At some point in the difficult divorce process you will be asked to fill out a CIS (Case Information Statement). The CIS is a financial disclosure document which, among other things, establishes your standard of living while married.
Schedule C of the CIS has a line where you put your historical savings/investments. Although the CIS shows monthly expenses (assuming 4.3 week/mo.), simply take your annual savings and divide by 52 and multiply by 4.3. Many people fund their retirement plans once a year, so it’s easy to forget this when filling out the form.
This includes all savings, not only what you may be contributing to your 401K or another pension plan. It also includes IRAs, Sec. 529 Plans, and non-retirement related investments.
Although this has been a long-established principle, it recently grabbed the attention of the legal community and the forensic CPAs who assist them. On September 12, 2016, the N.J. Appellate Division issued a ruling in the matter of Lombardi v. Lombardi.
The Court ruled:
It is well-established that the accumulation of reasonable savings should be included in alimony to protect the supported spouse against the loss of alimony…
We disagree with the court’s decision and hold that regular savings must be considered in a determination of alimony (emphasis added), even when there is no need to create savings to protect the future payment of alimony.
The decision is a good reminder that when meeting with your attorney it’s imperative to tell him/her about the pattern of savings you enjoyed during the marriage. If you have access to monthly or year-end statements from financial institutions holding your money, make sure you give them to your attorney.
Urbach & Avraham has almost a thirty-year history of providing attorneys and their clients tax, forensic, and other advice in current or post-divorce matters. Feel free to call or email if you have any questions.