In my practice as a certified divorce planner, I often find that people do not even consider using these assets for pre-retirement needs. And yet there is no objective reason why that must be the case. People believe mistakenly -- that taking distributions from retirement assets prior to age 59 must result in a 10% penalty tax to Uncle Sam.
The lack of ready money can delay or even aggravate the negotiations over the divorce settlement which may only further reduce available cash.
Yet some divorcing couples have plenty of money in the form of retirement assets -- which could solve these problems. People think retirement assets are only for retirement.
For the sole proprietorship that's considering an S corporation, the S corporation choice may require more or better bookkeeping and accounting.
And this "extra accounting" disadvantage means that either you'll need to learn more accounting or you'll need to pay a bookkeeper or accountant to do it.
There may be one-time expenses related to the transition, such as making a down payment on a new house or paying attorneys fees.
There also may be an ongoing need for more cash flow after the divorce than ones salary, child support, and/or alimony can provide.
You'll also, as a practical matter, need to buy a copy of an accounting software program like Quick Books.
As compared to a sole proprietor, S corporation tax returns also cost more to prepare.
GSCPA offers numerous opportunities to link with current and potential colleagues and share information on best practices.