$0.99 on iTunes

For one who is contemplating a divorce or going through a divorce, working through the overall division of the marital estate can be challenging. “Estate Divider” is a system that allows the user to:

• Input the values for the various assets and liabilities of the Estate,
• Assign specific assets and liabilities to “Spouse A” or “Spouse B” (such as a house or car) or, allocate asset value between “Spouse A” and “Spouse B” (such as a bank account)
• Input an overall desired division of the estate between “Spouse A” and “Spouse B”
• Calculate the amount of money needed to accomplish the split entered in 2)
  express the amount of money needed to accomplish the split in terms of A) a cash payment from the spouse with the higher initial allocation or B) alimony, or a mix of both
• If any of the equalizing payment is allocated to alimony, determine the post tax equivalent of the alimony to be received by payee and the post tax cost of the alimony to be paid by payor
• Calculate any overall tax advantage to payor and payee by structuring the part or all of the equalizing payment as alimony
• Email yourself, your attorney, and/or your financial advisor your desired settlement and outcome of the property division

Purchase from iTunes

Directions

To use this app, first write down the current values of your various assets and liabilities. View the categories on the app as a guide for categorizing your assets using and liabilities using current values and account balances.

Spouse A will be the spouse paying alimony who will be getting a higher share of illiquid assets (initially).

For each asset, input the value and associated debt. Assign the projected portion of each value to Spouse A and the remainder of the value (if any) will be automatically allocated to Spouse B.

Repeat the process for all assets and liabilities. At the top of the screen, a running total of the value of assets, debt and amounts allocated to each spouse will be maintained. Within each category, the assets will be allocated for that category at the top of the screen.

When finished with all of the asset and liability input, press the “Alimony” button

First, input the % of the estate that Spouse A should get and the amount that A has to pay to B will be shown : “Equalizing Payment to B”

Now, determine how much of that payment will be paid to B by A in cash at the time of the settlement of the divorce. Enter that amount, or leave blank if $0.

The difference between the total equalizing payment and the amount allocated to cash is how much will be paid in Alimony or a Note.

All that has to be decided is for how many months the payout will be “Months of Alimony” field.

If the payment is in the form of Alimony, enter Spouse A’s and Spouse B’s anticipated tax rate post divorce.

If the payment is in the form of a note, leave those fields blank. The interest rate used in all scenarios is 6%.

Simple Example:

Inputs:

Go to Real Estate, House, enter $150,000 for value, $25,000 for debt. Allocate net $100,000 to spouse A. Go back by hitting “Estate Divider”

Go to Bank Account, Bank Account 1, enter $25,000, allocate all to Spouse B. Go back by hitting “Estate Divider”

Currently, the estate is divided $125,00 to A and $25,000 to B. There is a $100,000 difference between A and B with A having that much more.

Hit the “Alimony Button” and input “50″ in the “Desired % to Spouse A” field. B needs to be paid $50,000 since it is a $150,000 estate and that would bring B to ½, or $75,000.

Input $10,000 in “Cash Portion of Equalizing payment”. B needs $40,000 in alimony to make up the rest of the $50,000.

Input “36″ in number of months. Input “0″  in both tax rate fields

The result will be $1,211 for the monthly payment from A to B. This figure takes into account the time value of money over 36 months at a 6% interest rate. This figure is just the monthly payment required to pay off a $40,000 note at 6% interest over three years and does not consider the tax effect of alimony.

Now, input 25% for A’s tax rate and 20% for B’s tax rate. This is an alimony scenario where the payment from A is taxable to B and deductible to A for federal income tax purposes. The payment is now $1,513 from A to B. The extra $302 in the payment will be paid by B to the federal government in taxes since alimony is taxable to the recipient.

Finally, using the “alimony” scenario results in an overall tax savings if A pays tax at a higher rate than B. In this case, A pays taxes at 25% compared to B’s 20%. The net cost of the alimony to B is $37,500, so together, the parties save a net $2,500 by structuring the deal as alimony.