How to Prepare for Divorce Part 2: Child Support and Dividing Assets

In this episode:

00:00 – 05:46: Debunking Common Divorce Myths
05:47 – 08:08: How to Decide on the Family Home
08:09 – 18:56: The Ins and Outs of Child Support
18:57 – 22:43: Financial Infidelity and Hidden Assets
22:44 – 28:37: Complex Situations: Crypto and Business Valuations
28:38 – 33:36: Inheritance and Retirement Accounts
33:37 – 42:32: Your Financial Life After Divorce
42:33 – 46:11: Final Tips and Closing

In part two of our divorce episode series, host and SVP Wealth Fiduciary Advisor, Kelly Mould, sits down with VP Wealth and Estate Administrator, Liz Pfeuffer, who spent years as a court commissioner presiding over divorce cases. They debunk common divorce myths, explain how child support is calculated and break down the critical differences between retirement accounts and liquid assets. The conversation covers financial infidelity, hidden assets, cryptocurrency valuation, business valuations, inheritance and more.

5 Key Takeaways

1. Don’t listen to these common divorce myths 

Prenups don't automatically expire after ten years (at least not in Wisconsin). Children don't get to pick which parent they live with at age 14. And the 50/50 split is a starting point, not a guarantee. Walking into a divorce with misinformation — whether it comes from friends, family or AI — can cost you. Knowing the actual rules of your state before you begin is non-negotiable.

2. Child support income is broader than your paycheck 

Wisconsin casts a wide net when calculating gross income for child support. It's not just your salary — it's your base pay, bonuses and benefits (the "Three B's"). The most reliable income document is your W-2's Social Security wages line, which captures pre-tax gross income more accurately.

3. Retirement accounts are not the same as cash

A $250,000 balance in a 401(k) is not equivalent to $250,000 in a savings account. Once taxes and early withdrawal penalties are applied, that balance could shrink to $175,000. Comparing retirement assets to liquid assets dollar-for-dollar is one of the most common and costly mistakes in divorce settlements. Treat it as apples to oranges and bring in a financial professional to properly calculate the after-tax present value.

4. Financial infidelity leaves a paper trail and kills your credibility

Hidden bank accounts, secret credit cards, gambling debts and undisclosed assets are increasingly common and increasingly traceable. When they're discovered, they don't just shift the property division, they also destroy credibility with the judge. A witness who's been caught hiding assets or swapping accounts has effectively surrendered their standing in court. Most financial schemes leave a traceable paper trail and forensic accountants know exactly where to look.

5. Maintenance has no formula and judges have wide discretion

Unlike child support, maintenance (alimony) cannot be calculated with a formula. Wisconsin courts consider nine statutory factors: Length of marriage, age, health, education, earning capacity, property division and more, plus a broad catchall for anything else the judge deems relevant. Two judges hearing identical facts could reach completely opposite rulings and both could withstand appeal. Settlement, not trial, is often the smarter play.

Commonly Asked Divorce Questions

1. How is a 401(k) balance different from a savings account in a divorce? 

A 401(k) and a standard savings account are not the same thing in a divorce settlement due to future tax liabilities and potential penalties. While both may show a $250,000 balance, a savings account is liquid cash. A 401(k) balance could shrink significantly once ordinary income taxes and early withdrawal penalties are applied. Comparing these assets dollar-for-dollar is a common mistake. We recommend working with a financial professional to calculate the after-tax present value of retirement accounts before finalizing your property division.

2. What counts as income when the court calculates child support? 

When calculating child support, the legal definition of income often includes much more than just your base salary. Wisconsin courts evaluate your total gross income, which includes bonuses and employer-paid benefits. For high earners, this means perks like company cars, corporate housing and cell phone allowances can all count toward your support obligation. Because pay stubs can be misleading, courts typically rely on the W-2 Social Security wages line as the most accurate reflection of pre-tax gross income.

3. Is a 50/50 asset split guaranteed in a divorce?

A 50/50 division of assets is a legal starting point in many states but it is not a guarantee. Courts seek an equitable division, which means the split should be fair, but not necessarily mathematically equal. Judges consider various factors, including the length of the marriage, each spouse's earning capacity and even instances of "financial infidelity" like hidden bank accounts or secret debts. If you have complex assets like a family business or inheritance, the final division may deviate from a simple 50/50 split to ensure a fair outcome for both parties.

Divorce can feel overwhelming but the financial side of it doesn’t have to be. Connect with an advisor to get personalized advice. Missed our first episode? Tune in to learn about financial disclosure statements and what to prepare before you file for divorce.