CDFA Module 2 Exam Questions And Answers

CDFA Module 2 Exam Questions And Answers Asset most likely to be couple's most valuable? - ANS- Family Home Separate Property - ANS- Property a person brings into the marriage; inherits during the marriage; or receives as a gift during the marriage. Marital Property - ANS- Everything acquired during the marriage, regardless of which spouse owns the property (including the increase in value of property in some states). Key documents for collecting financial information - ANS- financial affidavit, and asset/liability comparison worksheet Ways in which assets are traditionally hidden: - ANS- 1) person denies existence of asset; 2) assets transferred to third party; 3) person claims asset was lost or dissipated; or 4) person creates false debt First place to look for hidden assets? - ANS- Tax returns; good idea to look over past 5 years Appraisal - ANS- procedure for determining FMV of asset when it is sold or divided Arbitration - ANS- submitting dispute to someone who is not a judge; decision is usually binding and final Arrearages - ANS- Difference between amount of spousal/child support paid, and amount required under court order Assets - ANSAssets - ANS- Cash, property, investments, goodwill, and other items of value (as defined by state law) that appear on a balance sheet indicating the net worth of an individual or a business. Asset Inventory - ANS- Collection of financial data that includes information on assets and liabilities. Key documents used are the Financial Affidavit and Asset/Liability Comparison worksheet. Bankruptcy - ANS- See Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Best Interest of the Child - ANS- A discretionary legal standard used by judges when making decisions about custody, visitation, and support for a child when the parents are divorcing. Bunching Deductions - ANS- Tax strategy that involves "bunching" itemized deductions so that they are high in one year and low the following year. The standard deduction can be used on the alternate year. Career Asset - ANS- Assets tied to one's career (health insurance, stock options, retirement plans, etc.) Certified Business Appraiser (CBA) - ANS- An individual who is certified in business valuations. Change of Venue: A change of judges or geographical location, requested by a party to the action who feels that the change is justified by state law. Chapter 7 Bankruptcy - ANS- Type of bankruptcy filing that allows you to liquidate all of your assets and use the proceeds to pay off your debts, erasing your debts that cannot be paid off in full. All unsecured debts are forgiven and all assets over statutory minimum protected amounts are forfeited. Chapter 13 Bankruptcy - ANS- Type of bankruptcy filing that allows you to develop a pay-off plan over a three-year period. Some of the debts may be discharged. Childcare Credit - ANS- (dependency exemption) a nonrefundable childcare tax credit available to the custodial parent who pays for child or dependent care expenses so that they can be gainfully employed. Child Contingency Rule - ANS- States that if any amount of spousal support specified in the divorce decree is reduced: (a) upon the happening of any contingency related to the child; or (b) at a time that can be clearly associated with a contingency related to the child, then the amount of the reduction will be treated as child support, rather than spousal support. These payments will be considered child support when the payments begin. (IRS Code Section 71(c)(2)) Child Support - ANS- The amount of money paid by a non-custodial parent to the custodial parent for a child's day-to-day expenses and other special needs. Each state is required by Congress to have written child support guidelines and enforcement procedures. Child Support Guidelines - ANS- A series of mathematical formulas used to calculate the amount of child support to be paid in some cases. Congress has mandated that states adopt child support guidelines and support enforcement procedures. COBRA - ANS- Consolidated Omnibus Budget Reconciliation Act (COBRA) law passed in 1986. It allows an ex-spouse to continue to receive health insurance coverage from his/her former spouse's employer if the employer has at least 20 employees, for up to three years after the divorce. Premiums for this coverage are typically higher than when they were covered under the employer's plan. It should be noted that the normal COBRA provision states that if an employee leaves or is fired from a job, he or she can get health insurance from that company for 18 months. However, in the case of a divorce it is extended to three years or 36 months. Collaborative Divorce - ANS- A team approach to divorce in which divorcing couples obtain professional help from specialists in the legal, financial, and mental health fields; when needed, additional professionals (including child/parenting experts) may be called in to help the couple settle their case. Collaborative Law - ANS- Collaborative Law is a new dispute resolution model in which each party retains their own attorney who has gone through specialized "Collaborative Law" training. The lawyer's only job is to help settle the dispute. All parties agree to work together respectfully, honestly, and in good faith to try to find "win-win" solutions to the legitimate needs of both parties. No one may go to court, or even threaten to do so. If that should occur, the Collaborative Law process terminates and both lawyers are disqualified from any further involvement in the case. Collusion - ANS- An agreement between two or more persons where one of the parties brings false charges against the other. In a divorce case, the husband and wife may agree to use adultery as a ground in order to obtain divorce more quickly, knowing full well that adultery was not committed. Collusion is illegal. Common Law Marriage - ANS- A judicially recognized marriage in some states, usually based on cohabitation where no formal marriage ceremony has taken place. See page 35 for more details.