How should I deal with the exercise of stock options?
Consider the following example: An employee has an option on a stock. In the year one, he exercises the option and buys the stock. Two years later, he sells the stock. The exercise price of the option is $60. The value of the stock on the date the option is exercised is $100. The employee […]
What value should I give to unvested stock options?
Different states have different approaches to valuing stock options. Some states assign no value. Other states assign full face value. Still other states are somewhere in between. We suggest that you pick or negotiate some value in between. Then enter it as an Investment that pays no interest or dividends (but that may have a […]
How should I enter restricted vs unrestricted stock options?
A stock option is a right in which the company gives the employee the right to buy a number of shares of the company’s stock, usually at the current price. Let’s say the price when the option is issued is $100 a share. If the stock price goes up by $10, say, the employee has […]
How can I show children’s assets (including 529 Plans) being used for college?
Suppose you have a pool of assets that you have designated as children’s assets. They may be in a 529 Plan, or not. You can enter them as either “Cash and Investment” assets, or as “IRA/401k” assets. The advantage of entering it as an IRA/401k is that you can enter annual contributions, and the software […]
What is Accumulated Savings?
In real life, when there is positive net cash flow at the end of the year, it is reinvested. The Accumulated Savings account in Family Law Software represents that reinvestment account. In real life, those funds are typically invest in a portfolio. In the software, that happens as well. The Accumulated Savings account is invested […]
How can I stop interest and dividends from accruing on accumulated savings?
Here’s how to set the rate of return on Accumulated Savings to zero.
Can I specify a fixed-dollar reinvestment in specific investments?
You can not specify a fixed-dollar reinvestment in specific investments. Here is why: The software is concerned with overall cash flows. Any positive net cash flow in a given year will be put into the Accumulated Savings account. The Accumulated Savings account is invested in a hypothetical diversified portfolio. You can see and change the […]
How should I handle Health Savings Account (HSA) and Flexible Spending Account (FSA) balances?
Our approach to Health Savings Account and Flexible Spending Accounts is as follows: 1. When the contribution is made, we treat it as a deduction. Enter it in the appropriate living expense category (health insurance or child care, usually), and choose a tax category of “FSA, Flex, Caf Etc.” 2. When the actual expenditure out […]
Why am I not seeing any current income on the investments? Or, why am I not seeing appreciation?
To enter income on an asset, go to the “more info” screen for that asset, and enter income in its appropriate tax category. Enter annual appreciation in the field for appreciation. Current income will be taxed currently, based on the tax category you specify. If you enter net cash flow instead of a Rate (%), […]
How does the software show compounding of reinvested income?
The way the software shows compounding of reinvested income is as follows: At the end of the year, any positive after-tax cash (the last column on the Net After-Tax Cash Flow Spreadsheet) is moved into an account called the “Accumulated Savings” account. Our goal with this Accumulated Savings account is to mimic the performance of […]