Module 9: Specialty Areas and Other Considerations Flashcards
Gary works for an employer who has 20 or more employees. Following his divorce from Martha, how many months will Martha be eligible for COBRA insurance coverage?
36 months
Since there are 20 or more employees, she is eligible for COBRA for 36 months.
Matt and Claire have joint credit card debt of $8,000. Claire charged $6,000, and Matt charged $2,000 on the card. The divorce decree states that Matt will pay off the credit card debt. Who is liable for the debts?
Matt and Claire are both liable for this debt.
This is a joint debt, and they will both be liable to the credit card company. However, Matt will be the one that must make the payments according to the judgment.
Dave is ordered to pay lifetime spousal support and child support payments to his ex-wife, Sheila. Life insurance would be required in which situation?
Life insurance is only required if the judge orders it. It can be used to protect both child support and spousal support payments.
Life insurance is often a requirement in a divorce decree and should be obtained at which of the following times?
Insurance should be obtained as soon as the parties have an idea that it is required. If the spouse cannot get insurance (for health reasons, etc.), the settlement can be changed to make up for the lack of insurance.
Alex and Kim have a joint account with $25,000 in it, an ABC credit card with a balance of $2,500, and an XYZ credit card with a balance of $2,500. These are their only assets and debts. Which division of assets and debts makes the most financial sense?
The best option is for them to pay off the credit cards. That way, each will not be able to affect the other’s credit post-divorce.
Which of the following can be discharged in bankruptcy?
A) Spousal support in arrears
B) Child support in arrears
C) Student loans
D) Property settlement note
D) Property settlement note
Property settlement notes, especially unsecured notes, are almost always discharged in bankruptcy.
Sam has a $500,000 life insurance policy with a cash surrender value of $32,000 that earns interest annually. This policy is NOT likely to be which of the following types of insurance?
A) Whole life insurance
B) Universal life insurance
C) Indexed universal life insurance
D) Term life insurance
D) Term life insurance
Cash value is a feature which is not found in term life insurance policies.
How many ex-spouses may collect on one worker’s Social Security retirement benefits, assuming all other requirements are met?
There is no limit on the number of ex-spouses who can collect Social Security benefits. As long as he is married to each one for ten years or longer, they each get half of his Social Security benefit.
Margaret, who just turned age 65, was married first to Louis for 15 years and then to Harold for 12 years. She has not remarried since divorcing Harold. Louis, age 66, is receiving $1,250 per month from Social Security. Harold, age 67, is receiving $1,080 per month. Margaret has earned a benefit from Social Security of $820 per month. What is the highest Social Security benefit that Margaret is currently eligible to receive?
$820
Margaret can only take benefits from one account, so she will receive the highest benefit of $820 from her own account, $625 from Louis’s account, or $540 from Harold’s account.
Marty has a Universal Life Insurance policy with a death benefit of $100,000 and a cash surrender value of $10,000. Marty also has a 10-year term policy with a death benefit of $100,000. What is the asset value of all of the insurance policies?
$10,000
The cash value of the life insurance is the asset value.
If life insurance insuring the life of the first spouse is transferred to the other spouse pursuant to the divorce, what happens to the proceeds upon the death of the insured?
The death proceeds are non-taxable income to the recipient.
Whether you receive a lump sum or periodic payments, as long as the amount does not exceed the death benefit specified in the policy, the proceeds are not taxable income. However, should one receive more than the stated death benefit, the additional funds are considered interest and treated as income for tax purposes.
To equalize their divorce settlement, Joe signed a property settlement note for 16,000. Maura is concerned that Joe will attempt to discharge this debt and wants to make sure that she is protected should he file for bankruptcy. What should Maura’s CDFA professional suggest?
The property settlement note can be collateralized with a QDRO to protect it from bankruptcy filing.
A property settlement note that is collaterized by a QDRO would be protected from bankruptcy filing.
Bob (age 65) and Sally (age 57) divorced after ten years of marriage. Bob received Social Security of $1,000 per month. Sally’s Social Security benefit will be $750 per month at retirement. Bob died shortly after the divorce. How much will Sally be able to collect from Social Security at the time of Bob’s death?
$0
Sally does not qualify for widow’s benefits because she has not reached the age of 60.
Which type of bankruptcy allows for the liquidation of all assets to pay off debt and then the remainder of the unpaid debt is forgiven?
Chapter 7
