts. The S&P 500 lost 56% during the crisis and I have seen some situations where clients lost money then sold the assets locking in the losses. Now the spouse with no involvement in the investment management is wondering where all the money went. They may even be considering the possibility that they spouse responsible for managing the investments could have taken the funds and hidden them elsewhere in preparation for the divorce.

3. Some brokerage companies and banks did go out of business. It makes it difficult to track down account statements and verify funds when the custodian of the account no longer exists or has been consumed by another institution.

I suspect the effects of the Financial Crisis will continue to complicate the financial negotiations of divorces for a few more years maybe longer in situations where separate property claims must be traced back to 2008 and earlier.

We can help you and your attorney piece together the information that is available and make intelligent decisions about building your financial case.



Knowledge is Power in Financial Negotiations of Divorce

Knowledge is power  in the financial negotiations of divorce.


In most marriages one party will have taken responsibility for the management of the family finances. This is a natural by-product of economics. The fact is that one party will have a comparative advantage when it comes to managing finances either based on experience, education or efficiency. The party with the comparative advantage should take on the specific task in question in order to make best use of the family’s limited resources.


The unexpected consequence of this rational economic decision is that one party will find themselves on the outside looking in when divorce comes into the equation.


How you can take control of your divorce


One of the first and most important tasks Certified Divorce Financial Analysts undertake with clients is the gathering of information. When one party has all of the financial documents, information and knowledge the couple is not operating from a level playing field.


In amicable proceedings this is easily rectified by gathering the information through informal discovery and doing a little bit of education. In litigious cases, financial documentation and knowledge is often wielded as a weapon. The financially savvy party may make it difficult to gather documents and not be completely forthcoming with details. In this case it is necessary to pursue information through formal discovery which may include subpoenas, depositions, oral testimony and interrogatories. The formal discovery process can be the most significant cost in divorce proceedings when there is reason to believe a party has hidden or mis-appropriated assets and incomes.

The figure below details the value  of information in the negotiations of divorce financial settlements. As Financial Knowledge increases on the vertical axis, Power increases on the horizontal axis. It is extremely important to level the playing field with complete financial data gathering and expert guidance.