Separation: Nine Tips to Help You as You Move Through the Divorce Process
There may be 50 ways to leave your lover but there’s a heck of a lot more to it than just being creative with the word good-bye. More often than not, the way you handle your exit will determine your ex’s entrance — into your wallet, your circle of friends, and the judge’s predisposition on settlement day. Before you win a petty battle only to lose the whole dang war, here are nine tips to arm you for victory where and when it counts!
1. Shut up, zip it, mum’s the word.
“Stay cool. Do not discuss details with friends and relatives, they will only confuse you and your words can be used against you if they get leaked to the opposing camp,” says Joe DuCanto, named by the Leading Lawyer Network as one of the Top 100 Leading Lawyers in Illinois and an Illinois Super Lawyer. “Listen to your lawyer and share details only with him or her.”
2. Always tell the truth.
“Answer questions from the other side truthfully but briefly. Long answers can reveal too much. Always tell the truth, but don’t always be telling it,” advises DuCanto.
3. Don’t handpick your share.
“Telling the other side what you want may lead to handing them leverage to use against you later. If you really want the antique tea set or the newer car, just tell your attorney that, and no one else! Don’t discuss with your spouse what you will take, do, want or need,” says DuCanto. “Leave that to your lawyers.”
4. Don’t shoot the goose.
“Don’t set out to ruin or destroy the other party. If you do, you’ll hurt yourself, the kids, and maybe the goose that used to lay the golden eggs,” warns DuCanto. “Too many husbands go to jail because the wife was angry and spilled the beans.” Much too late, the woman comes to realize that the man can’t pay alimony or child support if he’s behind bars instead of working! The same holds true for men trying to hurt or demean their wives. You might have held all the winning cards if she has a drinking problem or cheated on you, but you’ll blow it if you come across as abusive verbally, emotionally or physically.
5. Do think of you first.
“It’s easy to cave to the emotions of the moment and agree to too much trying to assuage your guilt or ensure the kids have enough. But that strategy can backfire and leave you destitute in the long-term. Forget about anything other than yourself; no more Mister Nice Guy,” says DuCanto. “If you take care of number one, all the rest will follow.” Think of it like the airplane drill where you are told to put your oxygen mask on first, and then your kid’s. The thought process is the same: you cannot help your kids if you are out of commission. Tend to yourself first; you can always give your kids more later as you can afford it. for starters.”
6. Don’t second guess the process. “Do you even have grounds for divorce? Have you lived in your state long enough to meet the residency requirements? These are important questions you need to ask an attorney BEFORE you tell your spouse you are leaving,” says Mark Guralnick, a veteran divorce attorney licensed to practice in seven states and four countries. He is also author of six books on divorce. Spending time with a lawyer will enable you to negotiate with your spouse more knowledgeably.”
7. Accept the change.
“No matter how you cut it, one-half of something is not greater than the original sum. Mentally prepare to adjust your lifestyle following divorce,” advises Steve Rhode, President of Myvesta.org, a non-profit consumer debt assistance service. “When two people split there is often a change in the financial power of each newly separated spouse.”
8. Do watch the money.
“When you know separation is in the near future, think about dividing any cash available into separate sole accounts,” says Rhode. “I just had a client last week where the wife cleaned out the joint account before she left.” Separating the money, or at least starting an individual bank account with your next paycheck can contain your losses. If your spouse does clean you out, keep a journal and bank records to show to the judge later. Most courts accept journals as evidence which can help your case dramatically. It can also help your memory if you have to take the stand in court.
9. Do collect vital information.
“Inventory all debts; margin investment accounts, credit cards, auto loans, auto leases, personal loans, loans made to others,” says Thomas Duffy, CFP and president of Jersey Shore Financial Advisors, LLC. “Also get copies of credit reports on both spouses; credit card statements for last few years showing spending patterns for each; copies of tax returns for last two to three years; pay stubs for last several months;detailed employment history for both spouses indicating benefits such as deferred compensation, health care in retirement or other retiree benefits. For contested split-ups photographic evidence, for example, videotape, of hard assets, detailed records showing large and or unusual asset movements, withdrawals etc., need to be gathered too,” he says.
The main purpose of grouping taxpayers according to filing status is based on the presumption that, with the same income, single people can afford to pay a higher tax rate than those with children and, by allowing joint filing, it simplifies tax filing for married couples. There are 5 filing statuses:
State law determines single status but it is sometimes modified by federal law. Generally, single means unmarried, divorced or legally separated at the end of the tax year. Taxpayers filing as single or as married filing separately pay the highest tax rates.
Head of Household Status
The head of household status can be claimed if:
you are unmarried, or are considered unmarried, by year-end,
you paid more than ½ of the expenses for maintaining a household,
you provided more than 50% support for a child, parent, or other qualifying relative, and who, except for a parent, lived with you for more than ½ year, and
you were a United States citizen or resident for the entire year.
A qualifying child or relative must be legally related to you. Hence, boyfriends, girlfriends, or their children do not qualify you for head of household status even if they live with you and you provide more than ½ of their support.
You are considered unmarried if you are:
single at the end of the tax year
legally separated or divorced under a final court decree by the end of the tax year
Note that the court decree must be final; provisional decrees for custody or support do not qualify as a legal separation.
married but lived apart from your spouse during the last 6 months of the tax year
married to a spouse who was a nonresident alien at any time during the tax year and you did not elect to file a joint return, reporting your joint worldwide income
In determining whether a child lives with you for more than ½ year, temporary absences, such as vacation or when the child stays with the other parent pursuant to a child custody agreement does not count. If a dependent dies before the end of the tax year, head of household status can still be claimed if the taxpayer provided more than ½ of the cost of maintaining the household before the dependent’s death. A parent may be claimed as a dependent if you paid more than ½ of your parent’s household expenses, even if the parent lives elsewhere.
Household expenses include utilities, repairs, mortgage interest, property taxes, rent, property insurance, domestic help, and food eaten within the home, but does not include the cost of clothing, education, medical expenses, life insurance, vacation costs, or any provided transportation. In other words, expenses that are specifically for the individual are generally not included: only expenses for the household are counted. Moreover, you cannot count the value of your work around the home, since it is too easy to overstate its value.
Abandoned spouse rules allow a taxpayer who was abandoned by her spouse to file as head of household. Congress enacted these rules because otherwise the separated parent may be forced to use unfavorable tax rates if she has to file married filing separately. To qualify as an abandoned spouse, you must satisfy the following requirements:
you did not file a joint return
you can claim the child, stepchild, or adopted child as a dependent
your qualified dependent lived with you for more than ½ year
you paid for more than ½ of household expenses during the last 6 months of the tax year
your spouse did not live in the home during the last 6 months of the tax year
As a custodial parent, you can allow your ex-spouse to claim 1 or more of your dependents without giving up your head of household status, which may be advantageous if your ex-spouse is in a higher income tax bracket, but whose income is still below the phase-out limit for claiming dependent deductions or who is not subject to the alternative minimum tax, which is not reduced by exemptions. Who claims who can be changed from year to year, between you and your ex-spouse, but the noncustodial parent must file Form 8332 (Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent) for every year that he claims the exemption, and you must also sign the form.
Certain tax benefits are only available to joint filers, especially if 1 spouse has little or no income. For instance, the working spouse can claim an IRA deduction for a nonworking spouse. Although a couple filing separately can claim an IRA contribution, the phaseout limit for a married person filing separately is $10,000 of modified adjusted gross income (MAGI), which, for most individuals, is equal to adjusted gross income. Since this is much less than what most people earn, filing separately effectively eliminates IRA deductions. For couples filing separately, the alternative minimum tax exemption and the right to deduct up to $3,000 of net capital losses against other income is ½ of the amount available to joint and other filers. Moreover, a spouse filing separately may not claim the
Additionally, 85% of Social Security benefits are includable in gross income for married couples who file separately, and disadvantageous premium surcharge rules for Medicare Part B and Part D premiums apply to spouses filing separately who live together at any time during the year.
Spouses can file a joint return only if:
their tax years begin on the same date
they are married and not legally separated on the last day of the tax year
neither is a nonresident alien during the tax year, unless the nonresident alien is willing to be taxed on his worldwide income and supply all the necessary information to determine tax liability. If a nonresident alien earns a considerable income outside of the United States, then the couple should not file a joint return, since the nonresident’s global income will be subject to United States tax.
A married-filing-separately return can be amended to a joint return by filing Form 1040X, Amended U. S. Individual Income Tax Return within 3 years of the original due date, without extensions, of the separate returns. However, the reverse is not true: separate returns cannot be amended to a joint return unless one spouse is deceased, in which case, the executor of the estate has one year from the due date plus extensions to change a joint filing to a separate filing.
Both spouses must sign a joint return. If a spouse is incapacitated and unable to sign, then the other spouse can sign for the disabled spouse by writing the disabled spouse’s name followed by the words “by (signer’s name), Husband or Wife, whichever the case may be, while supplying the following information:
tax year for the filing
type of form being filed
reason why the other spouse cannot sign, and
the other spouse has consented to the signing
If a spouse is in a combat zone or a qualified hazardous duty area, then the other spouse can sign the joint return for both by simply attaching a signed explanation to the return. If the other spouse is simply unavailable, such as being out of the country, then a spouse can sign for the absent spouse with a power of attorney from the absent spouse: IRS Form 2848, Power Of Attorney and Declaration of Representative may be used for the authorization.
Even if both spouses did not sign the joint return and the signing spouse did not act as an agent for the other spouse, the courts have ruled that such a joint filing will still be valid if:
the other spouse’s income was included in the return
the information provided in the return conforms to the intention that it be a joint return
the other spouse agreed that the filing spouse would handle the tax return, and
the other spouse’s failure to sign can be explained
On the joint return, both spouses have liability for unpaid taxes plus interest and penalties. Joint liability may be avoided under innocent spouse rules if the other spouse is largely responsible for understating tax. If a spouse filed a joint return but is divorced or separated from the other spouse on the joint filing, then the spouse could petition the IRS for separation of liability treatment. A separation of liability request will also be necessary if the correct tax was reported but not paid.
If you suspect that your spouse may be cheating, it may be prudent to file separately, since by doing so, joint-and-several liability for unpaid taxes plus interest and penalties on a joint return will be avoided.
Same-Sex Marriage Is Now Legal in All 50 States
On June 26, 2015, the U.S. Supreme Court has ruled that “same-sex couples have a constitutional right to marry”, thereby legalizing same-sex marriage throughout the country. Henceforth, they will enjoy all of the benefits (and drawbacks) of marriage. Note, however, that registered domestic partnerships, civil unions, or similar relationships that are still recognized under state law, but are not considered marriages under that law, will not be treated as marriages under federal tax law. IRS.gov: Answers to Frequently Asked Questions for Individuals of the Same Sex Who Are Married Under State Law
If one spouse is a US citizen or resident alien by year-end, and the other spouse is a nonresident alien, then a joint return may be filed by choosing a special election to treat the nonresident alien spouse as a US resident, allowing both spouses to be taxed on their worldwide income. If the nonresident alien becomes a resident during the tax year, and the other spouse is a US citizen, then the special election must be made to file jointly. Records must be maintained on worldwide income that are available for review by the IRS.
The election is made by attaching a signed statement indicating that both spouses agree to be treated as US residents for the year. The election will apply to the tax year for which the return was filed and all later years until it is revoked by either spouse or it is suspended or terminated under IRS rules. The election is suspended if either spouse is not a US resident during the year; the suspension can be ended when either spouse becomes a US resident again. The election can be terminated by the IRS if:
adequate records are not maintained on worldwide income
if the spouses are legally separated under a decree of divorce or separate maintenance, or
if 1 of the spouses dies, in which case, if the surviving spouse is a US citizen or resident and has a child, then the surviving spouse can file as a qualifying widow or widower, allowing a joint return to be filed for up to 2 years after the year of death.
If the election is terminated, then neither spouse can ever again file jointly as a couple.
Community Property States
In community property states — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and Alaska, if community property status was selected — all of the income earned by the spouses during their marriage is considered equally earned by each spouse. Spouses can also own separate property, which is property that they acquired before marriage or received as a gift or inheritance. In most community property states, the income produced by separate property is separate income of the spouse that owns the property. However, in Idaho, Louisiana, Texas, and Wisconsin, the income produced by separate property is considered community property and, thus, must be apportioned half-and-half to each spouse. Note that registered domestic partners in California, Nevada, and Washington are subject to federal income tax community property rules, so even though they are not legally married under state law, they must report half of the combined community property income on their separate returns.
Spouses that file separately must report ½ of their community income and claim ½ of their deductions on their separate returns. So if the wife earns $100,000 and the husband earns $50,000, then each spouse is considered to have earned $75,000, which must be reported on their tax returns. Additionally, Form 8958, Allocation of Tax Amounts Between Certain Individuals in Community Property States must be filed to show the allocation between community income and deductions and separate income and deductions.
After the death of a spouse, any income earned by a surviving spouse is treated as separate income, but any income earned from community property is still subject to the community property rules.
If the couple is separated, then community income rules may not apply, since it may be difficult for 1 spouse to know the income of the other. In these cases, income will be attributed to the one that actually earns it if the following conditions apply:
the individuals lived apart for the entire year; and
they did not file a joint return.
Innocent spouse rules apply to community property, where a spouse filing a separate return may be relieved of tax liability on community income attributed to the other spouse if the taxpayer could not have reasonably been expected to know about the community income earned by the other spouse. However, innocent spouse rules do not apply if the spouses lived apart for the entire tax year and file separate returns, since community property rules will not apply, so they will only be reporting their own income.
When a married couple moves from a common law state to a community property state, separate property remains separate property, but any subsequent earned income or property bought with such income is treated as community property. After moving from a community property state to a common-law state, community property continues to be treated as such until it is sold or reinvested, whence it is treated as separate property.
Today you may not think twice about splitting military retirement benefits during a #divorce. But it wasn’t always that way. A 1981 U.S. Supreme Court decision, McCarty v. McCarty, actually precluded state courts from dividing military retired pay as an asset of the marriage. In response, Congress passed the Uniformed Services Former Spouses’ Protection Act (USFSPA in 1982. This legislation specifically gave a state court the authority to treat military retired pay as marital property and divide it between the spouses.
Of course, the actual process to divide these unique accounts is slightly different than standard retirement accounts. Rather than using a Qualified Domestic Relations Order (“QDRO”), military retirement accounts are divisible using a Military Retired Pay Division Order.
The Defense Finance and Accounting Service (“DFAS”) has very specific rules about how and when military retirement pay can be divided. For a division of retired pay as a property award to be enforceable under the USFSPA, the former spouse must have been married to the service member for at least 10 years, and during that time the service member must have performed at least 10 years of creditable service. This is referred to as the 10/10 requirement.
In addition, no more than 50% of retired pay can be awarded as marital property. Because the DFAS has very specific requirements relative to division of military retired pay, it is important that the parties understand these technical requirements early on. There are many ways that a former spouse can lose his or her right to division of retired military pay, so relying on an expert in this unique area is very important.
No matter your status…thinking about divorce, going through a divorce or moving on after a divorce, there will be work to be done on your part. Your own words, actions and thoughts undoubtedly play a role
If you’ve made the decision to divorce your first priority should be creating a process that is beneficial to all parties involved. According to the Journal of Health and Social Behavior, divorce is far and away the most stressful life event, other than loss of a loved one to death, that we can experience.
No matter your status…thinking about divorce, going through a divorce or moving on after a divorce, there will be work to be done on your part. Whether you end up in tears or with a satisfying post-divorce life depends on countless factors. Your own words, actions and thoughts undoubtedly play a role.
One thing that will give you an advantage when it comes to divorce is soaking up all the wisdom you can from those who are experts in the divorce field. That’s why DivorcedMoms.com has taken the time to distil it down to the very best 22 experts and what they’ve learned and think you should know about divorce. We hope their words help you uncover the key to navigating divorce and creating a fantastic post-divorce life.
22 Divorce Tips from Divorce Experts
1. There is a Light at the End of the Tunnel.
You move on socially and romantically while your kids become more independent. You have two weekends a month to do what YOU want to do. Just remember, divorce only hurts for a little while and you have complete control over how much someone can hurt you.
2. Civil Communication Between Parents is Imperative
The best thing any family facing divorce is to assure open communication about the children. It is essential to make sure that both parents have equal access to both the schedule as well as to information. I used the iCal app and created a schedule that would allow my ex-husband to subscribe. Google Calendar works just as well. This allowed us all to be connected without having unnecessary conversations. It also allows invitations to be accepted or declined. You didn’t get my invitation? Well, here is proof that it was sent. This leaves the obligation on the receiving party to always check their email. My favorite method of sharing and saving information has been through Evernote. It is a free application, and you can create shared notebooks to exchange and store information.
The one piece of advice that I always return to, and that I feel puts my situation into perspective time and time again is this: co-parent like business partners instead of like exes. When you parent as business partners, parents shift their focus on what is most important; the kids. So, if parenting is a business, the children are the product of the enterprise. The goal, then, is to produce happy, healthy, and well-adjusted “products”, which requires pooling resources in the most effective way possible and letting go of the petty things that get in the way of success.
It is not uncommon for divorcing parents to switch their focus from being a conscious parent to becoming a distracted one. So, remember to remain sensitive to your children’s needs as well as your own as they are also learning to cope with your divorce too!
~ Reiki Rita, Spiritual Life Coach and Parent Educator
5. Prioritize Finances
One way to prepare for your divorce is to create a list of all your assets and debts before you contact any financial or legal expert. Preparation can save you time and money. Make a list of all debts, and their interest rates. Know the equity of the home (appraisal if needed). Know what is marital property, premarital property, and second properties. List all retirement accounts and any undisclosed monies. Prioritize what is important to you. Do as much work on your own as you can prior to meeting with your legal counsel or going to any of your network of experts.
Be certain it is a divorce you want or are you feeling unloved and unappreciated? Over time behaviors become automatic consequently the response to a situation also becomes automatic, i.e. anger and frustration.
Do you find yourself arguing, and saying things, that are repetitive such as “you never listen.” “Why do I bother, you are never happy with what I do.”
Instead of continuing with the same behavior, make a conscious decision to change how you react in doing so you can change your relationship for the better.
~ Karen Bashford, Inner Child Connector and Guide, Hypnotherapist, Money Mindset and Abundance Coach, Financial Educator.
7. Focus on Building the Life You Want
Divorce your spouse, not your life: if you are at the point of divorcing, there was a part of you, hidden or not, that new it was the next step for the life you wanted to create. Focus on building your life even when you are in the process of divorcing, it will give you the headspace to make choices that work for you instead of choices that are a result of your divorce.
With divorce comes loneliness. You may feel that the only cure for loneliness is either get back the life you lost (which you can’t) or find a replacement (which won’t work). But there is a different way and one that does work. It starts with understanding that loneliness is within you, and that means that you have the power to heal it, just like you have the power to feel loved, appreciated and supported again. It’s a journey and it starts with two essential steps: self-care and reaching out for support.
Don’t run out and hire an attorney, mediate! Attorneys only make the divorce process last longer than it should. I am over three years into a divorce and at our court appointed date we will play “let’s make a deal” with my life, listening to an offer from my almost ex. All the time and money and pounds of paperwork and it comes down to something as simple as this. If someone had warned me that it would end up this way I would have insisted on mediation.
Get curious about why your ex is saying what he is saying or doing what he is doing. So often we only see things through our own lens, especially when we’re hurting. So, ask, try to see if from their perspective. Ask questions without anger or judgment about what it is they want, or why they are doing something, or how they want to do it or have it done. Then the most important thing is to keep quiet for at least 30 seconds, giving them a chance to think, pause, and respond. Then repeat. Ask if there is anything they want to add. Then wait 30 seconds more while they think, pause and respond. RESIST the urge to interrupt. I have been amazed at how this type of communication is transforming my relationship with my ex. Maybe if I had done this years ago, things would be different now. Who knows? Try it.
If you are planning on getting divorced, preparation is everything. Don’t run to the courthouse to file a Complaint for Divorce. Make copies of tax returns, bank statements, credit card statements. Make a list of all your joint and individual assets/debts. Create a “divorce” file and stay organized. If you prepare now, the process will be smoother later.
Don’t play the role of victim and begin to make decisions that reflect your strengths. The first step is to examine your divorce experience and self-defeating messages derived from it. Develop a mindset that relationships are our teachers. Divorce can be viewed as a catalyst for personal growth. Counseling, blogging, and reading can aid you in this process. It’s important to develop a healthy response to mistakes and failing. Give yourself permission to “think big” and want more. It’s an exciting time with all sorts of possibilities.
Get legal advice. Before you file for a divorce, whether or not you want a full representation and to hire a lawyer for the final process, you still need legal advice. If you have to pay for a consultation, do it. It’s wise to talk to a lawyer before you attempt to handle the divorce yourself without much knowledge. Laws change constantly and there may be new laws passed that you are not aware of. Sometimes the internet doesn’t have all the answers because YOUR case is YOURS and no other person has had the same exact situation.
The best advice I have for women going through a divorce is to separate your emotions from the process. It’s tempting for both parties to use divorce for revenge, which can lead to costly legal bills and aggravation over who gets the flat-screen or a statue in the yard. Alternatively, many women approach divorce through fear of conflict which hands over the control to your husband. Divorce is a business negotiation and it’s best to handle it as such.
~ Beth Cone Kramer is a journalist and co-founder of Divorce.ly, a seven-step program to help women develop skills and knowledge for a successful divorce and life after.
15. Do a Bit of Advanced Financial Planning
Before leaving the marital home or announcing your intention to divorce, ensure you have your own bank account set up. Deposit some of the joint account funds into your new account but don’t take more than half. Also, investigate your financial status as a married couple so you don’t face big surprises during the divorce process.
Uncover all assets, your spouse annual income, any debt and liquid cash before announcing to your husband that you intend to leave him. This bit of advance planning will get you set up for independence with much needed financial knowledge.”
Most “non-financial” spouses often find themselves out in the cold, as the advisor, they intended to lean on was retained by their ex-spouse. Because of this very common dilemma, The Wall Street Journal suggests divorcing your pre-divorce financial advisor as the best way to achieve post-divorce financial success.
Just as you smartly obtained a competent legal advocate, you should now align in similar fashion with a financial advocate. Specifically, a board Certified Financial Planner. From properly structuring your settlement so it last as long as you do to selecting the correct social security option, knowledge in this instance is power.
The thing that will hold you back from telling your spouse you want a divorce or calling an attorney is the overwhelming fear that you can’t do this. You can. Millions of other women have managed it, and so will you. It won’t be easy at first, but if you can take the first leap of faith (in yourself), the next one will be easier. You don’t have to stay in a miserable marriage. You can have a better life – on your terms. You deserve better and you’re worth it. There will come a day when you won’t question that.
19. Don’t Treat Divorce as a Failure, But as an Experience
You should stop thinking of a divorce as a failure—period.
Women who struggle with low self-esteem often blame themselves for the end of their marriage and treat it as kind of a failure in their lives.
Divorce is the end of your marriage, not the end of your life. It should be perceived as another experience on our path; a closure of one thing to make a space for another one. Many new wonderful experiences will come, as soon as you genuinely open your heart for them!
If you find yourself at divorce’s door, do not assume that your divorce settlement will protect your rights to your portion of your ex-spouse’s retirement account. This is especially important if you are a mom and have spent time away from a career taking care of your family while your spouse has earned all or a majority of the income. Be sure to work with your attorney to enact a QDRO. A QDRO is a “Qualified Domestic Relations Order,” which provides a legal mechanism for dividing the retirement benefits of private pension and/or 401K plans earned by your spouse during the years of your marriage.
21. Never Fight Around the Children or Badmouth Their Other Parent
Studies show that conflict creates the most pain and turmoil for children of divorce. Keep parental battles away from your kids – even when you’re on the phone or in another room. They deserve the peace of mind. Speaking disrespectfully about your former spouse hurts your kids with anger, guilt, and confusion. They think, “If there’s something wrong with Dad or Mom, there must also be something wrong with me for loving them.” This can result in a damaged relationship with your children and resentment when they are grown.
Never sweat the small stuff, especially when it’s on your dime. The antique clock passed down from your great-grandmother might be worth it, but if it’s a rug you bought from IKEA, let it go. It’s all just “stuff” in the end. Draw a line around it and let it go. Bickering about the little things just takes years away from your life and dollars out of your wallet.
When you decide to divorce, it’s almost as if you’ve entered a club with a super-secret handshake…only no one is quite certain how to do it. So we asked the divorce360.com community what they wished they had known before they decided to file for divorce. From the emotional breakup of their marriage to the financial one, here are some of the best tips from people who have through the real life turmoil of uncoupling.
1. If You Are Parents, You Have a Relationship with your Ex Forever….But It’s very Different First, you and your spouse go from being best friends to enemies almost overnight, said community members “Banshee1,” a 30-something dad who is getting divorced. The difference is: “He doesn’t have to listen anymore. He doesn’t have to work out problems,” said “Paula1,” a single mom who was married for four years to a man who cheated. To make matters worse, “Your ex will not cooperate…they want to stick it to your for whatever they think you did. They will not be fair at all or logical…,” wrote Georgia resident “Rebec311.”He or she will “always be lingering in the background waiting for you to slip up so they can pounce on you again through the legal system because now they have a new life and no longer want to be responsible for their first life,” wrote “Eve31,” a single mother whose spouse has refused to mediate their divorce.
What’s tough is “how the little questions from the kids like, ‘Why do we have two houses?’ will drive you…nuts…” she said. If you’re angry with your former spouse for driving those questions, your children can sense it: “Don’t even think bad thoughts about their dad when they are within five miles of you,” community member “timless” said.
The best advice, said Maryland salesman “wave” whose wife left him after 30 years is “Keep your children first, always.” 2. Divorce Starts after You’ve Signed the Papers. You can got to Las Vegas and get married in 30 minutes, according to “Eve31,” but getting a divorce takes a lot longer. “Purebredinip,” a California woman whose husband told her he “wasn’t happy”, said: “They should make divorcing easier, but getting married difficult.”
What no one tells you, said “Eve31,” is “what it’s really going to cost you to be divorced… your youth, your sanity, your faith, your trust, your ability to wake in the morning with hope.” You now second-guess all your decisions: “Your ex destroys your trust but also your ability to sometimes trust yourself,” she said.
The real pain starts after you sign the divorce decree, “Paula1” said: “Every fight can now lead to court, which costs you money. Every disagreement now leads to heated arguments where nobody wins. Every new life stage (dating spouses, remarriages, kids asking more questions, kids suffering with divorce) equals more pain.”
3. If You’re the Custodial Parent, Every Other Weekend is a Blessing. Essentially, you are raising your children alone — even if your former spouse has them for a few days a week or every other weekend. If you have young children, it will be a long time before you can take a shower that’s longer than three minutes. “You’ll fight it during the divorce proceedings, but will count down the hours for his weekend after,” “Paula1” wrote.
And if you’re ex has found a new partner, “…You spend all your time raising the kids, through sickness, surgeries and through all the heartache and picking up all the broken pieces that the divorce has caused,” said community member “Paris299.”
Work becomes a refuge. “Taking care of kids all weekend without any help is hard and exhausting. Monday mornings now become something you look forward to,” “Paula1” wrote.
4. You Lose a Lot of Friends and Family in Divorce. “Girl70” said her husband filed for divorce after having an affair. His family sided with him: “I was with him for 22 years. It is like I didn’t exist. It’s as if I was the one who had the affair. I …truly cared for my father in law and stepmother-in-law. I miss them the most.”
The reaction from friends can also be tough: “Some people will treat you like divorce is catching…like leprosy,” said “Tracy74” of Michigan, whose husband fell in love with another woman. “Your married friends will fear you being around their husbands/wives,” said community member “kdb,” a 50-something mother of three whose husband told her he wasn’t “in love” anymore.
Community member “Banshee1,” felt a sense of being “completely alone” and “misunderstood by my married friends” who took sides during the breakup. “You will lose a lot of friends/people that you like a lot because of your soon-to-be ex,” said “Rebec311.” agreed. “The friends you keep will either…love you more and be there more or have no clue how to talk to you.”
What’s more, “You think they are all a bunch of whiny children, since you’re doing it all alone now, and they have husbands to help,” said “Paula1.”
5. The Courts Do Not Care. You will waste money if you treat your divorce attorney as a therapist. “Timless” said “…that’s what your girlfriends and personal therapy is for. If you don’t have them, get them before you start the process,” she said.
The court system is “cold,” said “Rebec311,” and its participants “don’t care about your feelings.” “It’s treated as a business,” she said.” “Are your kids sick and is your ex clueless about how to take care of them? The courts don’t care. He still gets them,” said “Paula1.” “Is your ex-spouse not paying child support because he’s unemployed again? The courts don’t care. Visitation and support are not tied. Is your ex-spouse living with a drug addict with nose rings? The courts don’t care. As long as he is a good parent and doesn’t abuse them, he still gets them and can have anyone around that he wants.”
Maryland salesman “wave,” whose wife left him after almost 30 years of marriage, was surprised that the courts didn’t take into account who was at fault in the break up. “She turns 49, her mother dies, she got her inheritance, and two months later, she wants out. I have no drug or alcohol problems, no money problems, no abuse, no womanizing, but I lose half, plus I pay her child support…and she keeps the inheritance…The courts don’t care about right or wrong.”
6. Money Is Always an Issue. “You don’t just worry about money. You obsess over it,” wrote “Kitty7470,” a 40-something mom from Ohio whose husband had an affair after 20 years of marriage.
“If you had a traditional marriage in which both parents were working, etc., get used to living on half. Child support, if paid, does not cover much. It’s not as much as you think it will be (which is another ridiculous tragedy by the courts), and your savings is probably wiped out by divorce costs,” said “Paula1.”
A New York executive, “Banshee1,” doesn’t feel his financial settlement was fair. “…It was tough for me to give up everything and move into an apartment that’s about a quarter of the size of my house — taking almost nothing,” he wrote. Plus, as the breadwinner in his family, “I will be taking the majority of the debt load, taking on losses due to the sale of our marital residence and providing significant child support payments to my soon-to-be ex.”
However, “there is hope for recovery,” he said. He’s slowly “rebuilding and making a home” for his children. He believes he’s better off today. “(My ex) and I had very different views on money, and now that I’m on my own…, I can save the way I feel most comfortable.”
For “Soon2Bfine,” a 40-something administrative assistant whose husband cheated on her, said money wasn’t her biggest financial problem. When her spouse stopped paying the credit card debt after their divorce, he ruined both their credit ratings. “Having a great job means the money is there to make the payments, but good luck getting a loan for anything,” she wrote. 7. Your Ex — and You — Have Personal Lives. Building a new life doesn’t include whining about your ex. “Learn to deal with it and not hold on to it,” “timless” advised. That can be difficult if your ex finds a new partner, “Kitty7470” said. “…They now have a say in your entire life, because your ex lets them.”
“Banshee1” said he’s surprised at how bitter people can be. “I’ve talked to so many people that get upset because they believe their ex is doing better than they are or are suffering less. My feeling is — focus on you and your life… You can spend the rest of your life comparing to your ex-spouse and miss out on opportunities that are right in front of you.”
Advice from the trenches: “Your ex has a life and so do you ……..don’t share,” said “timless.” “I’ve learned to keep things focused on my daughter and vague pleasantries. Any unnecessary details come back to bite me in the butt.”
8. You Will Get a Second Wind. When you think it won’t get any better, just keep moving forward. “The train wreck that was your life during the divorce suddenly gets a makeover as soon as your divorce is final,” “timless” said. “Somewhere near the end you have one final cry and then get a second wind… This is your saving grace, your reward for the pain and suffering.”
Unhappily married to her high school sweetheart for 15 years before she finally asked for a divorce, “Wow65” agreed, saying when the divorce was final she realized “I could do what I wanted with my life and have a great time doing it.”
“Now is the time to focus on you,” “Banshee1” advised. “Look at divorce as a chance to rebuild, to start fresh. Yes, there will be hurt, loneliness, frustration — but that’s life, isn’t it? For me, I’m taking the experiences that I’ve had has a husband and turning them into a guideline for how I want to live my life as a man. I will always and forever be a father to my children — and my focus is 150 percent on them. But, to be the best father that I can be I must learn to take care of myself, too. I’m learning to pursue my dreams, and through that inspire my children (and possibly others) along the way. My legacy to my children will be strength and perserverance even when the chips are down.”
Divorce coach Annie O”Neill added: “You have your whole life ahead of you to do what you want to do. It is a chance to reinvent yourself, a new chapter of your life. You have to put your marriage behind you and decide to move on.”
2016 has arrived, and for the tens of millions of Americans who receive Social Security benefits, the New Year is a good time to review what they can expect from the program over the coming year. While there are changes every year, 2016 has some unusual changes that you need to know about if social security is part of your current retirement planning.
Recipients will need to deal with the fact that there will be no cost-of-living adjustment for Social Security benefits in 2016 and for higher wage earners; the maximum Social Security benefit will fall in 2016 by $24 to $2639.
Recently (November 2) the bipartisan budget act was signed into law and with it came a number of social security strategy related changes. Those strategies include the following:
File and Suspend
File and Suspend for retroactive benefits
Divorced Spousal benefits
To review, let us look at an example of how file and suspend is used:
A husband and wife are both age 66 and at their full retirement age (FRA). The husband, with a monthly benefit of $2000 wants to wait until age 70 to collect his benefits. He wants to take full advantage of the 8% annual increase that would make his monthly benefit $2640. The wife, with no work history, is entitled to 50% of his benefit ($1000 per month) at her FRA. Since she will always be entitled to only 50% of his FRA benefits, it makes sense for her to file now. To do this the husband has to file for his benefits, and then suspend them until age 70.
So what are the changes with file and suspend in 2016? After April 30, this option is going away. In order to take advantage of file and suspend, the filer must be age 66 prior to or on April 30, 2016 and must have actually filed and suspended benefits. After April 30, 2016 file and suspend is not available.
These changes also apply to File and suspend for retroactive benefits. Under this strategy, the recipient is entitled to a lump sum of the benefits they would have received from the time they filed and suspended benefits to the current date. Again, as of April 30, 2016 file and suspend is no longer available and neither is the ability to collect retroactive payments unless you are 66 prior to April 30, 2016 and have filed and suspended.
When both spouses have a work history, another strategy they could utilize is Restricted Applications. In this scenario, the husband or wife is already collecting a SS benefit – the spouse at his/her FRA will collect a spousal benefit only from age 66 to age 70 and then at her age 70 switch over to his/her own benefit. Because he/she did not collect on their own benefit until age 70 his/her SS benefits received the 8% annual increase.
Under the new law the ability to receive a spousal only benefit (restricted application) will no longer be available to individuals who turn 62 after December 31, 2015.
Lastly, there are changes that impact divorced individuals’ social security strategies. Currently, law allows a divorced individual who qualifies for their own benefit to apply for only a spousal benefit on the ex-spouse’s earnings record if:
They were married for at least 10 years
Spouse B (who plans to collect the spousal benefit) is not remarried
Spouse B is full retirement age or older
Spouse B has not started collecting on their own record
Spouses have been divorced for at least 2 years
This also changes in 2016. Individuals can no longer file for a divorced spousal benefit then switch to their own benefit later unless they are age 62 before December 31, 2015.
It takes some work to keep up with Social Security’s changes. But doing so will leave you better prepared to handle what’s coming next year and give you the ability to manage your future Social Security strategies more effectively. If you are already taking advantage of any of these strategies, the recent changes do not affect you.
It is said that the only sure things in life are death and taxes.
There is no doubt that the Internal Revenue Service wants their share of any income received by US taxpayers, and distributions from Qualified Domestic Relations Orders (QDROs) are no exception. Whether paid by the plan participant or an alternate payee, taxes are an inescapable part of the process.
Most people recognize that a plan participant must pay taxes on any distribution of QDRO benefits. However, what are the tax liabilities facing an alternate payee?
When the alternate payee is a spouse or former spouse who receives a share of the QDRO benefits from a retirement pan, he or she is also required to report the money received as if they were the actual plan participant. However, the spouse or former spouse is also entitled to a share of the participant’s cost basis (their investment in the contract). According to the IRS, the alternate payee’s share is equal to the participant’s cost basis multiplied by a fraction. This fraction is calculated as follows:
Present Value of the Benefits Payable to the Alternate Payee ÷ Present Value of All Benefits Payable to the Plan Participant = fraction
If the alternate payee is a child or other dependent of the plan participant, the taxes on benefits is assessed to the plan participant.
In some cases, an individual can roll over, tax-free, all or part of a QDRO distribution. If the alternate payee is either the spouse or former spouse of the plan participant, then he or she can roll over the distribution into another qualified retirement account (such as an IRA) and avoid any immediate tax liability on the QDRO distribution. Pursuant to the IRS, this option is not available to non-spousal alternate payees (e.g. children or other dependents).
The end of summer can be sad, especially for children. It often brings cooler weather, earlier bed times, and of course, school. A new school year brings about a lot of changes that can be both exciting and scary. A new classroom, new friends, new teachers, and even an entirely new school can make even the bravest kids feel nervous.
While the prospect of a new school year may feel daunting to a lot of kids, parents are also experiencing similar feelings of anxiety. However, parents who went through a separation or divorce during the summer may be feeling even more anxious about this new school year. After a tough summer for their family, children face new difficulties that they may not be sure how to handle. At the same time, this is the first school year that the parents will have to navigate post-divorce or separation, and this can be quite a challenge if they don’t prepare for it. In this situation, parents should employ strategies to help make the transition into this new school year as smooth as possible for everyone involved. To prepare for the new academic year, here are five new school year tips for divorced or separated parents.
Talk To The Teachers
Children often learn who their new teachers will be a few weeks before the new school year begins. These teachers don’t know anything about what is going on in your child’s life, and you can’t assume for them to understand without having a little knowledge of the situation. Talk to each of your child’s teachers to let them know what has been going on with your family. Let the teachers know how your child has been dealing with it throughout the summer; this is especially important if your child has had a difficult time emotionally. Passing along this knowledge before school starts will help the teacher get to know your child better, to know where any issues may stem from, and to offer better support throughout the school year.
Coordinate Shopping Plans
Shopping before a new school year is a tradition for so many families. Beyond just buying new crayons and notebooks, some parents buy their children new backpacks, clothing, shoes, and many other things each year. For separated or divorced parents, it’s often important to coordinate how you will share the responsibility of shopping for school supplies. Instead of one parent being dealt the entire responsibility of school supply shopping, consider dividing the shopping between both parents. One parent can shop with their child for the supplies they need for school, while the other parent could cover the cost of new school clothes. Also, it might be a good idea to buy a few supplies to each have at each home like extra crayons, pencils, and socks. These little items can be easily misplaced and aren’t worth arguing over with the other parent over, so having extras may come in handy.
Get On Top Of The Schedule
Even for young kids, school schedules can get busy very quickly. On top of simply getting your kids to and from school, parents need to plan for how to deal with extracurricular activities, how to attend functions like school fairs and plays, and more. As soon as you start to learn about what’s on your child’s agenda for the school year, get it written down. Using a shared online calendar, both parents can be sure that they are keeping up with the same agenda. This will also give you a chance to see how your child’s school schedule will work into your established parenting schedule. The OurFamilyWizard calendar has tools to keep both parents updated on their child’s throughout the entire school year. It even has a space for parents to input the details of their child’s class schedule as well as upload copies of homework, permission slips, report cards, and anything else related to school. These tools help keep parents connected about what their child is studying and how they are performing this school year.
Prepare Your Kids Together
For a lot of kids, a new school year isn’t something they can just fall into without need time to prepare beforehand. Each parent should do their part in preparing their children for the year ahead. Commit to getting your child to wake up and go to bed a bit earlier each day starting a few weeks before the new school year. Set aside time for your child to read and brush up on the things they learned the year before; this will help to get them ready for the academic challenges they face this year. On top of preparing them for the new school and studies, the way that parents talk to their child about school can also help to prepare them. Always keep the topic of school a positive one. If your child starts to feel down about going back, let them know it’s okay to be scared and assure them that it will be a good experience.
Open Lines Of Communication
There’s a lot that parents will need to discuss as their child heads into a new school year. Discussing each of the aforementioned points is valuable in order to make the school prep process run as smoothly as possible. As the school year gets going, it will also be important for parents to remain in contact in order to stay updated on their child’s progress. For parents already using OurFamilyWizard to coordinate the school schedule and share information, they can continue to use these tools to stay connected. Parents can share journal entries to document the details of any incidents that take place at school, note what their child ate at school each day, and more. As field trips and other school events come up that include a cost, parents can use the expense tracking tools in their account to record each cost and request reimbursements between each other, if necessary. All in all, having a means of communication that keeps your school-related conversations and other information available to each parent is invaluable for separated or divorced parents.
Getting children ready for a new school year shouldn’t be made any more complicated or difficult due to parental conflict or poor communication. Making a commitment to stay connected with your child’s other parent and to work together to make this process as smooth as possible can make all the difference for you both and your child.
The Divorce process is a stressful process that can easily bring out the worst in people. Some people even see divorce as a way to seek revenge on a spouse by seizing money and assets.
Although divorce can get you out of an unhappy marriage, it can also milk you for all you are worth if you don’t know your rights. Check out these 40 secrets from top divorce attorneys to help you protect your assets and stay on the winning side.
1. Don’t Let Emotions Lead Your Financial Decisions
People often want to take out their hurt feelings on their exes; however, it’s important not to let emotions interfere with the business at hand. In the long run, being spiteful could harm your own finances.
“Asking your lawyer to write a letter to your ex over who gets the $50 coffee table book is kind of nonsensical,” said Brendan Lyle, a former divorce attorney and CEO at BBL Churchill, a divorce finance firm. He went on to reveal that a short letter could cost you $500 in attorney fees.
2. Everything Is Divisible and Is Fair Game
Individuals often make the mistake of assuming that assets that are in their names can’t be claimed by spouses in a divorce. However, divorce experts caution that the opposite is true.
“Practically everything is divisible, including frequent flyer air miles or royalties from a book you wrote,” said Ann Narris, a Massachusetts attorney with the Narris Law Office & Family Mediation Partners.
Because the same holds true for liabilities like debt and credit cards, couples should be sure to consider all factors when doing their financial planning.
3. Make Big Purchases Before Filing for Divorce
Have a big purchase in mind, such as a new car?
“Most states issue automatic financial restraining orders prohibiting people from making big purchases or liquidating assets after the divorce is filed, absent a court order or an agreement,” said Narris.
In her practice, she advises those considering divorce to buy big items before filing.
4. Keep Track of Your Spouse’s Money
If you’re thinking of filing for divorce or legal separation, it’s a good idea to take a look at your spouse’s financial situation. According to Narris, spouses should start by tracking the partner’s new credit card and loan applications.
“People are more generous in their income reporting on credit or loan applications than they are in, say, their 1040,” said Narris, who went on to stress that loan applications could be crucial parts of a divorce discovery.
5. Gather Key Evidence Before Filing for Divorce
If you’re thinking of filing for divorce, it can be tough not to walk out the door when your spouse pushes your buttons. However, Narris recommended that individuals take time to collect evidence before a split. Along with taking pictures of assets, individuals should make copies of account statements and jot down any important numbers. Preparation is key if you hope to come out ahead in court.
6. Get Property Valued Before You Part Ways
When it comes to the divorce process, almost all property is fair game. However, spouses can’t hope to get their fair shares if they don’t know the value of assets.
“No sense in guessing on the worth of his baseball cards or your engagement ring — never mind a house or a business,” said Narris, who reminds couples that there are experts available who can appraise just about anything.
Doing your homework now is the best way to come out ahead down the line.
7. Don’t Hide Assets
You can try to deceive your spouse by hiding or concealing assets, but don’t forget that you’re also messing with the law. According to Narris, if what you’re hiding is discovered, you’ll lose your credibility in court. There could also be stiff penalties, including monetary sanctions. To protect yourself and your property during a divorce, it’s best to declare all assets upfront in the divorce process.
8. You Can Write Off Alimony Payments on Your Taxes
People who pay alimony are rarely grateful for the opportunity. Paying alimony can actually help you out come tax time, however. According to Narris, people who pay alimony to their exes can write it off as a tax deduction. On the other hand, those who receive alimony must report it as taxable income.
It’s important to note that alimony is different from child support, which is neither taxable nor deductible.
9. If Not Considered Alimony, the Income Is Not Taxable
If the transfer of money in a divorce is not considered alimony, the receiving spouse is in luck: These funds aren’t regarded as taxable income, according to Christian Denmon, founding partner of Denmon & Denmon, a personal injury, divorce and criminal defense law firm in Tampa, Fla.
Not so lucky is the payer, as there is no tax break for money transferred during the divorce process.
10. There Are Hidden Tax Implications to Watch Out For
During a divorce, it’s important to stay alert to hidden tax obligations.
“A husband might have purchased stock for $50 during the marriage,” said Denmon. “The stock has gone up in value so that at the time of the divorce, the husband ends up transferring $75 to the wife. If not otherwise addressed in the divorce settlement, the husband will be on the hook to pay taxes on the $25 gain on the stock.”
According to Denmon, spouses who are receiving real estate, stocks or bonds need to understand that taxable gains can leave them vulnerable.
11. Get Job Training or Update Your Education Before Filing
If you are currently being supported by your spouse, you might want to consider taking the time to dust off your resume and freshen up your skill set before seeking a divorce.
“Even if you receive support, the courts can impute income and expect you to be working if your kids are school aged and you are not of retirement age or disabled,” said Narris, who cautioned against “depend[ing] too much on a hopeful spousal support award.”
Updating your education now can help protect you later if things don’t go your way in court.
12. Familiarize Yourself With Your Finances Before You Split
Normally, one person in a household manages the finances. However, this arrangement can create a “power imbalance when it comes time to negotiate settlements,” according to Narris. So what can you do to protect yourself?
Seek professional help to guide you in making more informed decisions about finances being filing for divorce. Doing this will help you come out swinging when you get your day in court.
13. Consider Mediating Your Divorce
It’s no secret that divorce can be expensive. In fact, according to Narris, the average cost of legal fees in a divorce is $15,000. One way to cut down on these expenses is to use a mediator.
A mediator doesn’t work on behalf of any one party, just facilitates agreements. If you want to keep your divorce details behind closed doors while cutting costs, a mediator might be the best bet for both you and your bank account.
14. Know What Is Your Biggest Asset
According to Narris, many people mistakenly believe that their house is their biggest asset when it is actually a retirement or pension account. Even if your retirement account is less than robust now, the court will likely consider its future value when dividing assets.
“There are many ways to divide your portion of your spouse’s retirement asset (called a qualified domestic relations order) so give that due consideration,” said Narris.
15. If Your Lawyer Recommends a PI or Forensic Accountant, Hire One
Many individuals are hesitant to shell out for a private investigator or forensic accountant when going through a divorce, but sometimes, these professionals’ services are necessary.
According to Eva Cockerham, an attorney with Burke Jaskot law firm in Baltimore, “Private investigators are useful for investigating people who own small businesses, as independent data about numbers of customers, employees and resources can give a much fuller picture of a person’s true finances.”
Likewise, Cockerham noted that forensic accountants can give “insight as to whether a person going through a divorce is getting accurate information from their soon to be ex-spouse.” By spending a little now, you might be able to save yourself a bundle in the future.
16. The Most Expensive Lawyer Isn’t Always the Best
Pick your divorce lawyer wisely because your choice could save your bottom line.
“Find one that is experienced and knowledgeable but is also a good fit for you,” said Narris. “You have the power to set the tone for your divorce. The attorney should advise you but also respect your position on how to approach the negotiations.”
Just because an attorney has a high hourly rate doesn’t necessarily mean he or she will honor your wishes. For best results, go with your gut feeling.
17. Understand Debt Obligations
According to Heather Sunderman, a divorce attorney with Mirsky Policastri in the Washington, D.C. area, too many clients assume partners’ debts are joint when they’re not.
“Some states do not divide marital debt if it’s just in one person’s name, so if possible, during separation you may want to pay down that debt preferentially,” said Sunderman.
The last thing you want is to be on the hook for debts you didn’t accumulate.
18. Don’t Forget About Beneficiary Designations
Divorce attorneys note that many clients fail to remove former spouses from their beneficiary designations.
If you fail to remove these designations, “those amounts may end up being paid out to a former spouse,” said Sunderman. “Usually that’s not the result you want.”
For best results, handle beneficiary designations and other tedious paperwork as soon as possible.
19. Pay Court-Ordered Attorney Fees
Court-ordered attorney fees are no joke.
“The court can order one spouse to contribute to the other spouse’s attorney fees,” said Denmon, who went on to explain that this type of debt was treated in a special manner. When it comes to court-ordered attorney fees, the judge can throw the offending spouse in jail for failing to pay.
In light of these regulations, Denmon advises that spouses who are receiving financial help have language drafted into agreements clarifying how much money must be paid and by what date. Doing this gives spouses the ability “to enforce the agreement should the paying spouse fail to follow through with his agreement,” said Denmon.
20. Consider Your Income Before Asking for All the Deductible Items
Clients typically strive to get as much as possible in a divorce. However, according Russell Luna, a certified divorce financial analyst in Colorado, higher incomes can disqualify individuals from important tax deductions.
“If you file single and make more than $380,750, your personal exemption of $4,000 is not available,” said Luna.
In light of this fact, individuals might not want all the items they originally requested in a divorce. For best results, speak to a financial professional about your specific fiscal situation and options.
21. Take Advantage of Free Legal Advice
Most attorneys will offer free consultations, said Narris, who advises clients to “take advantage of that and get some basic information, see if the lawyer is the right fit.”
To ensure you make the right choice, be sure to consult with a few attorneys before coming to a hiring decision. After all, the outcome of your divorce depends in large part on the quality of your legal advice.
22. Be Mindful of the Date When Initiating Divorce
While you might be tempted to file as soon as possible, it’s important to note that property division is based on the date of marriage separation in some states. Typically, the court uses a formal date of separation (DOS) to determine property division and the value of certain assets.
“If you are expecting a large increase in the value of a major asset upon a certain occasion, be mindful of that when you decide to initiate the divorce,” said Narris.
23. Design a Joint Parenting Arrangement Wisely
Unlike claiming a child as a tax dependent, claiming head of household is not assignable, said Narris, who went on to explain that individuals either met the criteria or did not.
If you’re negotiating who will claim a child as a dependent, Narris said, “You can include a provision that the right to claim the child is dependent on the parent being up to date on their support obligation.”
24. Plan Finances for After the Divorce
Clients often neglect to consider how their financial planning can change after a divorce.
“Your risk aversion may be very different than your former spouse[‘s] and you do not need to keep the same investment trajectory you had before the divorce,” said Narris.
If you don’t know where to begin, you might want to hire a financial advisor. Remember to think long term when planning finances after divorce.
25. Have a Paper Trail
While most assets are divisible in divorce, there are some exceptions to the rule. Documents can help preserve what you believe to be separate property when it comes to divorce proceedings and should be collected beforehand.
“Too many times the necessary documents seem to disappear after a divorce starts, so to the highest degree possible, gather those documents before you start the divorce,” said Jeff Anderson, a Dallas family law attorney.
26. The Division of Property Can Be Complex
Dividing assets and properties isn’t always a simple numerical transaction.
“Negotiating the division of property is an art form all its own,” said Keith Nelson, a family law attorney with Orsinger, Nelson, Downing and Anderson, LLP in Dallas. “It’s a three-step process: Characterize the asset, value it, divide it.”
After the asset is identified as community property, separate property or both, figuring out the value can be tricky. “For instance, a bank account with cash in it is pretty easy to value — look at the balance,” said Nelson. “But a retirement account, a house or securities can have more complex issues.”
27. Retirement Accounts Are Not Worth the Statement Balance
Just as it can be difficult to value assets, couples often struggle to determine the true value of their retirement accounts. One reason that retirement accounts pose problems is that deferred tax will have to be paid at some point. In light of this fact, Nelson cautions clients that retirement accounts might be worth even less than the balance minus tax.
“If one of the parties will be liquidating a retirement account early, then the highest marginal tax rate and the early withdrawal penalty might need to be subtracted from the value of the account,” said Nelson, who went on to explain that the value of these assets is often drastically reduced as a result.
According to Nelson, “Even if the account is not going to be liquidated, the taxes which will be paid on the money at the time of retirement can be considered and a reduction of the overall value of the asset might [be], and very often is, appropriate.”
28. ‘Division of Property’ Depends on Where You Live
When a divorcing couple heads to court for a property dispute, state law is used to divide the property using one of two classifications: community property or equitable distribution. With community property, both spouses own income and assets equally, and items can be divided evenly. Additionally, individuals can keep separate property.
According to NOLO, a legal advice website, community property applies to the states of Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin as well as Puerto Rico. Every other state uses equitable distribution, which involves “fairly” divvying up assets and money accrued during marriage. Knowing the law of the land can help you avoid surprises during your divorce proceedings.
29. Some States Are Better for Getting a Divorce
According to the government research site InsideGov, the five states with the easiest and most lenient divorce laws are Alaska, South Dakota, Wyoming, Iowa and Washington. The ease of filing, fees and processing times are all considered as part of the rankings. If time and cost are of the essence, you might want to consider where you live before filing divorce papers.
30. Be Mindful of the Worst States for Divorce
Based off InsideGov’s data, the most difficult states to get a divorce include Arkansas, New Jersey, Rhode Island, South Carolina and Vermont. Arkansas takes the longest amount of time at 540 days. If you live in one of these states, you and your spouse might want to consider relocating to expedite the divorce process.
31. When in Doubt, Seek a Professional — Or It May Cost You
Todd Huettner, president of the residential and commercial real estate mortgage bank Huettner Capital and a financial analyst who has helped many individuals dealing with divorce, advises clients to seek professional help at all costs.
“A simple mistake that drops your credit score 40 points can cost you thousands on your next mortgage,” said Huettner. “Making a mistake separating accounts, renaming beneficiaries or not setting up life insurance properly can cost you hundreds of thousands and impact you for years.”
32. Make Sure You Actually Implement the Divorce
Despite their eagerness to be divorced, many people actually fail to complete all the steps needed to make their divorces legal, according to Huettner. For the best results, clients should make sure all their bases are covered and check up on spouses to ensure they have completed the necessary steps.
“You don’t want to find out that your ex-spouse never refinanced the house five years ago like he was supposed to and [it’s] now in foreclosure,” said Huettner. “By the time you find out about it, your credit will be destroyed for years.”
33. Compromise Could Help You
You win some, you lose some, right? Unfortunately, divorcing spouses often refrain from compromising out of spite.
While you might be tempted to fight every battle that comes your way, agreeing to compromises could save you a lot of headaches and money on legal fees when going through a divorce. As an added bonus, your decision to compromise could encourage your spouse to do the same.
34. Don’t Forget About Health Insurance
Although federal law might dictate that you have health insurance access under your former spouse, Narris cautions clients against relying on COBRA coverage long term due to the high cost.
Her advice: “Start doing legwork for available options that may be less expensive. Better yet, find a job for yourself that has benefits.”
35. Belts Are Always Tightened During a Divorce
While individuals tend to factor the price of getting divorced into their budgets, they don’t always consider other everyday expenses incurred during the process.
Narris recommends that clients carve out a little extra money to care for their personal needs during this difficult time. “Factor in a gym membership, therapy co-payments, massages,” said Narris. “You will want to be as healthy as you can to help your kids through the process, and you never know when you may have a bad day.”
36. Take Action but Be Wary
Savvy divorce attorneys advise their clients to be cautious when filing for divorce.
According to Luna, it’s important to make sure you have the current statement for your spouse’s brokerage account before announcing and filing for the divorce. After all, a deceitful spouse could very easily liquidate the account with no paper trail by neglecting to cash checks until later. The last thing you want is to find out your spouse set up a new account after the divorce settlement while leaving the current brokerage statement with a zero balance.
37. Avoid Underestimating Living Expenses
You need to know what your spouse earns monthly, as well as where the money goes. According to a Divorcenet.com article, when considering the cost of future living expenses, it’s important to take into account the effect of inflation.
Narris recommended keeping receipts so you have a good idea of what everything actually costs. Doing this will help you maintain quality of life after a divorce.
38. Don’t Let Emotions Get in the Way of Selling the Family Home
Whether you have an emotional attachment to your family home or are just being vindictive toward your former spouse, be sure you’re thinking wisely about your decisions with regard to shared property. You don’t want to discover later that you gave up other assets just to keep a home in which you can’t afford to live.
39. Know What You Value
When contemplating divorce, it’s important to consider what assets you value most and be prepared to let some things go.
“A major mistake in divorce that everyone can get trapped into is spending hundreds or thousands of dollars fighting for something that you don’t even want,” said Narris.
Take your time so you can make the most rational and intelligent decisions.
40. Dress Appropriately for Court
It might seem like a small matter, but buying nice clothes for court can boost one’s confidence.
“You will feel better and likely fair better with the judge,” said Narris.
Of course, clients should remember to keep it professional and avoid dressing in a manner that’s flashy or overly pompous. Play it safe by keeping clothing neutral and accessories to a minimum.
It’s important to remember that divorce law varies by state, and some of these tips might not be applicable in your region. Be sure to find a divorce attorney in your area to advise you on how to get a divorce. Doing this will help protect your assets and property while ensuring the divorce process goes as smoothly as it possibly can.
Adjusting to co-parenting after a divorce can be challenging. Your relationship as a couple is over, but you have to find a way to continue your relationship as parents for the sake of your children. Creating some rules for your new relationship can give you structure and help you stay focused on what’s really important – your kids. Here are the kinds of guidelines you should establish to help you move forward as parenting partners.
Rules for your kids
Now that you have separate houses (assuming you haven’t set up a “bird’s nest”), you’re free to run your home the way you want, and the other parent doesn’t have to approve or agree. You might require your kids to make their beds although the other parent doesn’t, or maybe you object strongly to your ex’s lack of restrictions on screen time. Accepting and adjusting to those differences are part of the co-parenting process. Each of you will create house rules that work for you and your kids, and those rules won’t necessarily be the same at each house.
That being said, the best way to maintain a sense of normalcy for your kids as they adjust to life after divorce is to align the major rules at both parents’ homes. Having similar rules regarding bedtimes, curfews, and homework at both houses makes it easier for your child to transition back and forth and stay on an even keel.
Rules about stuff
Some of the biggest problems with co-parenting involve stuff. A common problem occurs when your kid leaves something at the other house he needs (for school, for sports, for life in general). Some parents agree that whoever has the child will drive him back to get the missing item. Other parents maintain that teens are old enough to take responsibility for their own belongings and will have to wait until their next time at that house to get the missing stuff.
Another common point of contention is laundry. Residential parents get upset when kids come home from the other house with a mountain of dirty laundry. Non-residential parents get annoyed when kids show up without enough clean clothes. Some families tackle this issue head on. Keeping some clothes at each house (with that parent being responsible for laundry) is one way to handle it. Putting older kids in charge of managing their own laundry is another solution.
Rules for watching your words
One of the most important ways to help your kids adjust is to shelter them from the conflict between you and your ex as much as possible. Many divorced parents work hard to avoid arguing in front of their children, but there are many ways your kids can get exposed to conflict without you realizing. They overhear you on the phone—arguing with each other or complaining about each other to friends. It’s also common for parents to say critical or derogatory things about each other to the children. One family started a comment jar (similar to a swear jar) where each parent had to put in a dollar for every time they started an argument in front of the children.
Rules about holidays
Holidays can be a challenging time to co-parent. Lots of families have found that instead of alternating holidays, it can be best to share them, particularly during the first years after divorce. So instead of the kids being with Mom on Thanksgiving and Dad on Christmas, the entire family (both parents and kids) spend the day together as a family. This helps the kids to feel secure and lets both parents enjoy the children on special days.
Of course, most of the rules outlined here assume a level of civility on the part of the parents which accommodates ongoing changes in your respective situations—along with the evolving wants and needs of your kids. Finding your way after divorce takes patience. A family lawyer can help you navigate custody challenges and create a co-parenting plan that works in everyone’s best interest.
Often the divorcing couple doesn’t remember they have these items, or doesn’t consider them to be assets.
When you’re working through your divorce settlement, deciding who gets what, you are likely focusing on major considerations: house, cars, retirement accounts, investments. While these items are clearly important, many other assets are easily overlooked. Often the divorcing couple doesn’t remember they have these items, or doesn’t consider them to be assets.
Even if you think you don’t care about how they’re divided, keep in mind they have value; adding them to the pot not only increases the total amount of assets to be divided (which increases your share), but they also represent chips in your ongoing negotiation. If you were the more enthusiastic traveler in the marriage, for instance, you might be willing to give a little back on the home sale in order to secure frequent flier miles.
Here are some often overlooked assets to consider when you’re tallying up during a divorce:
Stock options: Your or your spouse may have stock options from your employer. This might seem like something with no value (particularly if they aren’t fully vested), but these options do have monetary value and can increase the total value of your joint assets.
Intellectual property: Copyright, patents, trademarks and even things like books that one of you has written—even if the copyright paperwork hasn’t been completed—have value.
Digital assets: Websites or blogs that either of you owns are assets. Even your social media accounts should be included in your settlement. Most likely, these accounts have no value (unless you have a large number of followers who have potential value for business reasons) but it’s important to establish who will own the accounts after the divorce.
Digital downloads: Movies, music, and e-books are expensive to replace, so be certain to include these items when tallying assets.
Frequent flyer miles and loyalty programs: You and your spouse probably have memberships in lots of loyalty programs and many of them accumulate points, particularly airline programs. Any loyalty program in either of your names is a marital asset and should be divided in the divorce.
Capital loss carryovers: Capital losses can be carried over from one year to the next on income taxes and such losses can reduce future taxes. If you are carrying a capital loss, make sure it is included in your settlement.
Loans: If you or your spouse has made personal loans to friends or family during the marriage using marital funds, the balance and interest due on those loans should be divided in your settlement.
Vacation pay: Paid time off accumulated at a job has a value and is a marital asset. Make sure this is taken into account.
Pets: Emotional attachments to pets can sometimes give rise to nasty “custody” battles, but beyond that aspect, your pet may also be a purebred or particularly valuable for some reason; if that’s the case, you should also include this in your list of assets.
Prepaid memberships: Any personal (for example, a gym) or professional memberships and subscriptions that have been paid for this year and for future years should be included if marital funds were used to pay for them.
Adding items to your total list of assets results in a larger total to divide and more for your half, but beyond that, thinking through what matters to you and to your soon-to-be ex can help devise a settlement that feels advantageous for both sides. A good lawyer can assist you in finding these “hidden” assets, and help decide what’s worth negotiating for as you work through your divorce.
Divorce, by nature, isn’t easy. Luckily, there are some things you can do that will make the process just a little less difficult.
Below, divorce lawyers share their little-known tips.
1. Open a bank account in your own name.
“Couples who share a joint bank account should know that either one of them can drain the entire account under the banking laws. They will eventually have to pay their spouse their share, but it can take a while to get to that point in a case where a judge is ordering repayment. That’s why I advise everyone to have a separate bank account in their own name, even if the account is a secret. Chances are if the account has to be kept secret, you need it even more than you realize.”
2. If you plan on explaining your rationale for divorce in a letter to your spouse, have a lawyer approve it first.
“When you’re the one who wants the divorce, there is often a lot of guilt associated with that decision. Many people want to explain their decision to their spouse, and that often takes the form of a heartfelt letter. That’s a really decent thing to do, and it comes from the right place. The problem, however, is that in writing these types of letters, people tend to take more of the responsibility for the breakup to help soften the blow. Handing over a bunch of ‘it’s not you, it’s me’-type statements in written form is never a good idea. Letters like that can become ‘Exhibit A’ in your ex’s case against you.”
3. It’s always a good idea to get a second opinion.
“If you have any concerns at all about the advice you are getting, do not be afraid to get another opinion. Any good lawyer will be glad you are doing that and will accept any good suggestions a respected colleague may have. You only have one chance to handle your divorce well and you have a right to be confident in the advice you are receiving. And if the second opinion is that your case is being handled well, then the reassurance will be worth the consultation fee for that second opinion.”
4. Ask your lawyer to meet with your ex’s lawyer at the very beginning.
“A better practice is for lawyers to begin constructive communications right away. The vast majority of cases will settle, so begin the negotiation process now. Sometimes it is as simple as working together to lay out the rules of the road for the divorce process. Other times it is to solve little pesky problems that might blow up into big issues later. Sometimes the best thing your lawyer can do for you is to meet the other lawyer at the coffee house to explore win-win resolutions.”
5. Devote the time required to the divorce process.
“Going through a divorce is like having a second job. You are going to spend an enormous amount of energy gathering documents, meeting with professionals, figuring out your finances and separating your stuff. You are going to have to work to make sure that your kids are okay, and that their transition to a totally different life is as smooth as possible. If you understand this from the beginning and find a way to devote the time and energy to your divorce that it requires, your divorce will go more smoothly than if you resent everything about your divorce and drag your heels doing what you need to do to put your divorce behind you.”
6. If you plan on filing a motion with the court asking for relief, wait until you have multiple things to address before doing so.
“Judges get annoyed by parties who file a motion every other week for every little thing. You can ask for relief for more than one thing in a motion, so wait until you have a few items to address and then file. Also, don’t ask for 50 different things; focus on the major disputes so the court does the same.”
7. Know that the reasons for your divorce will likely have no impact on child custody proceedings.
“Custody in divorce is the most expensive to litigate and whether your partner cheated on you or gambled away your savings will probably have no impact on his or her ability to parent your kids.”
8. Pay attention to how you time your offer.
“Cases do not settle until both parties are ready to let go of the marriage. Therefore, the timing of your offer may be as important as the content. Do not make an offer too early to a party not ready to receive it. You will end up betting against yourself in the end.”
Try to simplify your divorce rather than make it a complicated divorce.
When it comes to divorce, does sex matter? That is, are there differences between men and women?
Research and experience both say yes. Men, for example, tend to file for divorce less often than women. “From my own case load, I’d say roughly 60 percent of women initiate the process, whereas 40 percent of men initiate the process,” says Tony Zorich of the Seattle area family law practiceMcKinley Irvin.
Men also have somewhat different reasons for divorcing, according to research from Pennsylvania State University. Here are top reasons men seek divorce.
5. Growing apart
Nearly 1 in 10 men, or 9.6 percent, cited growing apart from their spouse as their primary reason for wanting a divorce. This reason is common among men who married young and feel that they—and their spouse—have since grown into different people. Growing apart can also be the result of spending less time together due to the demands of work and parenthood or due to what Zorich describes as “lack of acknowledgment by their spouse for their role in the marriage,” which can ultimately lead to a loss of interest in the relationship.
“Marriage is a team effort in every sense of the phrase, and each team member has various roles. When the performance of tasks associated with those roles is not acknowledged in a positive way, the man can feel disenfranchised.”
4. Drinking or drug use
Men have been known to have very passionate love affairs with the bottle, but it seems women are no slouches in that department either: Substance abuse and addiction was listed as a reason for divorce for more than 1 in 10 men, or 10.6 percent of those studied. Apparently having similar attitudes about drugs and alcohol use is helpful in keeping marriages together. Addictions to other things, like pornography, can also be a factor in divorce.
3. Lack of communication
This issue might be better called “lack of good communication.” Couples typically have lots of logistics to manage (particularly if there are kids involved), a situation which requires tact, understanding, and patience. But stressed couples communicate by fighting, most often about sex andmoney. As you might suspect, this was a problem for quite a few men (13 percent) in the study.
Men may have some flexibility when it comes to open relationships, but many of them still view cheating as a stone-cold deal breaker. It may be the case, as it is often said, that cheating is merely a symptom of deeper problems in the relationship. But with 15.6 percent of men citing it as a reason to leave, those kinds of distinctions might not matter much in the grand scheme of what drives guys to consider having papers drawn up.
This catchall phrase indicates general unhappiness in marriage and was reported by nearly 1 in 5 men, or 19.5 percent of those surveyed, as the main reason for divorce. “Personal dissatisfaction in the relationship has generally been the number one reason in my practice for a number of years,” says David Starks, an attorney who also works at the McKinley Irvin firm. “Domestic violence and sleeping around sound more interesting and, frankly, more excusable, but really just giving up the fight to stay in love or at least mutual admiration is really what both sexes do most to end up in divorce.”
How are women and divorce different?
Unsurprisingly, women seek divorce for many of the same reasons men do. Notable differences include a higher incidence of divorce over infidelity—25.2 percent of women cited unfaithfulness as cause for separation compared with 15.6 percent of men—plus reports of physical and emotional abuse and problems with the husband’s personality, immaturity, and untrustworthiness.
What else is different? “There are, speaking very broadly, some typical differences in how men and women handle the divorce process, mainly driven by what roles they played in the relationship,” says Starks. For instance, women are more likely to ask for financial help post-divorce, which he believes is due to the homemaker role women are more likely to assume in the couple.
When it comes down to it, however, it’s impossible to paint a portrait of divorce in broad strokes. “Every divorce is different for many, many reasons,” says Zorich. He recommends that men going through a divorce get emotional and legal support. “Divorce is a process that can take a significant emotional toll on even the ‘toughest’ of men. Support, whether it be from friends or family, is very important, but a man’s greatest ally in a divorce can be the advice of a competent attorney to represent him. Men should not be afraid of the courthouse or the law, and a good attorney can keep a man grounded in that reality.”
Learn more about the divorce process by speaking to a top-rated divorce attorney in your area.
Are you going through a divorce? You should avoid these very common divorce mistakes which can have long-term effects on your family and financial future.
1. Getting legal advice from friends and family members
2. Interpreting what your divorce attorney tells you as a guarantee
3. Making threats to your spouse
4. Moving or hiding marital funds without the knowledge of your spouse
5. Speaking too soon or too openly to minor children about the separation and divorce
Mistake #1 Getting legal advice from friends and family members.
Although they may mean well and want the best for you, advice from friends or family is almost always wrong. They can sometimes unintentionally lead you down the wrong path by offering you advice that is uninformed or does not apply to your particular situation. Is the person you are talking to a practicing divorce lawyer or someone that is already on your side? You will often hear things like: “My friend got full custody of her children so you can too,” or “my cousin had a great attorney who got her 90% of the assets and alimony for the rest of her life, so you should be able to get the same thing.” Although this advice may sound good to you at first, you need to understand that there are no two divorce cases that are the same, so they cannot possibly be treated the same way by a court. There are many many factors that go into a court-ordered divorce settlement, such as:
1) The state law that applies to your particular set of facts;
2) The local court customs and practice in your particular county;
3) The effectiveness of your attorney, and:
4) Since judges are human, the mindset of the particular judge or even the mood they are in on a given day.
In actuality, going to court is often a “roll of the dice” in which you might spend a lot of money in legal fees, only to get an end result that is radically different than what you were expecting. Therefore, when approaching your divorce, you should seek out the advice of an experienced and competent attorney first who will help you to sort out all your rights and options while helping you to develop some realistic expectations up front.
Mistake #2 Interpreting what your divorce attorney tells you as a guarantee.
Getting the advice of a good experienced attorney you can trust and get along with is always a wise choice and a good place to start. A divorce attorney will attempt to gather all the relevant facts as well as financial and other important information about your marriage. The attorney will usually give you a general assessment of the type of settlement you can expect, with a general idea of the outcome. However, do not rely on an attorney’s preliminary impressions as a guarantee of the exact outcome you can expect in your case. Remember, an attorney’s advice will always be limited to what information you alone give them. That’s it. The attorney will not be aware of financial or other information your spouse may have in which you do not know. And that could drastically change the attorney’s analysis of your case. Moreover, because you may come to an attorney’s office feeling upset and angry at your spouse or otherwise emotionally distressed, you might have the tendency to hear only what you want to hear. This can cause you to firmly dig in your heels without any compromise going forward. This can be the most costly mistake you make which can both deplete your finances and harm your family emotionally for years to come. This is true, especially if your spouse is already in a position to discuss a compromise in order to avoid costly and emotionally draining litigation. Wait for a full analysis of all of the information that is relevant to your case and only then discuss what a realistic outcome may be.
Mistake #3 Making threats to your spouse.
Spouses commonly make empty threats and other nasty comments to one another.“I’ll get the meanest lawyer in town and destroy you,” or “After cheating on me, there is no way you will ever see your kids again, or “My lawyer said you’ll have to leave the home and pay me alimony for the rest of your life.” Such threats, although understandably borne out of anger, are really meaningless in the long run and have no effect either way on the outcome of your case. Remember that the way you act towards your spouse early on will not only set the tone for your entire divorce case, but also for years to come after it is all over. This, of course, becomes especially important if you have children to co-parent which you will be difficult to do in a way that is healthy for them if you carry hatred and resentment towards your spouse into your post-divorce lives. Believe me, no matter how old your children are they will feel the hatred you have for one another even if you don’t argue in front of them. Your children will greatly benefit if they see you and your spouse trying to “get along.”
Always take the high road in approaching your divorce. You don’t necessarily have to be best friends with your spouse through all this, just be willing to make an effort to communicate, cooperate and compromise with him or her as best you can, especially when children are involved. Assure your spouse that you are not out to hurt him/her or the kids (if kids are involved), and that you have good faith intentions of reaching an amicable settlement as soon as is possible. Just because your spouse may act like a jerk does not mean you are not a jerk if you respond in the same way. Bad behavior does not justify bad behavior.
Your goal should be to achieve the best overall outcome you can. Trying to “get even” with your spouse and arguing at every opportunity rarely ends up with your spouse giving in to your demands or suddenly admitting that they are wrong and you are right. Keep in mind, the court doesn’t care who is the “bad” person or who is at fault. There are no winners here and the court never declares to the world that it is all your spouses’ fault and you are the victim. You should not argue over petty things simply because you are hurt or angry. Is arguing over your old furniture or fighting to get an extra hour with your kids worth it? Often this only leads to your spouse reacting by being just as stubborn. You have to choose what is important and let go of what is not. There is a middle ground between being a push-over and demanding that you get everything you want. Compromise, you will feel better about yourself and hopefully your spouse will respond positively.
Mistake #4 Moving or hiding marital funds without the knowledge of your spouse.
Trying to hide assets so that they are not part of your divorce is a big mistake. One big way to break any trust that exists is for one or both spouses to act underhandedly, especially with the marital finances. When a spouse decides they want a divorce, they will sometimes try to secretly transfer funds from a joint account into their own account or into someone a friend or family member’s account or even make significant withdrawals of cash from a joint account. When clients are asked why they do this, they typically say they feel threatened and need to act quickly in order to protect what is theirs or make up some other excuse. Although it is understandable that such activity could occur in the heat of the moment when a spouse may perceive a sense of urgency and desperation for it, if these are marital funds that are being moved in and out of accounts, this activity will immediately be uncovered through the initial steps of the discovery process. This means generally that if marital monies were withdrawn from marital accounts, this will eventually come to light and they will have to be returned to the marital estate. If a spouse has since spent the funds away, they will be ultimately accountable for them as part of the divorce settlement. Therefore, if you and your spouse are contemplating a divorce, and you feel the need to move any funds from an existing marital account or redirect marital funds away from a marital account, discuss your intentions with your attorney and/or spouse first and make sure there is a good reason for doing this, and one that also makes sense to your spouse. This open disclosure early on help save you money in attorney’s fees in the long run and avoid the judge thinking that you are cheating or lying.
Pitfall #5 Speaking Too Soon or Too Openly to Minor Children about the Separation and Divorce.
Discussing your separation or divorce plans with your children is a very sensitive subject which must be approached very delicately. Without realizing it, many times people who decide to separate or divorce will use their children to vent all the frustration and confusion they are feeling at the moment. This is the worst thing you can do to your children during this time and can have very bad long-term effects on their emotional well-being. If you need to vent, find a friend, family member or therapist. Although your own feelings and emotional well-being are important in a divorce, a healthy divorce means considering what’s best for your children first. Therefore, if you are getting a separation or divorce, try to make every effort to go about your business as quietly as possible without involving your children in any particular facts or even worse, trying to get them to pick sides. This is not to say that children should be completely left in the dark either. Sooner or later, you will have to face these issues with them directly so that they can begin to emotionally prepare for what will be a very different life involving two separate households. Figuring out the ideal time and also the appropriate things to say to children is key. Planning with your spouse in advance how to approach this, and also approaching the children together is the best way. Family therapy with a licensed family therapist can also be very effective when working through these issues together as a family. Believe it or not, a large majority of divorcing parents can amicably work out a compromise regarding child custody issues without legal assistance and only 6- 20% of all divorce cases involving children actually need the courts to intervene. Therefore, the odds are in your favor that your custody matter can be resolved amicably without court involvement if both parents are willing to work together and do what’s best for the children.
Divorce is an ongoing reality in our society. No longer will the exception, at least one in every two marriages end through a divorce. And yet, despite this fact, we have been slow to adapt procedures that allow a marriage to end civilly, creatively, fairly and in these tough economic times, with the minimum of expense. For the most part, divorce is still framed as an adversarial battle that is characterized by accusations, blame, unproductive argument, high costs, and weak solutions that ignore the best interests of the children.
There are plenty of attorneys waiting for you to show up angry, indignant, hurt, and vengeful. They are happy to stand up to make futile motions to court, beating their chest, but only as long as there is money in the estate. The number of divorce cases that start out with an attorney, but end without is an embarrassment. The number one reason-there was no more money!
It doesn’t have to be this way. In truth, we have already evolved better ways to end a marriage, ways that are kinder, gentler, and when there are children involved, to deal with the reality that what is actually taking place is a reorganization of the family, rather than an ending.
What follows is a list of ten ideas that are worth considering as you seek to cope with the divorce experience:
1. Seek to collaborate, not to fight: The research from the field of negotiation is clear. We get better deals when we seek to work jointly at the challenge on hand, both in regard to those issues where the best interests of the children are at stake, but also when it’s all about the money.
2. Keep your eye on the ball, start with the end in mind: The purpose of the process is not to exact revenge, but rather to work out a fair solution that makes sense for your family. The end product is your marital settlement agreement. It documents your plan of action for your ongoing care of your children, the division of your estate, and also addresses whether and to what extent there will be any spousal support. It is this document that allows the court to essentially rubber stamp your process.
3. Prepare! Getting a divorce takes an effort. You will have homework to do! Both parties must make full disclosure of all assets and liabilities. Only you have the information. The sooner you share it the quicker the process will be.
4. Manage your Emotions Wisely! Not only is it important to have your financial information organized, but also that you take time to manage your feelings. Inevitably, divorces surface strong emotions, like anger, disappointment, shame, fear and jealousy to name a few. There will be opportunities to share how you feelings which will help you in coping with divorce. If you can dissipate your negative emotional energy before the meetings it will help.
5. Listen To Understand: As hard as it may be to listen attentively to what your partner is saying, it will pay dividends. You will have the benefit of understanding where they are coming from and what is important to them. Too often we can only hear the voices in our own head and tune the other out. Mediation works best when both parties communicate effectively, and listening is a vital part of that.
6. Focus on your needs: In conflict it is natural to identify a solution that we feel is fair and to demand its application. The danger with this approach is that it fosters defensiveness and conflict escalation. The mediation process works best when we articulate and focus on our needs, and then together search for the most creative solution with the resources available.
7. Explore Standards of Fairness: The law is one standard. If you don’t work things out and still want to divorce, a judge will apply the law to the facts of your case. How you feel or what your personal standards of fairness look like, will not come into play. However, in mediation, you can establish your own criteria for fairness, and use those family inspired yardsticks to address the more tricky issues that leave you feeling hopeless.
8. Consider the need to apologize: When your kids throws a ball through your neighbors window you don’t tell them to run inside and hide. You send them over to apologize and to make reparations. When our actions cause pain to another, the right thing to do is to say you are sorry. When we are conciliatory with one another in this manner, we set the stage for reconciliation, a vital outcome for the ongoing, but reorganized family.
9. Consider Forgiveness: Forgiveness is something we do for ourselves. It empowers us to move on with our lives without challenging the past to be anything other than the way it was. To forgive does not mean we condone, but it does signal an intention to let go of the pain.
10. Be Creative: As humans facing a challenge, we are only limited by our own creativity. Your challenge is to think outside the box and find a unique solution that addresses the reality of a reorganized family. Mediation is a family friendly process that allows you to focus on what you need to do to make your divorce a reality. It represents a new way of doing things. A way that most agree is good common sense. Following the suggestions contained in this brief article will help you get through your divorce with the least pain possible and with the greatest potential for a marital settlement agreement that is fair to both.
The Uniformed Services Former Spouses’ Protection Act (USFSPA) was passed by Congress in 1982, specifically to give a state court the authority to treat military retired pay as marital property and divide it between the spouses. This legislation was in direct response to the preceding year’s U.S. Supreme Court decision in McCarty v. McCarty, wherein the court precluded state courts from dividing military retired pay as an asset of the marriage.
While military retired pay is not divisible using a Qualified Domestic Relations Order (“QDRO”), it is divisible using a Military Retired Pay Division Order.
The Defense Finance and Accounting Service (“DFAS”) has very specific rules about how and when military retirement pay can be divided. For a division of retired pay as a property award to be enforceable under the USFSPA, the former spouse must have been married to the service member for at least 10 years, and during that time the service member must have performed at least 10 years of creditable service. This is referred to as the 10/10 requirement.
In addition, no more than 50% of retired pay can be awarded as marital property. Because the DFAS has very specific requirements relative to division of military retired pay, it is important that the parties understand these technical requirements early on. There are many ways that a former spouse can lose his or her right to division of retired military pay, so relying on an expert in this unique area is very important.
Dealing with Divorce Divorce can be a lengthy process that may strain your finances and leave you feeling out of control. But with the right preparation, you can protect your interests, take charge of your future, and save yourself time and money. You certainly never expected divorce when you cut the wedding cake–you and your spouse planned on spending the rest of your lives together. Unfortunately, the fairy tale didn’t work out, and you’re headed for a divorce. So where do you begin?
First things first: should you hire an attorney?
There’s no legal requirement that you hire an attorney when divorcing. In fact, going it alone may be a sensible option if you’re young and have been married only a short time, are childless, and have few assets. However, most divorcing couples hire attorneys to better protect their interests, even though doing so can be expensive. Divorce attorneys typically charge hourly rates and require you to submit retainers (lump sums) up front. The charges will depend on the complexity of the case, the reputation and experience of the divorce attorney, and your geographic location.
You should know that if you’re a homemaker or earn less income than your spouse, it’s still possible to obtain legal representation. You can submit a motion to the court, asking a judge to order your spouse to pay for your attorney’s fees.
If you and your spouse can agree on most issues, you may save time and money by filing an uncontested divorce. If you can’t agree on significant issues, you may want to meet with a divorce mediator, who can help you resolve issues that the two of you can’t resolve alone. To find a mediator, contact your local domestic relations court, ask friends for a referral, or look in the telephone book. Certain attorneys, members of the clergy, psychologists, social workers, marriage counselors, and financial professionals may offer their services as mediators.
Save time and money by doing your homework before meeting with a divorce professional
To save time and money, compile as much of the following information as you can before meeting with an attorney or other divorce professional: • Each spouse’s date of birth • Names and birthdates of children, if you have any • Date and place of marriage and length of time in present state • Existence of prenuptial agreement • Information about parties’ prior marriages, children, etc. • Date of separation and grounds for divorce • Current occupation and name and address of employer for each spouse • Social Security number for each spouse • Income of each spouse • Education, degrees, and training of each spouse • Extent of employee benefits for each spouse • Details of retirement plans for each spouse • Joint assets of the parties • Liabilities and debts of each spouse • Life (and other) insurance of each spouse • Separate or personal assets of each spouse, including trust funds and inheritances • Financial records • Family business records • Collections, artwork, and antiques
If you’re uncertain about some of these areas, you can obtain the necessary information through your spouse’s financial affidavit and/or the discovery process, both of which are mandated by the court.
Consider the big questions, such as child custody and alimony
Although your divorce professional will help you work through the big issues, you might want to think about the following questions before meeting with him or her: • If you have children, what are your wishes regarding custody, visitation, and child support? • Whose health insurance plan should cover the children? • Do you earn enough money to adequately support yourself, or should alimony be considered? • Which assets do you really want, and which are you willing to let your spouse keep? • How do you feel about the family home? Do you feel strongly about living there, or should it be sold or allotted to your spouse? • Will you have enough money to pay the outstanding debt on whatever assets you keep?
In addition to an attorney, you may want to see a therapist to help you clarify your wishes, express yourself more clearly, and deal with any child-related issues. Such counseling is typically covered by health insurance.
Some dos and don’ts when divorcing
Keep the following tips in mind: • Do prepare a budget and a financial plan to sustain you until your divorce is final. Get help if you don’t currently have the skills and energy to do this on your own. • Do review monthly bank and financial statements and make copies for your attorney. • Do review all tax returns that have been filed jointly or separately by your spouse. • Do make sure all taxes have been paid to date. • Do review the contents of any safe-deposit boxes. • Do get emotional support for yourself–talk to friends, join a support group, or see a therapist. • Don’t make large purchases or create additional debt that might later cause financial hardship. • Don’t quit your job. • Don’t move out of the house before consulting your attorney. • Don’t transfer or give away assets that are owned jointly. • Don’t sign a blank financial statement or any other document without reviewing it with your attorney.
While most divorcing spouses are laser-focused on the date their divorce will become final, many underestimate the importance of their date of separation. Often these two dates occur months – or even years – apart. Yet, the date of separation can have a dramatic impact on many financial aspects of the divorce.
The date of legal separation is generally considered the date the spouses no longer lived together as a married couple, although each state may slightly vary this definition. The date of separation is often obvious – either one party moves out of the marital home or the parties agree to a set date, sometimes the court must make the determination.
So why is the date of separation so important?
Barring any prenuptial agreements or state law to the contrary, the income earned by a spouse during the marriage is considered marital property, subject to division between both spouses. However, any income earned by either spouse after the date of separation is generally treated as separate property. This means that if one spouse wins the lottery or receives a large bonus before the date of legal separation, the other spouse is entitled to a portion of that income.
Things can get complicated if one spouse receives income after the date of separation but before the date of divorce. In those cases, the courts will look to when the received income was earned to determine if it is marital property. In some cases, even money received after the date of legal separation but earned before that date will be subject to division.
One of the unfortunate realities in many divorces is that one spouse will attempt to hide assets from the other to avoid having to divide them down the road. This is particularly problematic for the “non-financial” spouse – the one who took a hands-off approach to involvement with the couple’s finances during the marriage.
These non-financial spouses usually will not understand or have immediate access to records or documents related to marital property like investment accounts, real estate holdings, business interests and the like. Not having any information on marital assets can make it very challenging to ensure that the non-financial spouse receives a fair share of the marital estate.
If you are a non-financial spouse facing a divorce, your first priority should be identifying and locating documents related to all marital assets. While sometimes you can get this by simply asking your spouse, usually the spouse intent on hiding assets will delay or refuse outright.
In these cases, you or your attorney will need to rely on the legal process to obtain financial information from the unwilling spouse. In legal jargon this is referred to as the “discovery process” and can become a complicated and costly affair. However, it is one of the most effective ways to compel an unwilling spouse to turn over financial records.
Even after you receive the requested information, another problematic situation arises when the unwilling spouse has an ownership interest in a privately held business. In these cases, you will usually need the help of a forensic accountant to study the financial statements and records of the company to determine an appropriate value for the business and identify any unusual transactions that suggest assets are being hidden.
For any non-financial spouse experiencing the issue of hidden assets in a divorce, it is important to seek out the advice of an experienced divorce attorney or forensic accountant who can provide advice on the best course of action, depending on your circumstances.
The groups that are most likely to get divorced in America
There’s this persistent myth in America that about half of all marriages end in divorce.
In fact, the figures are significantly lower, as new graphics by Nathan Yau of Flowing Data demonstrate.
Yau explains that this myth simply stems from bad math – dividing the divorce rate by the marriage rate in a given year. In 2014, there were 8.7 divorces and 17 marriages per 1,000 women in the United States, he says, citing figures from the American Community Survey. If you divide the first number by the second number, you get 51 percent.
The problem is that the people who are marrying each other in 2014 aren’t the same as the people who are divorcing each other in 2014. If you look at the data over a longer period of time, it becomes clear that the divorce rate is lower than half.
As Claire Cain Miller wrote at the Upshot, the divorce rate peaked in the 1970s and early 1980s and has been declining since then. In fact, if current marriage and divorce rate continues, only about one-third of American marriages will end in divorce, the Upshot’s Justin Wolfers has calculated.
But the rates are much higher for some groups than others, as Yau’s graphs show.
Here’s what the graph looks like for American men and women who have a high school education or less.
The graph shows the age of men and women along the horizontal axis and the percentage who have been divorced or married more than once on the vertical axis. These graphs are cumulative, so as you go from left to right they add in the people who have ever divorced or remarried at any age group, to reach the total percentage on the right hand side of the graph. As you can see, about 39 percent of men with a high school education or less divorce or remarry in their lifetimes, compared to 37 percent of women with a similar education.
Nathan Yau, Flowing Data
And here’s what the graphic looks like for those with a bachelor’s degree. Perhaps predictably, the divorce and remarriage rates are lower, with roughly 29 percent of women and 28 percent of men with a bachelor’s degree getting divorced or remarried.
Nathan Yau, Flowing Data
Yau also broke the divorce rates down by race. Here are the rates for whites:
Nathan Yau, Flowing Data
The rates are slightly higher for blacks:
Nathan Yau, Flowing Data
They are much lower Hispanics:
Nathan Yau, Flowing Data
And lowest of all for Asians, with less than one-fifth of Asian-Americans getting divorced and remarried:
Nathan Yau, Flowing Data
The highest rates of the bunch belong to Native Americans:
Nathan Yau, Flowing Data
Your daily policy cheat sheet from Wonkblog.
You can see more graphics, including a breakdown of divorce rates for employed and unemployed Americans, on Yau’s site, here.
Did you know that, in America, there is one divorce about every 36 seconds? That’s nearly 2,400 divorces per day, 16,800 divorces per week and 876,000 divorces per year.
With tax season upon us, that means approximately 876,000 people are newly navigating the realm of post-divorce taxes. Taxes are complicated enough as it is, but when you add in assets, dependents, alimony, child support and other freshly split obligations, filing can be downright daunting.
Here, the five most important things to keep in mind when facing this new challenge.
1. Marital status is set as of Dec. 31, not April 15
If your divorce was finalized after Jan. 1 but before you filed your taxes, you are still officially married as far as your 2014 taxes are concerned. In other words, your marital status as of Dec. 31 determines your filing status for that entire calendar year.
Although you cannot file jointly, you may be able to file as a head of household, depending on particular qualifiers such as length of cohabitation, cost of home upkeep, et cetera.
2. Home is where the taxes are
Upside: You don’t have to pay taxes on transferred property in a divorce, and if you’re retaining the residence, you can claim the mortgage interest deduction.
Downside: Now that you’re single, capital gains exclusion laws work less to your advantage. As a result, if you eventually decide to sell your home, your profit from the sale may be significantly reduced.
3. Alimony is tax deductible, with some caveats
In most cases, alimony is tax deductible for the party paying it; in fact, it’s an above-the-line deduction, meaning it does not need to be represented as an itemized claim. However, a few conditions should be kept in mind:
Alimony payments made while both parents of the child are still living together are not tax deductible.
While cash, checks and money orders meet alimony standards, property contributions do not.
4. Custodians clean up on tax returns
Modern custodial agreements rarely designate a sole custodian, which makes taxes a little more difficult. Typically, the custodial parent is considered, by default, the parent who has physical custody for most of the year. However, many couples now alternate who claims custody each year in order to share the tax benefit.
Also, keep in mind that child support is always tax-neutral, which means that even if you’re paying it, it is not tax deductible in any way.
There’s one little loophole, however. If you continue to pay a child’s medical bills, even without custody, those costs can be included as a medical expense deduction.
5. Be careful with your 401(k)
Your retirement should be handled with the same care it took to earn it. Cashing out a 401(k) to use in a settlement is subject to taxes; however, this tax trap can be avoided if the transfer is done under a qualified domestic relations order, or QDRO. A QDRO grants your ex-spouse the right to the funds without the imposition of taxes.
As always, if you have any doubts about how to file your taxes due to a divorce, contact your attorney and your accountant. They are best qualified to give advice for your unique situation.
Filing taxes during or after a divorce can be more complicated than expected for the parties. It is important to understand a variety of tax issues unique to divorcing parties in order to avoid unexpected short- and long-term issues.
In Part One of this article, we introduced some of the most common tax issues facing individuals during and after divorce. Here we offer several more things you must know when going through a marital dissolution action.
The Filing Status to Use While the Divorce is Pending
Many people inaccurately believe that once a divorce is filed, they are no longer entitled to file as “Married Filing Jointly.” This it not true. IRS code allows a taxpayer who is married on the last day of the calendar year to file as either Married Filing Jointly, Married Filing Separately or, in some cases, Head of Household.
The IRS makes no distinction for people going through a divorce in any given year. Even if the final court date is scheduled for January 2 of the following year, so long as the parties are still legally married (with no legally binding divorce decree or separation maintenance order in place) on December 31 of the current year, they are entitled to file as Married Filing Jointly. This can be beneficial, as most married couples enjoy greater tax benefits when filing under this status. At the very least, this will shave off a bit of tax liability for the current tax year.
Some Legal Fees Can Be Deducted
One of the most common questions asked by divorcing parties is whether they can deduct their legal fees on their tax return. Unfortunately, while the IRS does allow for the deduction of legal fees related to tax advice from your divorce lawyer, the balance of his or fees is non-deductible. For this reason, it is critical to ensure your divorce lawyer prepares an itemized invoice, as it is your responsibility to provide support for any deductions you take.
How the Property Division Can Impact Taxes
For most divorcing couples, the majority of their marital estate is comprised of retirement accounts. In most cases a Qualified Domestic Relations Order (QDRO) is required to effectively divide these assets. However, there are tax consequences for a spouse receiving a share of the other spouse’s retirement accounts. It is important to fully discuss the potential tax liability – and ways to avoid them – with your divorce attorney or financial planner.
To learn more about divorce tax filing please contact our office.
As if divorce doesn’t cause enough emotional and financial turmoil, every person going through a divorce must also consider a variety of tax issues that arise once a marriage ends. Many of these issues can catch a divorcing spouse off guard. It is important to understand these tax pitfalls in order to make sound decisions and avoid unnecessary troubles down the road.
Alimony is Taxable to the Recipient
With some exceptions, spousal support paid by one party to the other is usually considered a taxable event for both. This is crucial to understand because it causes a tax liability for the payee spouse and a tax credit for the payor spouse.
The IRS sets forth specific criteria in order for a payment between spouses to qualify as alimony:
The spouses do not file a joint tax return with each other
The payor spouse pays in cash (including checks, bank transfers or money orders)
The payment is received by (or on behalf of) the payee spouse
The divorce or separate maintenance decree does not state that the payment is not alimony
If legally separated, the former spouses are not members of the same household when the payment is made
There is no liability to make payments after the death of the payee spouse
The payment is not treated as child support or part of a property settlement
Who Gets the Dependency Exemption for the Minor Child
The IRS presumes that the custodial parent will receive the dependency exemption for any minor children of the divorcing couple. A custodial parent is defined as the parent who has the minor children for the greater portion of the calendar year. This presumption can create a situation where one parent always gets the deduction, year after year, providing significant tax savings to him or her.
However, the dependency exemption can be allocated by agreement of the parties or by court order. In such cases, the parent relinquishing the dependency exemption is required to sign IRS form 8332, which is then attached to the non-custodial parent’s tax return in each year that he or she claims the exemption.
Before moving out during divorce or physically separating in PA, consider the legal ramifications. Here’s the answers to the top 4 questions our firm gets, to help you make an informed decision.
Living together after you’ve decided to divorce or separate is extremely difficult, regardless of how you got there. It’s no wonder this tense, uncomfortable living situation often pushes divorcing couples to make rash decisions about moving out before fully considering the consequences.
Before you pack up your bags, it’s critical to consider the legal ramifications to moving out during divorce in Pennsylvania. There are lots of misconceptions, so we’ve gathered the top four questions we hear all the time.
Let’s clear things up so you can make an informed decision before taking action.
1. If I move out, will I still have a claim to the house in a divorce?
If you move out temporarily, you still have a claim on the house because it was your primary residency. If you bought the house, you also have a claim. However, this can change if you are separated for a prolonged period of time. If you establish yourself in a new residency for more than two years, the court could grant the current occupant of the house a greater portion of the marital property’s worth.
Even if you move out, you still have a claim on the marital home. The length of legal separation could be a factor in how much of its worth is granted to you.
2. Who pays the bills while we’re separated?
If you do choose to move out, you may be required to pay spousal support depending on who has a higher net income. However, before coming to an agreement on a divorce, you will still be required to pay off your portion of a mortgage loan or rent. This keeps you financially married to your spouse even though you may be emotionally separated. That’s why it’s best to collaborate before moving out. Determine a plan for you both that is financially fair. If you choose to mediate a divorce, you can create a temporary agreement about finances. If you are unsure about whether the separation will lead to divorce, you can have a separation agreement that outlines financial responsibilities.
Even if physically separated, you are still required to pay off your portion of a loan or rent before the divorce is final.
3. Will it be considered abandonment if I move out?
The court will only consider the issue of abandonment if your spouse makes a claim for it, though it typically does not gain much traction unless the separation is extremely prolonged and communication almost nonexistent. If this becomes an issue, it can affect the physical custody rights you have toward your children in a divorce. This is why discussing moving out with your spouse before you make the move is important. You can make sure abandonment will not be an issue before you go to court.
Abandonment is only considered by the court if your spouse makes a claim for it, and usually is only a factor if separation is very long and communication is almost nonexistent. Abandonment is a rarely used fault ground for divorce. Simply moving from the marital residence is not abandonment (the court does not expect the parties to live together until the divorce is granted).
4. Is there anything I should do while separated to help my divorce?
If you are going through litigation, a contested divorce can last many months if not years. This is one reason you might want to consider mediation if moving out is an issue. Mediation can be as fast as six months and may eliminate the need for you to make a total move out. Keeping the status quo will also minimize the legal complications around your divorce. If you still choose to move, look for a place where your children can stay as well. You want to keep communication during a separation so you stay a primary parent – not the parent they visit.
Tips for Financial Security After Divorce Settlement
Meet with an Lawyer
Even if you’re hoping for a simple divorce, you can still benefit significantly from consulting an attorney who specializes in divorce law. A lawyer can be objective, advising you of your rights, obligations and options and walking you through issues surrounding alimony, child custody and a divorce settlement. During this emotional period, an attorney will be able to help you focus on critical details regarding your divorce finances.
Estimate what you and your spouse are worth
The court may require a list of all marital assets and liabilities you and your spouse have jointly and separately. You should:
List all financial accounts and assets the two of you have, either individually or jointly. That includes stocks, bonds, real estate, mutual funds and workplace retirement plans.
Do an inventory of household possessions, including vehicles, appliances, electronic equipment and furniture.
Once you’ve accounted for all assets, list each of them under one of three categories:
1. Your pre-marital assets (things you brought into the marriage). 2. Your spouse’s belongings. 3. Marital property, or property acquired during the marriage.
The court will decide how to “equitably” divide marital property. Pennsylvania laws does not automatically define “equitably” as “equally.” The court and applicable law will also determine the ownership and division of all property and the responsibility for debt incurred during the marriage.
Itemize your liabilities — debts like mortgages, home equity loans, car loans, credit card balances, etc. Essentially anything else you and your spouse owe money for. List liabilities as yours, your spouse’s, or joint.
As an aside, if your marriage is in trouble, from this point on, it might be a good idea to postpone new and large purchases as well as the assumption of any new debt.
Review your Income and cash flow
After divorce, you’ll be a single person and maybe even a single parent. Financially, things will be much different from the way they’ve been, so it’s important to estimate your cash flow after the divorce, so you can plan for your new financial reality. You should also try to forecast future income to enable the court to determine child custody and alimony payments.
Give serious thought to creating a post-divorce budget as a tool for managing your money going forward. A budget can help you determine how you will need to scale back your lifestyle.
A budget can also help you focus on the income side of your cash flow. For example, you might realize that after the divorce, you will need to find a higher-paying job, or go to work if you’re not currently employed. You may even decide to go back to school as a way of enhancing your future income potential.
Review your insurance
Make sure you will have adequate health, disability, and life insurance coverage after a divorce. If you’re currently covered by your spouse’s employer-provided health plan, you can usually keep existing coverage for at least 36 months after a divorce under the Consolidated Omnibus Reconciliation Act (COBRA). You will have to pay premiums for COBRA coverage, and the premiums will probably be much more expensive, so you need to account for them in your post-divorce budget.
If you’re employed but don’t currently use your own employer-sponsored health plan, consider signing up for it. A group policy at work is typically much cheaper than an individual policy purchased on your own. Employers typically do not permit you to sign up for health insurance mid-year, but if you’ve experienced a major life event like a divorce, it may be possible.
After a divorce settlement, remember to review and, if necessary, change beneficiary designations on your life insurance policies and retirement/investment accounts, as permitted by court order. Definitely discuss your situation with a financial advisor
Your attorney may be able to provide limited guidance on financial issues. However, for broader assistance with the financial aspects of a divorce settlement, consider consulting with a financial advisor. He or she will also be able to guide you through longer-term financial planning, which might address issues like debt reduction, education funding, retirement planning and estate planning.