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Divorce and Your Money - #1 Divorce Podcast

Visit us at www.DivorceAndYourMoney.com Divorce and Your Money is your guide to avoiding costly mistakes during divorce. Shawn Leamon, Certified Divorce Financial Analyst and MBA, wants to help you learn the fundamentals of how to get a divorce. Whether you are looking for an uncontested divorce, a do it yourself divorce, or an online divorce, resources are available to offer guidance. Through his divorce podcast and divorce blog, Shawn offers his professional opinion on the best ways to handle the end of your marriage. He covers topics including how to file for divorce, divorcing a narcissist, and finding the best divorce attorney. Even tricky subjects such as a “what is a QDRO?” and “is alimony taxable?” are tackled through these venues. If you need to know what the first steps are or what you should do to head to trial during litigation, you can find resources to give you a step-by-step guide to what comes next. Think of his advice as an alternative to divorce support groups where you can find exactly what you need when you need it. He offers one-on-one divorce coaching to give you a solid grasp on the decisions that are bound to affect your financial future. Before you have a divorce decree in hand, you will likely go through some type of divorce mediation. For any spouse saying, “I want a divorce,” you need to make sure that you are getting the financial future you are entitled to. Do not allow yourself to be blinded by the emotional, legal, and financial burden that divorce can become. Instead, take control of your situation with sage wisdom to help all individuals make better financial decisions for their independent future. If you find yourself asking “where are the best divorce lawyers near me?”, Shawn can help you to recognize the best of the best. Whether you need a divorce in Texas, a divorce in Florida, or a divorce in New York, you will have all the knowledge you need to find the best team of professionals to assist you. You can start from a place of being legally separated or once you have already started to file for divorce using free divorce papers or an attorney. No matter where you or your marriage may be in the process, Shawn Leamon has professional advice to offer your unique situation. A simple no fault divorce or a high-stakes power struggle are all areas he has vast experience with during his work outside of Divorce and Your Money. Let his advice be a guide to help you get all that you need for a secure financial future in your divorce records. It will not make a difference whether you are getting a divorce in Ohio or a divorce in California if you are following the basic principles set out through Divorce and Your Money’s divorce blog, divorce podcast, and divorce coaching.
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Now displaying: March, 2017
Mar 30, 2017
“One of the easiest things to do is get a camera system installed for the outside of the home. Record everything that’s going on.” - Trip Elix
 
Are you worried your spouse may be spying on you? Sometimes, regardless what you try to do, it seems like your soon-to-be-ex spouse knows just a little bit too much information about what’s going on in your life.
 
In this episode we interview Trip Elix, a former hacker, published author and privacy expert. Trip will surprise you with just how much information companies have about you — and how easy it is for a spouse to track your every movement. This is a great episode that you do not want to miss!
 
We barely scratch the surface with Trip, so be sure to check out his myriad of resources.
 
Website: http://www.tripelix.com/
Facebook: https://www.facebook.com/tripelix/
Twitter: https://twitter.com/trip_elix
LinkedIn: https://www.linkedin.com/in/trip-elix-67354889/
Youtube: https://www.youtube.com/channel/UCM3ac9bLmAsT7aqnWJEN2zw
 
Thank you for listening to the Divorce and Your Money Show. Visit us at www.divorceandyourmoney.com for 1-on-1 coaching. If you enjoyed the show, please take a moment to leave a review on iTunes, as it will help other people discover this free advice.
Mar 21, 2017
"The clients are in control of the [collaborative divorce] process and we’re just there as sherpas…We’re guides and just providing education and information.” - Tonya Alexander
 
What is Collaborative Divorce? It’s a divorce process that doesn’t rely on the "scorched earth" practices of traditional divorce litigation. In this episode we interview Tonya Alexander, a Collaborative Attorney and Mediator based in Oregon. Tonya will explain why collaborative divorce may make sense for you, as it can save substantial time, money and emotional heartache. This is a great episode to check out for everyone weighing their options in divorce.
 
For more information, you can learn more about Tonya Alexander here: 
 
Website: http://yourpeacefulresolution.com
Great Resources: http://yourpeacefulresolution.com/forms-and-handouts/
 
Thank you for listening to the Divorce and Your Money Show. Visit us at www.divorceandyourmoney.com for a full transcript of this episode, 1-on-1 coaching and be sure to check out the NEW courses Steps to Take Before Divorce and How to Get a Divorce without Losing Everything.
 
If you enjoyed the show, please take a moment to leave a review on iTunes, as it will help other people discover this free advice.
Mar 16, 2017

Divorcing a Narcissist is Hard

Have you ever thought that your soon-to-be ex might be a little self-centered? There may be more truth to the statement than you ever thought possible. Unfortunately, divorcing a narcissist — even a self-proclaimed one — is one of the most challenging topics for an impending divorce.

Roughly 6% of all individuals in the United States will be diagnosed with Narcissistic Personality Disorder. According to the Diagnostic and Statistical Manual of Mental Disorders published by the American Psychiatric Association, there’s such a thing as being too preoccupied with your own self-interests.

This manual establishes set guidelines and symptoms used by professionals in the diagnostic assessment of patients for Narcissistic Personality Disorder. Here are a few of the criteria that people must meet to earn this label:

  • Having an exaggerated sense of self-importance
  • Expecting to be recognized as superior even without achievements that warrant it
  • Exaggerating achievements and talents
  • Having a preoccupation with fantasies regarding success, power, brilliance, beauty, or the perfect mate
  • Believing that they’re superior and can only be understood by (or associate with) equally special people
  • Needing constant admiration
  • Possessing a sense of entitlement
  • Expecting special favors (and having an unquestioning compliance with those expectations)
  • Taking advantage of others for personal gain
  • Lacking compassion or willingness to recognize needs and feelings of others
  • Envying others and believing that others envy them
  • Having an arrogant or haughty manner

The list of formal criteria to receive this diagnosis is relatively lengthy. In many cases, your spouse may present some, but not all, of the symptoms listed above. But the question remains: How do you deal with your divorce when your spouse tends to behave like a narcissist?

Why a Narcissist Makes Divorce Difficult

The unfortunate part of being married to a narcissist is that you already know how controlling and manipulative they can be. Your spouse may truly believe that they’re a victim in every situation, which leads them to act without compassion or regard for your feelings.

Their victim mindset may bring about other unpleasant behaviors as well. Bullying is likely to be a key tactic that your spouse will cling to, especially as you move towards settlement negotiations. Their sense of entitlement and arrogant attitude leaves them feeling justified in requesting more than their fair share of your marital assets.

Reaching an agreement with an uncooperative, entitled spouse can be extremely frustrating and challenging. But if you give into their unreasonable demands, you could find yourself on financially shaky footing for the future. It becomes even more important to assemble a team of experienced communicators and negotiators, especially when your spouse knows how to manipulate a situation.

How to Effectively Handle a Narcissist

Prepare your paperwork.

Before proceeding, make sure that you have access to every bank statement, asset statement, and documentation regarding investment income. Any information available about your current financial situation should be closely reviewed and filed away in case you need it. A narcissistic spouse has the potential to be extremely controlling. They may restrict your access to pertinent documentation after you file for divorce.

Having all of your paperwork organized and available is critical to help your Certified Divorce Financial Analyst or divorce attorney realistically view your financial status. Then you can help them create a fair settlement to get you all that you are truly entitled to.

Find the right divorce attorney.

When dealing with an uncooperative, narcissistic spouse, you need a divorce attorney that has strong communication skills. If your case ever reaches trial, they should have the ability to persuade a judge of your right to marital assets.

An attorney who is lacking in communication skills may also allow a narcissistic spouse to bully them. If your attorney is unable to convince the judge or stand up for your rights during the settlement negotiations, it could cost you the security of a firm financial future. As a result of their poor negotiation and communication skills, you will not receive all that you are entitled to.

Be prepared for the additional expense associated with hiring the best divorce attorneys and teams in your area. Their advanced skillset and knowledge can significantly cost more than an inexperienced or ineffective divorce attorney.

Take care of your emotional health.

Divorce is rarely a pleasant experience, but when your spouse struggles with a narcissistic personality disorder, it can be incredibly taxing on your emotional and mental health. One of the first steps in successfully divorcing your narcissistic spouse is hiring a therapist to help you sort through your own issues, including those stemming from emotional, verbal, or physical abuse inflicted by your spouse.

By taking responsibility for your emotional health, you can gain a feeling of control over the tumultuous times that surround you. You will be better prepared to head into your settlement negotiations and divorce proceedings with a greater sense of calm and preparation.

Divorcing a narcissist is possible.

Divorce is already hard, but divorcing a narcissist makes the entire process even more difficult. You need to take the appropriate amount of time to prepare yourself for the challenge before you file for divorce. Advance preparation is key to maintaining a feeling of control and balance as new situations arise throughout the process.

By preparing your paperwork, hiring the best team, and taking care of your emotional health, you are setting yourself up for success to handle the additional challenges that this unique situation can present. Be sure you are ready to fight for your financial future and freedom from a narcissistic, overbearing spouse.

 

Find this information helpful? Share it with someone who needs it.

Shawn Leamon, MBA, CDFA is the host of the “Divorce and Your Money Show” and Managing Partner of LaGrande Global, with offices in Dallas, New York and Hanover, New Hampshire.

Mar 16, 2017

This was originally published on Divorce and Your Money here

Divorcing a Narcissist is Hard

Have you ever thought that your soon-to-be ex might be a little self-centered? There may be more truth to the statement than you ever thought possible. Unfortunately, divorcing a narcissist — even a self-proclaimed one — is one of the most challenging topics for an impending divorce.

Roughly 6% of all individuals in the United States will be diagnosed with Narcissistic Personality Disorder. According to the Diagnostic and Statistical Manual of Mental Disorders published by the American Psychiatric Association, there’s such a thing as being too preoccupied with your own self-interests.

This manual establishes set guidelines and symptoms used by professionals in the diagnostic assessment of patients for Narcissistic Personality Disorder. Here are a few of the criteria that people must meet to earn this label:

  • Having an exaggerated sense of self-importance
  • Expecting to be recognized as superior even without achievements that warrant it
  • Exaggerating achievements and talents
  • Having a preoccupation with fantasies regarding success, power, brilliance, beauty, or the perfect mate
  • Believing that they’re superior and can only be understood by (or associate with) equally special people
  • Needing constant admiration
  • Possessing a sense of entitlement
  • Expecting special favors (and having an unquestioning compliance with those expectations)
  • Taking advantage of others for personal gain
  • Lacking compassion or willingness to recognize needs and feelings of others
  • Envying others and believing that others envy them
  • Having an arrogant or haughty manner

The list of formal criteria to receive this diagnosis is relatively lengthy. In many cases, your spouse may present some, but not all, of the symptoms listed above. But the question remains: How do you deal with your divorce when your spouse tends to behave like a narcissist?

Why a Narcissist Makes Divorce Difficult

The unfortunate part of being married to a narcissist is that you already know how controlling and manipulative they can be. Your spouse may truly believe that they’re a victim in every situation, which leads them to act without compassion or regard for your feelings.

Their victim mindset may bring about other unpleasant behaviors as well. Bullying is likely to be a key tactic that your spouse will cling to, especially as you move towards settlement negotiations. Their sense of entitlement and arrogant attitude leaves them feeling justified in requesting more than their fair share of your marital assets.

Reaching an agreement with an uncooperative, entitled spouse can be extremely frustrating and challenging. But if you give into their unreasonable demands, you could find yourself on financially shaky footing for the future. It becomes even more important to assemble a team of experienced communicators and negotiators, especially when your spouse knows how to manipulate a situation.

How to Effectively Handle a Narcissist

Prepare your paperwork.

Before proceeding, make sure that you have access to every bank statement, asset statement, and documentation regarding investment income. Any information available about your current financial situation should be closely reviewed and filed away in case you need it. A narcissistic spouse has the potential to be extremely controlling. They may restrict your access to pertinent documentation after you file for divorce.

Having all of your paperwork organized and available is critical to help your Certified Divorce Financial Analyst or divorce attorney realistically view your financial status. Then you can help them create a fair settlement to get you all that you are truly entitled to.

Find the right divorce attorney.

When dealing with an uncooperative, narcissistic spouse, you need a divorce attorney that has strong communication skills. If your case ever reaches trial, they should have the ability to persuade a judge of your right to marital assets.

An attorney who is lacking in communication skills may also allow a narcissistic spouse to bully them. If your attorney is unable to convince the judge or stand up for your rights during the settlement negotiations, it could cost you the security of a firm financial future. As a result of their poor negotiation and communication skills, you will not receive all that you are entitled to.

Be prepared for the additional expense associated with hiring the best divorce attorneys and teams in your area. Their advanced skillset and knowledge can significantly cost more than an inexperienced or ineffective divorce attorney.

Take care of your emotional health.

Divorce is rarely a pleasant experience, but when your spouse struggles with a narcissistic personality disorder, it can be incredibly taxing on your emotional and mental health. One of the first steps in successfully divorcing your narcissistic spouse is hiring a therapist to help you sort through your own issues, including those stemming from emotional, verbal, or physical abuse inflicted by your spouse.

By taking responsibility for your emotional health, you can gain a feeling of control over the tumultuous times that surround you. You will be better prepared to head into your settlement negotiations and divorce proceedings with a greater sense of calm and preparation.

Divorcing a narcissist is possible.

Divorce is already hard, but divorcing a narcissist makes the entire process even more difficult. You need to take the appropriate amount of time to prepare yourself for the challenge before you file for divorce. Advance preparation is key to maintaining a feeling of control and balance as new situations arise throughout the process.

By preparing your paperwork, hiring the best team, and taking care of your emotional health, you are setting yourself up for success to handle the additional challenges that this unique situation can present. Be sure you are ready to fight for your financial future and freedom from a narcissistic, overbearing spouse.

 

Find this information helpful? Share it with someone who needs it.

Shawn Leamon, MBA, CDFA is the host of the “Divorce and Your Money Show” and Managing Partner of LaGrande Global, with offices in Dallas, New York and Hanover, New Hampshire.

 

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Mar 9, 2017

What is a financial affidavit?

Preparing for divorce requires you to gather, organize and prepare a lot of financial information. Your attorney, spouse, spouse’s attorney, and judge are all going to want to know what your lifestyle was like during your marriage.

One of the first documents you will complete as part of the divorce process is a financial affidavit. It may also be called a statement of net worth or financial disclosure statement, depending upon your state. Some states even have "short form" and "long form" versions of the financial affidavit, depending on the complexity of your situation.

The financial affidavit is one of the most important financial documents you must complete during divorce. Filling it out properly is complex and confusing, and it takes many, many hours.

The financial affidavit is a summary of your entire financial life, usually spanning the course of a year. It includes all your sources of income, expenses, assets, and debts. It sounds easy, until you realize that a financial affidavit can ask you about 20 different types of income, 150 different expenses, and many details you may have forgotten about.

On top of that, financial affidavit forms are created by courts. In other words, judges and lawyers contain a lot of jargon, and they are not usually very user-friendly.

Not only do you have to accurately complete this complex form, you must legally swear that the financial affidavit is correct. If your ex-spouse, attorney, or judge questions an item on your financial affidavit, you must provide proof that it is correct. So if any detail is inaccurate or missing, it can hurt your divorce case.

The stakes are high for the financial affidavit. It serves as the basis for splitting your property, determining spousal and child support, and calculating everything financial in your divorce. It serves as a crucially important snapshot of your financial life, so you must take the financial affidavit seriously.

What documents do you need to prepare?

Completing a financial affidavit can feel overwhelming, so you need to prepare as much information in advance as you can. And you need to get your essential documents organized. You will start needing to gather income tax returns, employment records, banking and credit card statements, home information, and many other personal details.

To help keep you organized, I have prepared The Ultimate Divorce Checklist. You may not have looked at this information for many years, so it could take a few days to gather it. Just remember to keep everything organized.

How do you fill out a financial affidavit?

Since it is usually only a few pages long, the financial affidavit can seem straightforward. But as you dig into each individual line item, you will realize that financial affidavits are incredibly detailed. So they can feel overwhelming.

The first step to completing a financial affidavit is making sure you have the proper form. Consult your attorney, or check the family law section of your county courthouse’s website. Make sure you have the right one! That way, you can avoid having to complete this complicated document multiple times.

When you first look at your state’s form, do not rush while you are filling information in. Give it an initial review by reading through it. Get a feel for the key elements involved. It will start with basic questions about you, your spouse, and your children.

As you begin to further investigate the form, you will see questions about every imaginable source of income, all your expenses, the value of every asset, and a list of all your debts. Make notes regarding any items you may have questions about or do not understand.

Below is an in-depth review of each of the sections of the financial affidavit.

The income section is usually the most important.

Since spousal and child support payments are usually determined based on the incomes of you and your spouse, the income section of the financial affidavit is crucial. While income seems straightforward on the surface, it can be very complicated.

Let us start with salary or wages. While determining your income, it may be tempting to just look at your most recent paystub and multiply it by 52 weeks. Unfortunately, it usually is more complicated than that, so you may need to ask some additional questions.

For example, does your financial affidavit ask for gross income (before taxes) or net income (with all taxes taken out)? Do you get paid 24 or 26 times per year? Do you receive a bonus? What about overtime? Commissions or tips?

What taxes are taken out of your current pay stub, and is that amount consistent for the full year? For example, social security taxes are only paid on a certain amount of income – approximately the first $118,500. If you make more than that, you may need to adjust your calculations.

Employment is only one type of income. For example, the Illinois financial affidavit asks about:

  • Salary/wages/base pay
  • Overtime
  • Commissions
  • Tips
  • Bonus
  • Pension and other retirement benefits
  • Annuity
  • Interest income
  • Dividend income
  • Trust income
  • Social security
  • Unemployment benefits
  • Disability payments
  • Worker's compensation
  • TANF and SNAP
  • Military allowances
  • Investment income
  • Rental income
  • Partnership income distributions and draws
  • Royalty income
  • Educational funds
  • Maintenance
  • Child support for children of this relationship
  • Child support for children not of this relationship
  • Gifts of money

Therefore, your income alone requires 25 different line items. You must calculate every type of income involved, and you need to have the relevant documentation to prove what you provide if questions arise. While you probably will not have every type of income, you do need make sure that every number is in the right place and calculated correctly.

Expenses are often the most complicated to calculate.

There are thousands of everyday expenses for the average person. Unless you use a full-time bookkeeper, categorizing and tracking every expense can be a nightmare.

To start, you will need everything related to your home, including the mortgage, utility bills, repairs, or renovations. Then you will likely need to list all the expenses related to transportation, including gas, parking, and repairs. After that, list all your personal expenses, including groceries, meals at restaurants, and travel. Then come the medical bills, including insurance payments. And you cannot forget about your kids.

Just look at this image from the New York financial affidavit form, which they call a statement of net worth):

 
 

Even though every state varies, it is a good representation of how you should prepare for the financial affidavit. Do you have every item organized?

It is very easy to make mistakes. For example, did you pay with cash or a credit card? If you paid with cash, do you have a receipt to prove that the expense exists? Do you pay your bills on a monthly, bimonthly, or yearly basis?

What about one-time, annual, or seasonal expenses that slip through the cracks? For example, you should remember to include annual snow removal.

It can feel overwhelming, but you can do this.

Unfortunately, you are not done with the financial affidavit section yet. Even though just completing the income and expenses section can feel overwhelming, try not to panic. The best approach is focusing on one item at a time. This is even the tactic I use when helping clients complete their financial affidavits. Trying to complete the whole document at once is nearly impossible.  Pick one expense, for instance, the mortgage, and fill out that line item.

Make sure you have the documentation to support the number you place on your document. Put it in a binder or folder, and move onto the next line item. Even though you may have to review 100+ different items, if you knock out each item one-by-one, you will complete a lot more than you realized.

If you want individual help completing the Financial Affidavit, I can help you. All you have to do is click here.

Assets: All the Stuff You Own

The financial affidavit will ask you to list all your property that has significant value, such as bank accounts, cars, houses, jewelry, businesses, and investments. You will need to know two things about your assets: when the items were acquired, and what they are worth.

The date you acquired an asset is very important for determining whether property is considered separate or marital. Depending on your state, assets obtained before your marriage can sometimes be considered separate property, so they are not subject to divisions during divorce. It may sound complex, but the time that you obtained an asset can have a big impact on how it is classified.

The value of assets is very important. Cash in a checking account is easy to calculate, but other items can get more complicated. Has your home been recently assessed by a certified appraiser? If not, you may need to get one. An online appraisal will not suffice. What value do you use for cars? Expensive jewelry or collectibles can require specialized appraisals as well.

When completing your financial affidavit, include every valuable you can think of. More information is better than less. Your attorney can always tell you to remove or modify certain assets, but failing to include something can cause you to be accused of hiding assets. And during divorce, withholding information can come with steep penalties. If you do not disclose it, that collection of Beanie Babies could come back to haunt you.

Debts: Everything You Owe

For a highly detailed, complex form, the debt section is usually one of the easiest to complete, except for the part that involves facing your outstanding bills. Debts include things like credit cards, student loan debts, mortgages, and other loans. For most people, simply looking at a recent copy of your credit report can provide a good overview of your debts. You will also need to gather the most recent account statements for each debt, so you have the most up-to-date information.

However, everything will not show up on your credit report. If you have a personal loan, an outstanding bill, or a loan on an investment account, they generally will not appear on your credit report unless they are in collection. You will need to list these debts and make sure you have the proper documentation for each one.

Putting it All Together: A Sanity Check

If you have made it this far, you have finally completed the first draft of your financial affidavit. Congrats!

Now it is time to add everything up and conduct a “sanity check.” You need to forget about individual line items for a moment. Instead, make sure the whole picture makes sense.

Is your income greater than your expenses? If your expenses are much larger than your income, you will need to explain how that is possible. Are you taking on a lot of debt? Is there unreported income somewhere? Did you miscalculate anything?

Do any numbers jump off the page as being really high? Everything depends on your location and lifestyle during your marriage. For example, a person in New York City can easily spend thousands of dollars per month eating out in restaurants. But if you live in a smaller town or suburb, you probably will not.

Did you list all your assets? Forget any debts? Did you count anything twice? Or fail to count something? If your name is on your account, you must report it. You are not necessarily going to lose the asset, and it may not even be relevant during the settlement negotiation. But trying to hide something can cause more harm than good.

Having a 3rd party like a Certified Divorce Financial Analyst review your financial affidavit can be helpful. Then you can make sure there are no major mistakes.

Now what?

Give it to your attorney. In most cases, they will only give a cursory review of your financial affidavit. Barring egregious errors, they will not check it for mistakes. Rather, they will take your word for what is listed. So make sure everything is correct.

Checking Your Spouse’s Financial Affidavit

Both you and your spouse will complete your state’s financial affidavit. If you live in different states, you will complete the financial affidavit in the state where you file for divorce. You and your attorneys will swap financial affidavits with each other, so you can both review them.

When you receive your spouse’s financial affidavit, you need to make sure that everything looks correct. In my experience, there are almost always discrepancies or missing information on one spouse’s financial affidavit. And if you have been living apart for a while, there may be a lot you do not know about your spouse’s financial life.

Here are some areas to check as you review your spouse’s financial affidavit:

Is the income section of the correct? A spouse can use subtle tricks to hide or underreport income, such as masking contributions to a retirement plan or excluding the payment of a bonus. When you look at a spouse’s total income, you need to make sure that all the benefits are included, and nothing is missing. It should match your lifestyle and expectations.

If your spouse was a business owner, you may want to collect the business’ tax returns and have an accountant go over them. In a business, many expenses and deductions can be used, which may affect their income levels, including how things are reported. Anytime your spouse owns or operates a business, things could easily go missing.

Do the assets and debts make sense? The value of the assets may not be accurate. States differ on the ability to calculate the value of an asset, so be aware of your state’s laws. Make a list of questions to review with your attorney, such as for anything that looks incorrect or raises suspicion.

If your spouse makes mistakes on the financial affidavit, they may just be sloppy, rather than malicious. But either way, you should protect yourself. Take the time to review their information.

Want more help completing your Financial Affidavit?

The financial affidavit is one of the most important documents in divorce, as it serves as the basis for negotiating your settlement. Any mistakes on your form or your spouse’s form can come back to haunt you during the divorce process – or worse yet – later in life.

Unfortunately, completing a financial affidavit can feel like a mind-boggling task – a gathering all your financial records, looking at hundreds of different types of expenses, assets, and debts, then swearing that a legal form is correct.

On top of that, you may not have been directly involved in the family finances for many years. So you simply do not know where to start.

Your attorney is not a financial expert. Most lawyers will not or cannot help you complete the financial affidavit. If they do, it can end up costing you thousands of dollars in legal fees, before even getting to the negotiations in your divorce case. Therefore, you should consider hiring a Certified Divorce Financial Analyst (CDFA).

A CDFA is an expert at reviewing issues with the financial affidavit, so they can identify potential mistakes or pitfalls on the form. They can evaluate every line item on a financial affidavit and help you successfully complete the form. You can learn more about getting individual help here. You will receive greater financial expertise, and it is much more cost-effective to hire a CDFA than completing a financial affidavit alone or asking your attorney to.

The financial affidavit is the most important document in your divorce, so make sure you complete it properly.

 

Find this information helpful? Share it with someone who needs it.

Shawn Leamon, MBA, CDFA is the host of the “Divorce and Your Money Show” and Managing Partner of LaGrande Global, with offices in Dallas, New York and Hanover, New Hampshire.

Mar 2, 2017

This was originally published on Divorce and Your Money here

When it comes to a property settlement, having a trust fund can make for a sticky financial situation. Divorce forces spouses to consider every asset that can be counted as part of their union. 

A trust fund (also just called a trust) is a legal entity that holds property for another person or group of people. The property is financial in nature, consisting of any combination of cash, stocks, bonds, property, or other products that hold value to the beneficiary. The contents of the trust are placed by the grantor with a trustee (a person or legal entity charged with the responsibility of responsibly managing the account).

In many cases, a trust fund is designed to release the finances when a specific event happens, such as a death. Other possible scenarios include trust funds created for one specific purpose, such as paying for college or buying a home.

Why Do Trusts Exist?

In the end, trusts really exist to make sure that funds are responsibly, appropriately managed at the proper time. Many people set up a trust fund to keep money safe, and they set it aside until a specific time, like when their grandchildren turn 18. These situations are relatively common for passing wealth along to future generations at a time when they’re deemed responsible enough to manage finances on their own.

Trusts can also exist to ensure that certain funds will be used in a specified manner with the help of a third-party trustee. Commonly, you will find a trustee that is responsible for managing the finances of these affairs, or issuing checks on behalf of the beneficiary for a set purpose like college.

Generally speaking, trusts are ultimately designed to appropriately manage funds. They may be structured to allow annual income releases or one-time payments for certain expenses. The specific details about why each trust is created are solely between the person creating it and the person it is bestowed upon.

Are Trusts Considered Separate or Marital Property?

As is the case in many issues regarding divorce, trusts can be considered separate or marital property depending upon the laws of your individual state. There is no cut-and-dry precedent for whether a trust could be determined to be a separate or marital property.

Most often, this issue hinges on the specific terms of the trust involved. If the terms are clear that the money was gifted to only one spouse, it is typically considered to be separate property. It becomes even more likely that a trust will be counted as separate property when the trust was bestowed prior to the beginning of a marriage.

When it comes to the terms of your trust fund, ambiguity could lead to the entire account being counted as marital property. It may seem unreasonable when it was created to provide income and inheritance for just one spouse. But in order to claim your trust as separate property, the terms must be clear.

Prenuptial and postnuptial agreements can also contribute to how your trust will be counted in a settlement. If the trust fund was to be counted as combined property after the union was official, it could be equally divided between both spouses in a settlement.

The Terms of the Trust Are Important in Divorce

If the terms of your trust are ambiguous, you must consider a few other things prior to heading into your settlement agreements. Trusts could be factored into any potential alimony or support payments, which you are ordered to pay through the court. Many individuals who have access to a trust fund could have serious financial implications regarding their monthly obligation to their spouses and dependents.

A trust could also be counted as an income or asset during a property settlement. Without clear instructions and terms spelled out for the trust, it could be counted as one of these two items. In this type of scenario, it could lessen what you would otherwise be entitled to—in terms of dividing the marital assets.

Gain Control of Your Trust in Divorce

When you think that your marriage could have a rocky end, it is critical to ensure that the terms of your trust are completely clear. To ensure that there is no ambiguity when it comes to identifying your trust as separate property, have a lawyer review the details in the event of a future divorce.

Likewise, you should try to keep those trust funds separate from any major purchases that the two of you make as a married couple. If major portions of the trust fund are used to purchase items that become marital assets, it becomes even more unclear whether the trust fund should be counted as separate or marital property.

Set up prenuptial or postnuptial agreements that include information about the trust fund. These agreements can help protect your financial interests, and they can be referred to in court, should a divorce make it to trial. Putting measures in place to protect yourself gives you the best possible chance of success at securing a financially stable future for yourself. Your trust fund was created to give you more financial freedom to improve your life, so make sure that it stays in your hands — not your ex-spouse’s.

 

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Shawn Leamon, MBA, CDFA is the host of the “Divorce and Your Money Show” and Managing Partner of LaGrande Global, with offices in Dallas, New York and Hanover, New Hampshire.

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