Need Cash for Divorce Payout
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Need Cash for Divorce Payout
I need to come up with $50,000 to pay a lump sum alimony payment. Wife has agreed to take a lesser amount in alimony if it's a lump sum. I have approximately $250,000 in a ROTH IRA and $180,000 in a Traditional IRA. I know I can take out principal from a ROTH penalty free, as I've already paid tax on the principal. I don't know what can be done with a Traditional IRA. Maybe there are other options, like taking a home equity loan to pay her off instead of tapping the IRA. Any help is appreciated. Stressful time.
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Re: Need Cash for Divorce Payout
Pull in every bit of cash you have in checking, emergency fund, change under couch cushions, any taxable brokerage etc and then take the least amount possible from Roth contributions to get to 50K and move on.
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Re: Need Cash for Divorce Payout
Unfortunately that has already been done, except the change from the couch, but I will start looking. I have $150,000 in a taxable brokerage but she's taking half of that and the other half will be used to buy her out of the house. I will be left with just enough cash to be considered an emergency fund. My only options, as I see it, are tapping the IRA(s) or some type of loan.Mike Scott wrote: ↑Wed Apr 21, 2021 12:41 pm Pull in every bit of cash you have in checking, emergency fund, change under couch cushions, any taxable brokerage etc and then take the least amount possible from Roth contributions to get to 50K and move on.
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Re: Need Cash for Divorce Payout
Compare the costs of the IRA withdrawal vs the best deal you can find on a HELOC.
Is selling the home then downsizing an option?
j
Is selling the home then downsizing an option?
j
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Re: Need Cash for Divorce Payout
How much of a discount are you getting for an upfront, lump sum payment? Is it really a better deal for you if you need to take a loan or draw down your retirement accounts?whoshighpitch wrote: ↑Wed Apr 21, 2021 12:34 pm I need to come up with $50,000 to pay a lump sum alimony payment. Wife has agreed to take a lesser amount in alimony if it's a lump sum. I have approximately $250,000 in a ROTH IRA and $180,000 in a Traditional IRA. I know I can take out principal from a ROTH penalty free, as I've already paid tax on the principal. I don't know what can be done with a Traditional IRA. Maybe there are other options, like taking a home equity loan to pay her off instead of tapping the IRA. Any help is appreciated. Stressful time.
Why not spread the alimony payments over time? There could be significant inflation, one of you could die, etc.
Re: Need Cash for Divorce Payout
401K loan?
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Re: Need Cash for Divorce Payout
Cash out refi? Can she wait that long. If you both are on the mortgage, won’t you want to refi anyways?whoshighpitch wrote: ↑Wed Apr 21, 2021 12:54 pmWell it's an option but I love the house and the property, so it's not a good option for me.
Re: Need Cash for Divorce Payout
I would not allot any dollars in favor of the emergency fund over the Roth or tIRA accounts.whoshighpitch wrote: ↑Wed Apr 21, 2021 12:44 pmI will be left with just enough cash to be considered an emergency fund.Mike Scott wrote: ↑Wed Apr 21, 2021 12:41 pm Pull in every bit of cash you have in checking, emergency fund, change under couch cushions, any taxable brokerage etc and then take the least amount possible from Roth contributions to get to 50K and move on.
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Re: Need Cash for Divorce Payout
+1 for cash out refi and/or HELOC. You can't get the Roth space back but loans can be repaid.aerosurfer wrote: ↑Wed Apr 21, 2021 1:00 pmCash out refi? Can she wait that long. If you both are on the mortgage, won’t you want to refi anyways?whoshighpitch wrote: ↑Wed Apr 21, 2021 12:54 pmWell it's an option but I love the house and the property, so it's not a good option for me.
Re: Need Cash for Divorce Payout
My thought too.aerosurfer wrote: ↑Wed Apr 21, 2021 1:00 pmCash out refi? Can she wait that long. If you both are on the mortgage, won’t you want to refi anyways?whoshighpitch wrote: ↑Wed Apr 21, 2021 12:54 pmWell it's an option but I love the house and the property, so it's not a good option for me.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: Need Cash for Divorce Payout
I like the idea of the cash out refinance. You get the discount upfront with the lump sum payment and then get to spread out the repayment over a longer period of time. You may be required to obtain a new mortgage anyway. Tapping my retirement accounts would be the last thing I would do.
Mary
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Re: Need Cash for Divorce Payout
She is not on the mortgage and I just refinanced to a 2.5% in October.aerosurfer wrote: ↑Wed Apr 21, 2021 1:00 pmCash out refi? Can she wait that long. If you both are on the mortgage, won’t you want to refi anyways?whoshighpitch wrote: ↑Wed Apr 21, 2021 12:54 pmWell it's an option but I love the house and the property, so it's not a good option for me.
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Re: Need Cash for Divorce Payout
It sounds to me that you can't afford the lump sum alimony and will have to agree to monthly payments even if the total number is higher.
Last edited by UpperNwGuy on Wed Apr 21, 2021 1:24 pm, edited 1 time in total.
Re: Need Cash for Divorce Payout
Can you borrow the money from your parents and then just pay them the "alimony" payment till paid off?
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Re: Need Cash for Divorce Payout
This is actually an option. I don't want to ask for any favors BUT if I can keep from touching my IRAs... My parents are good people and will probably do this.
Re: Need Cash for Divorce Payout
As others have said, you have to consider how big of a discount are you getting by paying in a lump sum and does that offset both the cost of raising the money and the possibility that your ex gets remarried. If the ex gets remarried, you would not owe alimony.
You have to assess your particular situation. I had an acquaintance where the ex requested a lump sum and then shortly thereafter got remarried. If the acquaintance would have paid overtime, they would’ve saved themselves a lot of money when their ex got remarried. Because the ex refused to work, even with alimony, they were totally dependent on somebody else paying their bills so the ex would’ve gotten remarried either way.
On the other hand, we know of at least three people who refuse to get married because they’re still receiving maintenance from their ex. As they say “It is dIfficult to Get Someone to Understand Right from Wrong When Their Salary Depends Upon Them Not Understanding”.
You have to assess your particular situation. I had an acquaintance where the ex requested a lump sum and then shortly thereafter got remarried. If the acquaintance would have paid overtime, they would’ve saved themselves a lot of money when their ex got remarried. Because the ex refused to work, even with alimony, they were totally dependent on somebody else paying their bills so the ex would’ve gotten remarried either way.
On the other hand, we know of at least three people who refuse to get married because they’re still receiving maintenance from their ex. As they say “It is dIfficult to Get Someone to Understand Right from Wrong When Their Salary Depends Upon Them Not Understanding”.
Last edited by Ependytis on Wed Apr 21, 2021 1:39 pm, edited 2 times in total.
Re: Need Cash for Divorce Payout
Looks like an emergency to me.whoshighpitch wrote: ↑Wed Apr 21, 2021 12:44 pmI will be left with just enough cash to be considered an emergency fund.Mike Scott wrote: ↑Wed Apr 21, 2021 12:41 pm Pull in every bit of cash you have in checking, emergency fund, change under couch cushions, any taxable brokerage etc and then take the least amount possible from Roth contributions to get to 50K and move on.
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Re: Need Cash for Divorce Payout
LOL Good Point!SrGrumpy wrote: ↑Wed Apr 21, 2021 1:30 pmLooks like an emergency to me.whoshighpitch wrote: ↑Wed Apr 21, 2021 12:44 pmI will be left with just enough cash to be considered an emergency fund.Mike Scott wrote: ↑Wed Apr 21, 2021 12:41 pm Pull in every bit of cash you have in checking, emergency fund, change under couch cushions, any taxable brokerage etc and then take the least amount possible from Roth contributions to get to 50K and move on.
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Re: Need Cash for Divorce Payout
She has been more than fair in agreeing to let me keep my IRAs and she keeps hers. Mine is worth considerably more. So even if she wants this lump sum because she has plans to remarry, it's still a home run for me. It wouldn't bother me one bit if she took the money and got married the very next day.Ependytis wrote: ↑Wed Apr 21, 2021 1:28 pm As others have said, you have to consider how big of a discount are you getting by paying in a lump sum and does that offset both the cost of raising the money and the possibility that your ex gets remarried. If the ex gets remarried, you would not owe alimony.
You have to assess your particular situation. I had an acquaintance where the ex requested a lump sum and then shortly thereafter got remarried. If the acquaintance would have paid overtime, they would’ve saved themselves a lot of money when their ex got remarried. Because the ex refused to work, even with alimony, they were totally dependent on somebody else paying their bills so the ex would’ve gotten remarried either way.
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Re: Need Cash for Divorce Payout
Exes don’t remarry if doing so will end alimony. Ask me how I know.Ependytis wrote: ↑Wed Apr 21, 2021 1:28 pm As others have said, you have to consider how big of a discount are you getting by paying in a lump sum and does that offset both the cost of raising the money and the possibility that your ex gets remarried. If the ex gets remarried, you would not owe alimony.
Otoh, depending on the discounted terms and duration of alimony, inflation might make it less painful. My guess is that your ex will be open to taking a lump sum in a year or whenever you have the wherewithal to suggest a new look at a lump sum payout.
I get the FI part but not the RE part of FIRE.
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Re: Need Cash for Divorce Payout
If you do a lumpsum payout and she miss manages her finances, can she come back and request more money from you later? Just curious if there would be any benefit in providing the regular allowance vs the lumpsum?
My posts are for entertainment purposes only.
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Re: Need Cash for Divorce Payout
Oh she'll mismanage it for sure. This is one of the many reasons the marriage didn't work. No she won't be able to come back and request more money though. Everything will be official in the divorce decree, once it's done it's done. If not I will run to Canada or Mexico.tiburblium wrote: ↑Wed Apr 21, 2021 1:56 pm If you do a lumpsum payout and she miss manages her finances, can she come back and request more money from you later? Just curious if there would be any benefit in providing the regular allowance vs the lumpsum?
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Re: Need Cash for Divorce Payout
IANAL, but I would say definitely not. If there are children involved, there are workarounds for the spendthrift spouse to get another bite of the apple, but OP did not mention children.tiburblium wrote: ↑Wed Apr 21, 2021 1:56 pm If you do a lumpsum payout and she miss manages her finances, can she come back and request more money from you later? Just curious if there would be any benefit in providing the regular allowance vs the lumpsum?
I get the FI part but not the RE part of FIRE.
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Re: Need Cash for Divorce Payout
OP has three beautiful little girls. Oldest living with me and 2 youngest living with mom.TomatoTomahto wrote: ↑Wed Apr 21, 2021 2:02 pmIANAL, but I would say definitely not. If there are children involved, there are workarounds for the spendthrift spouse to get another bite of the apple, but OP did not mention children.tiburblium wrote: ↑Wed Apr 21, 2021 1:56 pm If you do a lumpsum payout and she miss manages her finances, can she come back and request more money from you later? Just curious if there would be any benefit in providing the regular allowance vs the lumpsum?
Re: Need Cash for Divorce Payout
Any competent divorce lawyer would word the lump sum alimony agreement receipt as once and final.TomatoTomahto wrote: ↑Wed Apr 21, 2021 2:02 pmIANAL, but I would say definitely not. If there are children involved, there are workarounds for the spendthrift spouse to get another bite of the apple, but OP did not mention children.tiburblium wrote: ↑Wed Apr 21, 2021 1:56 pm If you do a lumpsum payout and she miss manages her finances, can she come back and request more money from you later? Just curious if there would be any benefit in providing the regular allowance vs the lumpsum?
Of course, child support can be assessed, re-assessed, changed generally at any time and certainly within fixed, relatively short intervals.
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Re: Need Cash for Divorce Payout
I don't know if my attorney is competent but at least he's expensive.8foot7 wrote: ↑Wed Apr 21, 2021 2:11 pmAny competent divorce lawyer would word the lump sum alimony agreement receipt as once and final.TomatoTomahto wrote: ↑Wed Apr 21, 2021 2:02 pmIANAL, but I would say definitely not. If there are children involved, there are workarounds for the spendthrift spouse to get another bite of the apple, but OP did not mention children.tiburblium wrote: ↑Wed Apr 21, 2021 1:56 pm If you do a lumpsum payout and she miss manages her finances, can she come back and request more money from you later? Just curious if there would be any benefit in providing the regular allowance vs the lumpsum?
Of course, child support can be assessed, re-assessed, changed generally at any time and certainly within fixed, relatively short intervals.
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Re: Need Cash for Divorce Payout
I think both parties’ attorneys were competent in my case, but the judge was an idiot. My exe’s attorney, being competent, used that knowledge.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:13 pmI don't know if my attorney is competent but at least he's expensive.8foot7 wrote: ↑Wed Apr 21, 2021 2:11 pmAny competent divorce lawyer would word the lump sum alimony agreement receipt as once and final.TomatoTomahto wrote: ↑Wed Apr 21, 2021 2:02 pmIANAL, but I would say definitely not. If there are children involved, there are workarounds for the spendthrift spouse to get another bite of the apple, but OP did not mention children.tiburblium wrote: ↑Wed Apr 21, 2021 1:56 pm If you do a lumpsum payout and she miss manages her finances, can she come back and request more money from you later? Just curious if there would be any benefit in providing the regular allowance vs the lumpsum?
Of course, child support can be assessed, re-assessed, changed generally at any time and certainly within fixed, relatively short intervals.
I would not want to create a situation where subsequent events could provide another bite at the apple for an exe. Unless the discount is compelling, I would lean to sticking to the agreement.
I get the FI part but not the RE part of FIRE.
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Re: Need Cash for Divorce Payout
We are in the negotiating phase now. Her lawyer will send a demand letter to my lawyer, then we sign it, then it goes to the divorce master to finalize. I'm sure it won't be that smooth though. I can't put into words how much I hate this stuff.TomatoTomahto wrote: ↑Wed Apr 21, 2021 2:19 pmI think both parties’ attorneys were competent in my case, but the judge was an idiot. My exe’s attorney, being competent, used that knowledge.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:13 pmI don't know if my attorney is competent but at least he's expensive.8foot7 wrote: ↑Wed Apr 21, 2021 2:11 pmAny competent divorce lawyer would word the lump sum alimony agreement receipt as once and final.TomatoTomahto wrote: ↑Wed Apr 21, 2021 2:02 pmIANAL, but I would say definitely not. If there are children involved, there are workarounds for the spendthrift spouse to get another bite of the apple, but OP did not mention children.tiburblium wrote: ↑Wed Apr 21, 2021 1:56 pm If you do a lumpsum payout and she miss manages her finances, can she come back and request more money from you later? Just curious if there would be any benefit in providing the regular allowance vs the lumpsum?
Of course, child support can be assessed, re-assessed, changed generally at any time and certainly within fixed, relatively short intervals.
I would not want to create a situation where subsequent events could provide another bite at the apple for an exe. Unless the discount is compelling, I would lean to sticking to the agreement.
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Re: Need Cash for Divorce Payout
Sorry to hear your situation. I wonder how much prenups would have helped, if any.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:24 pm We are in the negotiating phase now. Her lawyer will send a demand letter to my lawyer, then we sign it, then it goes to the divorce master to finalize. I'm sure it won't be that smooth though. I can't put into words how much I hate this stuff.
Re: Need Cash for Divorce Payout
We'd do this for our kids in a heartbeat if it meant the meant they didn't have to pull money out of retirement accounts. Asking may be hard but if you're straight forward as to why and leave it with an only if you're willing and if you say no, you totally understand.whoshighpitch wrote: ↑Wed Apr 21, 2021 1:28 pmThis is actually an option. I don't want to ask for any favors BUT if I can keep from touching my IRAs... My parents are good people and will probably do this.
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Re: Need Cash for Divorce Payout
How much of a discount are you getting by agreeing to this? It has to make money sense to go to these lengths.
Trust me...I know my friend.
Trust me...I know my friend.
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Re: Need Cash for Divorce Payout
Once it's done, it's done.... until it isn't. My ex got a new lawyer and took me to court three years later seeking an increase to the alimony payments. Claimed that her first lawyer didn't get her a good enough deal. We had to go to court. The judge ruled in my favor after my lawyer argued that there was no legal precedent in our state for alimony to be revisited. Child support, yes, but alimony, no.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:00 pm No she won't be able to come back and request more money though. Everything will be official in the divorce decree, once it's done it's done.
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Re: Need Cash for Divorce Payout
Alas, there's no guarantee that someone wouldn't at least TRY to renegotiate later. Might not work, but could still be messy and expensive.Marseille07 wrote: ↑Wed Apr 21, 2021 2:26 pmSorry to hear your situation. I wonder how much prenups would have helped, if any.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:24 pm We are in the negotiating phase now. Her lawyer will send a demand letter to my lawyer, then we sign it, then it goes to the divorce master to finalize. I'm sure it won't be that smooth though. I can't put into words how much I hate this stuff.
RM
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Re: Need Cash for Divorce Payout
Everyone I know who did a lump sum payment to get out of spousal support does not regret it. It is a clean break, both emotionally and financially. Make sure you can pay your divorce attorney bills. I firmly believe they take a look at your net worth and take a percentage of it. Thankfully my divorce attorney let me pay it monthly with no interest.oldfatguy wrote: ↑Wed Apr 21, 2021 12:57 pmHow much of a discount are you getting for an upfront, lump sum payment? Is it really a better deal for you if you need to take a loan or draw down your retirement accounts?whoshighpitch wrote: ↑Wed Apr 21, 2021 12:34 pm I need to come up with $50,000 to pay a lump sum alimony payment. Wife has agreed to take a lesser amount in alimony if it's a lump sum. I have approximately $250,000 in a ROTH IRA and $180,000 in a Traditional IRA. I know I can take out principal from a ROTH penalty free, as I've already paid tax on the principal. I don't know what can be done with a Traditional IRA. Maybe there are other options, like taking a home equity loan to pay her off instead of tapping the IRA. Any help is appreciated. Stressful time.
Why not spread the alimony payments over time? There could be significant inflation, one of you could die, etc.
Re: Need Cash for Divorce Payout
+1. My oldest is 12 but I'd do it in a heartbeat.MrBobcat wrote: ↑Wed Apr 21, 2021 2:27 pmWe'd do this for our kids in a heartbeat if it meant the meant they didn't have to pull money out of retirement accounts. Asking may be hard but if you're straight forward as to why and leave it with an only if you're willing and if you say no, you totally understand.whoshighpitch wrote: ↑Wed Apr 21, 2021 1:28 pmThis is actually an option. I don't want to ask for any favors BUT if I can keep from touching my IRAs... My parents are good people and will probably do this.
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Re: Need Cash for Divorce Payout
Probably not much. 14 years ago when we got married she was making more money than I was, had ambition, and was mentally sound. Over time she became lazy, didn't feel she needed to contribute much of anything, and took everything I did for granted.Marseille07 wrote: ↑Wed Apr 21, 2021 2:26 pmSorry to hear your situation. I wonder how much prenups would have helped, if any.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:24 pm We are in the negotiating phase now. Her lawyer will send a demand letter to my lawyer, then we sign it, then it goes to the divorce master to finalize. I'm sure it won't be that smooth though. I can't put into words how much I hate this stuff.
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Re: Need Cash for Divorce Payout
Personally, if you have an option to take it out of the ROTH IRA, I would suggest this, as it is the simplest and fastest way to deal with the situation. You have enough on your plate to take the least complicated path to resolving this particular issue. There will be other things that will require your undivided attention as well.whoshighpitch wrote: ↑Wed Apr 21, 2021 12:34 pm I need to come up with $50,000 to pay a lump sum alimony payment....I know I can take out principal from a ROTH penalty free, as I've already paid tax on the principal....Maybe there are other options, like taking a home equity loan to pay her off instead of tapping the IRA. Any help is appreciated. Stressful time.
Still, if parents are not able to assist, I would look into the home equity loan options. With the current craziness in the housing market, you may have more equity than you are aware of. This is one of the paths I took in a very similar situation. Other than the time involved to get an appraisal, loan setup and approval, this could work. The loan company (I think it was them) actually offered me a very sizable Line of Credit for the interim period until the loan was properly approved (be careful with this option). I had to use it for a month or so, then never again.
In spite of the stress involved, repeat to yourself, this is survivable.
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Re: Need Cash for Divorce Payout
It makes a ton of sense. At any time she can drop the gloves and go after half of my IRAs. I need to play the game and if it means paying her a lump sum it's still a major financial win for me. Yes I have a lot of company in this divorce world. Sucks!SquawkIdent wrote: ↑Wed Apr 21, 2021 2:30 pm How much of a discount are you getting by agreeing to this? It has to make money sense to go to these lengths.
Trust me...I know my friend.
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Re: Need Cash for Divorce Payout
Jesus. And you were the lucky one who almost set that precedent. I will never ever get married again.UpperNwGuy wrote: ↑Wed Apr 21, 2021 2:30 pmOnce it's done, it's done.... until it isn't. My ex got a new lawyer and took me to court three years later seeking an increase to the alimony payments. Claimed that her first lawyer didn't get her a good enough deal. We had to go to court. The judge ruled in my favor after my lawyer argued that there was no legal precedent in our state for alimony to be revisited. Child support, yes, but alimony, no.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:00 pm No she won't be able to come back and request more money though. Everything will be official in the divorce decree, once it's done it's done.
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Re: Need Cash for Divorce Payout
And you have to pay alimony now? Sounds like you've been had, really infuriating.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:35 pmProbably not much. 14 years ago when we got married she was making more money than I was, had ambition, and was mentally sound. Over time she became lazy, didn't feel she needed to contribute much of anything, and took everything I did for granted.Marseille07 wrote: ↑Wed Apr 21, 2021 2:26 pmSorry to hear your situation. I wonder how much prenups would have helped, if any.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:24 pm We are in the negotiating phase now. Her lawyer will send a demand letter to my lawyer, then we sign it, then it goes to the divorce master to finalize. I'm sure it won't be that smooth though. I can't put into words how much I hate this stuff.
I actually think prenups would have helped, but I guess it was hard to foresee you would have needed one given how she was 14 years ago.
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Re: Need Cash for Divorce Payout
In spite of the stress involved, repeat to yourself, this is survivable.
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I do this regularly. I will survive and it's only money.
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I do this regularly. I will survive and it's only money.
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Re: Need Cash for Divorce Payout
Set up the HELOC, but use up the emergency fund before you draw on the HELOC. You might have time to rebuild the EF before you need it. If emergency hits, then you use the HELOC.
Ask your parents -- if your EF covers the $50k, I'd tell them now what the situation is and ask if they'd be backup if you are hit with an emergency. (Gives them time to adjust mentally and financially.) If EF doesn't cover it, ask for help now with the gap.
Ask your parents -- if your EF covers the $50k, I'd tell them now what the situation is and ask if they'd be backup if you are hit with an emergency. (Gives them time to adjust mentally and financially.) If EF doesn't cover it, ask for help now with the gap.
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Re: Need Cash for Divorce Payout
It is infuriating. I married the good earner with ambition not this lazy waste of life. She chose to take a nosedive in life, why should I have to pay for it? It's crazy But I can't even think like that because it won't help. I need to look at it as I get to take my half and live my own life.Marseille07 wrote: ↑Wed Apr 21, 2021 2:41 pmAnd you have to pay alimony now? Sounds like you've been had, really infuriating.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:35 pmProbably not much. 14 years ago when we got married she was making more money than I was, had ambition, and was mentally sound. Over time she became lazy, didn't feel she needed to contribute much of anything, and took everything I did for granted.Marseille07 wrote: ↑Wed Apr 21, 2021 2:26 pmSorry to hear your situation. I wonder how much prenups would have helped, if any.whoshighpitch wrote: ↑Wed Apr 21, 2021 2:24 pm We are in the negotiating phase now. Her lawyer will send a demand letter to my lawyer, then we sign it, then it goes to the divorce master to finalize. I'm sure it won't be that smooth though. I can't put into words how much I hate this stuff.
I actually think prenups would have helped, but I guess it was hard to foresee you would have needed one given how she was 14 years ago.
Re: Need Cash for Divorce Payout
Excellent advice!notPatience wrote: ↑Wed Apr 21, 2021 2:48 pm Set up the HELOC, but use up the emergency fund before you draw on the HELOC. You might have time to rebuild the EF before you need it. If emergency hits, then you use the HELOC.
Ask your parents -- if your EF covers the $50k, I'd tell them now what the situation is and ask if they'd be backup if you are hit with an emergency. (Gives them time to adjust mentally and financially.) If EF doesn't cover it, ask for help now with the gap.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: Need Cash for Divorce Payout
Thank you for my laugh-of-the-day!whoshighpitch wrote: ↑Wed Apr 21, 2021 2:13 pmI don't know if my attorney is competent but at least he's expensive.8foot7 wrote: ↑Wed Apr 21, 2021 2:11 pmAny competent divorce lawyer would word the lump sum alimony agreement receipt as once and final.TomatoTomahto wrote: ↑Wed Apr 21, 2021 2:02 pmIANAL, but I would say definitely not. If there are children involved, there are workarounds for the spendthrift spouse to get another bite of the apple, but OP did not mention children.tiburblium wrote: ↑Wed Apr 21, 2021 1:56 pm If you do a lumpsum payout and she miss manages her finances, can she come back and request more money from you later? Just curious if there would be any benefit in providing the regular allowance vs the lumpsum?
Of course, child support can be assessed, re-assessed, changed generally at any time and certainly within fixed, relatively short intervals.
Sorry that you and your daughters are going through this.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Re: Need Cash for Divorce Payout
Ha, glad someone caught it. They've been through too much but it will be so much better when this is done. Thanks for the good thoughts.delamer wrote: ↑Wed Apr 21, 2021 2:53 pmThank you for my laugh-of-the-day!whoshighpitch wrote: ↑Wed Apr 21, 2021 2:13 pmI don't know if my attorney is competent but at least he's expensive.8foot7 wrote: ↑Wed Apr 21, 2021 2:11 pmAny competent divorce lawyer would word the lump sum alimony agreement receipt as once and final.TomatoTomahto wrote: ↑Wed Apr 21, 2021 2:02 pmIANAL, but I would say definitely not. If there are children involved, there are workarounds for the spendthrift spouse to get another bite of the apple, but OP did not mention children.tiburblium wrote: ↑Wed Apr 21, 2021 1:56 pm If you do a lumpsum payout and she miss manages her finances, can she come back and request more money from you later? Just curious if there would be any benefit in providing the regular allowance vs the lumpsum?
Of course, child support can be assessed, re-assessed, changed generally at any time and certainly within fixed, relatively short intervals.
Sorry that you and your daughters are going through this.
Re: Need Cash for Divorce Payout
Just curious, OP, but did she become a stay-at-home mom of your three girls?
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Re: Need Cash for Divorce Payout
whoshighpitch wrote: ↑Wed Apr 21, 2021 12:34 pm I need to come up with $50,000 to pay a lump sum alimony payment. Wife has agreed to take a lesser amount in alimony if it's a lump sum. I have approximately $250,000 in a ROTH IRA and $180,000 in a Traditional IRA. I know I can take out principal from a ROTH penalty free, as I've already paid tax on the principal. I don't know what can be done with a Traditional IRA. Maybe there are other options, like taking a home equity loan to pay her off instead of tapping the IRA. Any help is appreciated. Stressful time.
I would suggest you at least look into a CARES act distribution:OP has three beautiful little girls. Oldest living with me and 2 youngest living with mom.
https://www.jacksonhewitt.com/tax-help/ ... ithdrawal/
Another option is to transfer IRA money directly:
https://www.investopedia.com/articles/r ... 060403.asp
Sorry to hear about the difficult situation I wish you and your family well.
Please don't forget to save for the kids!
In my personal opinion (!!!!!) given you have three kids I would suggest a comprise in setting up 529/ UTMAs with you contributing significantly more.
Diversification.