Desperately need answer on stock liquidation!

auntjenAugust 1, 2003

I am in the final stages of my divorce, with the decree being routed between parties for approval. I anticipate that this should all be wrapped up within the next couple of weeks. (By the way, I live in Texas, which is a community property state.)

Terms of our mediation agreement spell out that my ex-husband will liquidate two accounts - one at Merrill Lynch and one at Prudential. Here is the language in the decree:

Wife awarded: 100% of Merrill Lynch of plus or minus $****** (fluctuates) and husband allowed to sell stock in account and husband may have benefit of losses for tax purposes, but wife awarded 100% of account plus or minus $****** (basis is higher). [Same language for Prudential account.]

(Finally), here's my question: My ex will put in an order to the brokers to liquidate these accounts. I assume that this is NOT an uncommon request, and that brokerage firms have very strict regulations on how they go about doing this. BUT, I am not certain, and keep having thoughts of "what if the brokers liquidate these accounts in small 'chunks', over a period of time, accruing for themselves substantial fees and reducing the amount that I end up with in the end???" Can they do such a thing? Am I pretty much at the mercy of the brokers as to how they go about liquidating?

Please ... if anyone can help me understand how this is done, I would be SO appreciative. I have an appointment scheduled with my attorney to discuss this matter, but couldn't see him until next week and I'm afraid I'm going to spend my weekend tied up in knots, worrying over this.

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I think they must liquidate the account according to the directions they receive from their customers. it's not their account; they don't get to choose.

I closed an account once, wrote and said, just send me all the money, and I got one big fat old check.

The bggest problem may be is these accounts were ever tax free, in which case they may withhold a certain amount on behalf of the government unless the instructions are to pay to another tax-sheltered account, etc.

I'd think since ownership is also changing (from joint to single, at the very least), that you won't be able to just roll it over; that might get messier.

But if the accounts aren't tax sheltered at all, then they must follow your husband's directions. He can tell them to send him a statement and you a check, or him a check for $X and you a check for $Y, or you checks in stages, or whatever.

But if he simply says "liquidate the account" they'll have to close it completely all at once.

    Bookmark   August 1, 2003 at 12:47PM
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Thank you so much for the response, Tally Sue!

I suppose the important thing for me to be looking at right now is revising the language in the draft of the final decree to give my ex much more explicit instructions on how to liquidate these accounts. I can just see him trying to pull some jackass stunt like sending me checks in stages, when he KNOWS what I'm really wanting is a lump sum.

    Bookmark   August 1, 2003 at 12:55PM
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Yep. the language in the decree is where you want to be specific.

Then, you might not even have to rely in HIM to initiate the transfer of ownership; your laywer could send a copy of the court decree, and they'd simply have to follow it.

You might consider forcing a simple transfer of ownership, with him being sent a closing statement w/ profit or loss info, and then YOU can keep or close the accounts as you wish.

    Bookmark   August 1, 2003 at 12:58PM
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Looks like other reply didnt' go thru...

If he's taking losses, are you going to be taxed at Capital Gains on money you get? My accountant also has offices in Dallas. He is TAX accountant, will go stand up before government if you ever get audited. If you want his name/email, email me in private
put TAXES in subject line.


    Bookmark   August 2, 2003 at 1:31AM
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My first question is are you on this account? If you are than you can call and have it liquidated and a check sent to you if they have not frozen the account at his or your request. The firms must follow orders given by the court or the person(s) on the account. If I have a joint account and my husband calls to liquidate than they will take an order from him because he is on the account. If the account is in my husbands name than I would send them a copy of the divorc degree stating the name change. You will have to fill out new paperwork to open an account for it to be put into. If these accounts are tax sheltered than you are dealing with a totally different sitituion. You will need to roll the money over. Make sure you find out if it is a tax sheltered account. It should be somewhere on the statement. If it is in both of your names it is not a tax sheltered account like an IRA ect. Please be more specific in your relpy to my response and I will tell you exactly what you need to do as I have had to due this with both of these firms with my divorce. About the fees. The firms can only liquidate based on the court order or the people on the account. They cannot do what ever they want. I would look at your cost basis on each of these stocks and see if you really want to sell them or TRANSFER them. I strongly suggest transferring them if they are way down from what you bot them. Call the offices and speak to your advisor. Tell them you want to open an account and what the sititution is. They should give you advice on all of this.

    Bookmark   August 3, 2003 at 8:23PM
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Do you know someone who is a financial advisor or an accountant - whom you can trust?

Or do you know someone in community, social, church, etc., group who does such? If you are an active member of such a group, e.g. church, synagogue, mosque, etc., some of the leaders may be able to put you in touch with a knowledgeable person who is also trustworthy.

Have you received - or seen - periodic statements of the account(s)? Do you know whether they are in your husband's name only, or in both of your names?

If your name appears as part owner of the account, you can call the broker and discuss the issues with her/him.

Are they sheltered investments, as some others have asked? If so, if it may be possible to roll them over without tax liability, that would be most effective. If so, you will probably need to make allowance in the settlement for the tax issues that will need to be dealt with when liquidated, eventually.

Do you know what types of investment are involved?

Do you have any idea of the prices that were paid when the various issues were purchased? And the price now? If there are some where the value has increased and some where it has decreased, likely the total value of such increases and decreases can be balanced off, with tax being levied on net gain.

As I am unfamiliar with U.S. laws, I can be of only minimal assistance.

joyful guy

    Bookmark   August 7, 2003 at 6:04PM
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