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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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May 4, 2017

This article was republished by Investopedia here

Divorce becomes more complicated when you and your soon-to-be ex-spouse own a business together. Businesses require constant care and attention, and they can’t be easily split in half the way funds in a bank or an investment account can.

Your attorney will likely recommend you don’t keep running the business together after the divorce. This rarely works out, especially if you must be in close contact with each other on a daily basis.

Assuming you follow this recommendation, you can handle the business in a few different ways.

Three Options for Divorcing Business Owners

You and your former partner will need to decide who will assume ownership of the business when the divorce process is over. There are three options:

  1. One of you buys the other out of the business and assumes total ownership.
  2. You both sell the business to a third party. 
  3. You both agree to close the business.

Start With an Accurate Business Appraisal

No matter which option you pick, finding out how much the business is worth is the starting point for negotiation. To do this, you’ll need an appraisal from someone certified in business valuation. You also need to know how much of the value you own and how much of the business is considered marital property.

Consider Buying out Your Ex-Spouse

If you or your spouse wants to keep running the business, you’ll need to decide upon a buyout. In other words, one spouse pays off the other and assumes his or her ownership stake in the business.

Depending on the value of the business, you might not be able to give your ex a lump sum of cash. Instead, you could:

  1. Reach a long-term payout agreement in the form of a property settlement note.
  2. Exchange the business value for other marital assets.

Know That Selling a Business Takes Time

Depending upon your circumstances, selling your business might be the best option. It gives you and your ex a clean break so you can both move on to other things. Selling your business has costs, and many elements of the process are complicated. You’ll likely need a business broker, and it can still take many months, or longer, for a transaction to close. If you’re not prepared for this timeline, it could delay your divorce.

Close a Failing Business

This option is often the last resort, but if the business is failing and has a high burden of debt, divorce is a prime opportunity to close and move on. It’s never easy to close a business that you’ve worked hard to build, but sometimes it’s the best choice.

Final Thoughts

Going through a divorce with a jointly-owned business can add an extra layer of stress and complication to an already challenging process. Plan, know your options, and make the best decision for you.

Find this information helpful? Share it!

Shawn Leamon, MBA, CDFA is author of Divorce and Your Money: The No-Nonsense Guide and host of the Divorce and Your Money Show on iTunes. Learn more at  www.divorceandyourmoney.com

May 4, 2017

This was originally published on Divorce and Your Money here

Divorce Mediation Tips

Some couples find that mediation is a useful way to get divorced. Mediation involves hiring a neutral third party (such as a retired judge) who will negotiate the divorce or help you resolve specific issues of contention. Both you and your spouse must agree to use a mediator, but any agreements made are strictly nonbinding.

The biggest advantage of mediation is that it can be a quick, less formal method of getting divorced because court dates and litigation are not involved. It can also help minimize certain issues and acrimony on both sides.

The nonbinding element of mediation is a double-edged sword, as it can sometimes be a waste of time and money. Another disadvantage is that it is not appropriate in all cases. For instance, if you and your spouse have serious issues, mediation may not be the right path for you.

However, you should be aware that mediation will likely save you money. It is an efficient way to navigate the divorce process, and it does not involve a lot of court paperwork. It is not as public as other options, and it does not bind you.

Divorce Mediation Checklist

1) List the Property to be Divided

To start, you need to understand which assets need to be divided. If you do not have a clean understanding of everything you own, you will end up getting less than you deserve during the divorce process. Consider the following:

  • Bank, Investment, and Retirement Account Balances
  • Marital Home
    • Purchase Date
    • Mortgage and Loan Information
    • Appraisal and Valuation Information
  • Other Home(s) Information
  • Vehicle Data
    • Purchase Date
    • Estimated Value (Kelly Blue Book or similar)
    • Insurance Information
  • Personal Property of Value (including jewelry, artwork, collection, and antiques)
  • Insurance Policy Information
  • Any Other Assets or Debts That May Need Division (such as student loans)

2) What to Ask For during Divorce Mediation

Once you know what property you have, the next question is: what are your goals? What do you want to achieve when mediation is over? Do you want to keep the house, or sell it and split the proceeds? Who will have primary custody of the children? You should make a thorough list of what you want. BE REALISTIC. Then rank your priorities in order.

  • Define Your Goals
    • What is essential?
    • What things can you live without?
    • What is on your wish list?
  • Consider the Goals of Your Soon-to-be Ex
    • What do you think they care about most?
    • Do you have areas you will probably agree upon?
    • What areas will likely cause conflict?
  • Prioritize
    • What is most important to you?
    • What is an acceptable outcome?
    • What do you not care about very much?

3) Learn Your Local Laws

To understand if your goals are realistic, you must comprehend what you may be entitled to.

Ask yourself the following questions:

  • What are the state and county laws that govern your divorce? 
  • Are you in a community property or equitable distribution state? 
  • Should you expect to pay or receive a specific amount of child or spousal support
  • How does the state resolve custody?

Preparation Is Key to Success during Mediation

Mediation has the potential to resolve all the major issues in your divorce, but it can also be fruitless. While there is no guarantee of success, one way to guarantee a difficult mediation process is failing to prepare. You should also check out the Divorce Checklist to help you through the mediation process. 

Find this information helpful? Share it!

Shawn Leamon, MBA, CDFA is author of Divorce and Your Money: The No-Nonsense Guide and host of the Divorce and Your Money Show on iTunes. Learn more at  www.divorceandyourmoney.com.

May 4, 2017

 

 
This article was originally published on DivorcedMoms. You can view the original article here

Understand that marital finances are a critical aspect of securing a stable financial future following the end of your marriage. As the years progress in your marriage, many couples find that one spouse has taken complete control over the finances.

If you happen to be the spouse that is left in the dark, how can you get the financial information out of your spouse’s head and onto paper before you file for divorce? 

If you suddenly start asking questions about the status of your financial affairs, it can raise suspicion about your intentions. And once your spouse has their guard up, it can be next to impossible to gather and interpret accurate information regarding your current accounts or your financial future. Therefore, it could be a good idea to obtain financial information under the guise of something other than divorce, which can help you uncover the information that your spouse has been hiding.

The checklist below offers a few sneaky ways that you can obtain the valuable financial information you need from your spouse before filing for divorce:

1. Plan for a Health Emergency

This strategy is one of the simplest ways to begin discussing marital finances with your spouse. If you “plan” for the possibility of a “future health emergency,” you could gain access to key documents, professionals, and information that you will need to get an accurate read on your finances. When you present this option to your spouse, be sure to obtain copies of all the documents that are critical to your marriage, including:

  • Marriage papers
  • Financial records (including tax statements, bank statements, and investment account statements)
  • Car registrations
  • Income statements
  • Mortgage loan documents 

In addition to the paper trail created by the documentation listed above, find out if there are any key professionals involved in your finances. Investment brokers, attorneys, and financial planners may all be significant sources of information regarding your current situation. You may also want to wait to contact those individuals, but having their information available is a worthwhile consideration.

There are plenty of legitimate checklists available for this kind of situation. By introducing formal lists from reputable sources like the ones listed below, your spouse is more likely to believe that you are actually planning for a health emergency. They can help you find all of the critical financial documentation you need while lending an extra layer of validity to your “planning”:

2. Take an interest in retirement.

If you have never had much of a say in your investment accounts, an effective tactic could be feigning an interest in retirement accounts. Begin by opening up the lines of communication about how the two of you plan to spend your golden years together. To begin planning your idyllic future together, your spouse will have to get you up-to-speed with your current financial standing (in terms of retirement savings accounts, investments, and checking accounts). 

To “manage retirement funds,” be sure to ask questions about any current retirement savings accounts or investment brokers that your spouse is working with. You can also use some of the above checklists to gather together key documents (such as bank statements and records for accounts where funds have been deposited for the future). You may even be able to request copies of W2s and income statements to determine additional contributions (which could be made toward retirement on a monthly basis).

How does this ruse keep suspicions away from your impending divorce? Planning for the future can help take the wariness out of the situation at hand, which allows you to gather all the information you need to confidently move forward.

3. Hire a financial planner.

Your spouse may be less likely to hand information over to you alone, but visiting a financial planner under the guise of receiving assistance can turn the tables. If you have never had a financial planner before, this scenario is an excellent time to notate your current financial situation. Even couples who have used the same financial planner for years may want to consider taking the pulse on their investments. Many experts recommend receiving a second opinion about them, which marks another excellent opportunity to jot down details.

Encourage your spouse to help you round up all of the pertinent documents that a financial planner may request. They may include the income statements, tax statements, bank records, and current investment account statements that you needed to gather for the previous ruses. 

The best part of visiting a financial planner is the ability to sit back while a professional asks all of the necessary questions and obtains an overall sense of your financial well-being. Similar to the way a doctor will ask questions that may not seem obvious in order to assess to the cause of your distress, a good financial planner knows the proper questions to ask to gain perspective about your finances as a married couple. You can simply sit back and absorb all of the information while your planner works through the details.

Finding the Right Ruse

Understanding your finances is a necessary part of receiving a fair divorce settlement during negotiations. You may be asked to reveal any hidden assets your spouse has, as well as produce actual income statements to prove the financial status of your marriage. Finding a ruse that can trick your spouse into sharing sensitive financial information may be the most effective way to prepare yourself for divorce without arousing suspicion.

Each marriage is unique, and you will need to find the right tactic to get your spouse to give you sensitive financial information. Even if the two of you completed these items years ago, you can always ask to revisit them in the present—to make sure your documents and information are current.

These guises are meant to keep the focus on your marriage and future together while allowing you some flexibility in preparing to file for divorce. Find what works best for your relationship, so you can begin to secure a firm financial future yourself.

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.

May 3, 2017

This article was originally published on Divorce and Your Money here.

Divorce Mediation Tips

Some couples find that mediation is a useful way to get divorced. Mediation involves hiring a neutral third party (such as a retired judge) who will negotiate the divorce or help you resolve specific issues of contention. Both you and your spouse must agree to use a mediator, but any agreements made are strictly nonbinding.

The biggest advantage of mediation is that it can be a quick, less formal method of getting divorced because court dates and litigation are not involved. It can also help minimize certain issues and acrimony on both sides.

The nonbinding element of mediation is a double-edged sword, as it can sometimes be a waste of time and money. Another disadvantage is that it is not appropriate in all cases. For instance, if you and your spouse have serious issues, mediation may not be the right path for you.

However, you should be aware that mediation will likely save you money. It is an efficient way to navigate the divorce process, and it does not involve a lot of court paperwork. It is not as public as other options, and it does not bind you.

Divorce Mediation Checklist

1) List the Property to be Divided

To start, you need to understand which assets need to be divided. If you do not have a clean understanding of everything you own, you will end up getting less than you deserve during the divorce process. Consider the following:

  • Bank, Investment, and Retirement Account Balances
  • Marital Home
    • Purchase Date
    • Mortgage and Loan Information
    • Appraisal and Valuation Information
  • Other Home(s) Information
  • Vehicle Data
    • Purchase Date
    • Estimated Value (Kelly Blue Book or similar)
    • Insurance Information
  • Personal Property of Value (including jewelry, artwork, collection, and antiques)
  • Insurance Policy Information
  • Any Other Assets or Debts That May Need Division (such as student loans)

2) What to Ask For during Divorce Mediation

Once you know what property you have, the next question is: what are your goals? What do you want to achieve when mediation is over? Do you want to keep the house, or sell it and split the proceeds? Who will have primary custody of the children? You should make a thorough list of what you want. BE REALISTIC. Then rank your priorities in order.

  • Define Your Goals
    • What is essential?
    • What things can you live without?
    • What is on your wish list?
  • Consider the Goals of Your Soon-to-be Ex
    • What do you think they care about most?
    • Do you have areas you will probably agree upon?
    • What areas will likely cause conflict?
  • Prioritize
    • What is most important to you?
    • What is an acceptable outcome?
    • What do you not care about very much?

3) Learn Your Local Laws

To understand if your goals are realistic, you must comprehend what you may be entitled to.

Ask yourself the following questions:

  • What are the state and county laws that govern your divorce? 
  • Are you in a community property or equitable distribution state? 
  • Should you expect to pay or receive a specific amount of child or spousal support
  • How does the state resolve custody?

Preparation Is Key to Success during Mediation

Mediation has the potential to resolve all the major issues in your divorce, but it can also be fruitless. While there is no guarantee of success, one way to guarantee a difficult mediation process is failing to prepare. You should also check out the Divorce Checklist to help you through the mediation process. 

Find this information helpful? Share it!

Shawn Leamon, MBA, CDFA is author of Divorce and Your Money: The No-Nonsense Guide and host of the Divorce and Your Money Show on iTunes. Learn more at  www.divorceandyourmoney.com.

May 2, 2017

Cost is frequently one of the most pressing concerns for individuals who are in the midst of pursuing a divorce. In many cases, the perceived cost can prevent some couples from ending an unhappy marriage. The specific method that you use to pursue the finalization of the end of your marriage can drastically affect the overall cost. In particular, mediation can significantly lower the cost, compared to other methods — including litigation.

What many couples really want to know is how much mediation will actually cost them. Unfortunately, there are several aspects that need to be addressed to determine the real cost of mediation. Finances certainly have to be considered, but your relationship and emotional tolerance also need to be addressed.

So what does mediation really cost? A few of the expenses are listed below.

Financial Obligations

Spouses who are willing to participate in mediation will typically find a lower overall cost for several reasons. First and foremost, mediation is frequently less time-consuming and costs less than attorney’s fees. Especially compared to litigation, the professional costs of hiring a legal advisor to assist you with mediation are substantially lower.

In some situations, there is even the possibility of working through mediation without an attorney. Tricky situations and legal scenarios may require the assistance of an attorney, and you may still want to consider enlisting one to help you get all that you are entitled to.

However, some couples find that they are able to undergo mediation, and it solves any potential marital disputes about assets and finances without legal representation.

What does mediation cost?

Mediators will typically charge an hourly fee in the same way that attorneys do. In a similar fashion, that fee will vary from individual to individual, and differences in education, experience, and skill level play into the cost.

However, opting for the cheapest available professional may not put you in the best position for a secure financial future. You should seriously consider the qualifications of the expert that you and your spouse choose, as this person will come up with your proposed settlement.

In addition, you may want to consider finding a mediator who can put together your final documents for you. Professional mediators who are unable to provide this service may charge less, but you will still need to hire a drafting attorney to prepare your documentation.

As a result of these factors, determining a specific price range for a mediator is difficult. Many of them charge anywhere from $100 to $1,000 per hour. Overall, the cost of hiring a mediator could be just a few thousand dollars, in comparison to the tens of thousands that are often associated with litigation.

Emotional Obligations

While many couples are eager to consider the financial implications of mediation, they tend to ignore the emotional and relational benefits of this method. Because mediation between cooperating spouses can be resolved in a timelier manner, it takes less of an emotional toll on the two of you. Certainly, it is less emotionally stressful than litigation, which requires you to wait for a judge to determine the final outcome.

Mediation can be completed so quickly that some couples are able to do it in just a single day or session. Others may require multiple sessions over the course of several weeks or months. During this time (however long it may be), both spouses are given the ability to hear the other’s point of view about the critical items in the settlement. When the lines of communication are open, it is significantly easier to come up with a solution that is beneficial to both spouses, as well as any children involved in the dispute.

Particularly when children are involved, mediation takes less of a toll on the relationships among family members. Mediation sets the stage for teaching both spouses to begin working on their communication skills in their new post-divorce relationship; that is a critical skill when there are children involved. Therefore, an ongoing relationship will be necessary. Aside from keeping these lines of communication open, mediation allows you to work through difficult issues regarding custody, visitation, and providing a safe space for the children.

Determining the REAL Cost

The ability to use this method of divorce is contingent upon your ability to keep communication open. Situations that involve bullying, abuse, or intimidation will not be able to effectively use mediation to come up with an agreement that ensures a secure financial future for both parties.

No matter what the reason, the breakdown of a marriage always has a hidden cost that can surpass the financial obligations. Though both aspects need to be considered, mediation has the potential to be a more cost-effective solution for many couples.

Perhaps the cost of divorce is keeping the two of you in an unhappy union. If so,  consider the lowered fee associated with mediation, but only pursue it if it is possible to speak openly and discuss potential issues.

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.

Apr 27, 2017

This was originally published on Divorce and Your Money here

What is a QDRO?

QDRO stands for Qualified Domestic Relations Order, which is a court-ordered document used to split certain types of retirement plans during divorce. You will need a QDRO if you are trying to divide a 401(k), 403(b), pension plan or other type of employer-sponsored retirement plans. The employee, or owner of the plan, is called the “participant,” while the non-employee spouse is called the “alternate payee.” The QDRO form tells the retirement plan sponsor how to divide the plan in the event of divorce. Without a QDRO, the alternate payee has no legal right to the funds in a retirement plan.

A QDRO Form Must Contain Certain Information

QDROS are complex, as every retirement plan has different rules and procedures. However, there are four key areas that every QDRO requires:

1) Name, Social Security Number and Current Address of the Participant (plan owner) and Alternate Payee (non-employee spouse)

2) Exact name of the plan that is being divided

3) How the benefits will be divided

At its core, the items seem straightforward, but there are a lot of nuances involved.

How much does a QDRO cost?

A QDRO costs around $400-$1,000 depending upon your state and which QDRO attorney you use to draft the plan. Also know that plan sponsors may charge a fee for dividing the QDRO, which can range from $300 to $1,200 to divide the plan. 

Common QDRO Mistakes

1) Not specifying plan names, types, and dates

Within settlement agreements, common mistakes are forgetting specifics and being too erroneous while drafting up the QDRO. Simply referring to a vague “retirement account” and an unspecified “lump sum” leaves too much room for interpretation: One spouse could argue that the sole intent of the QDRO was to split your 401K account—not your pension plan.

The order should also set a clear date that each account is to be divided. It is critical to be as clear as possible, so that neither party can argue the intention later.

2) Attempting to divide an indivisible plan

Specifying the plan type is also a crucial component of determining whether a plan can be divided. Too often, QDROs are drafted that attempt to divvy up a plan that is indivisible. Only plans that fall under the Employee Retirement Income Security Act (ERISA) of 1974 qualify, and not all retirement benefits are required to follow these guidelines.

Non-ERISA plan (e.g., supplemental and excess benefit plans) are not subject to division by a QDRO. Additionally, many of these “golden handcuff” plans do not include survivor benefits, and they terminate the moment the employee passes. To avoid future litigation, it is critical that you and your attorneys know the type of plan before settlement agreements take place.

3) Forgetting to address gains and losses

Defined contribution plans (e.g., a 401K) fluctuate with the market. As payouts for qualified plans can take upwards of 90 days from the date the agreement was signed, it is important to address whether gains and losses will affect the dispersed sum.

The gross dollar value of the plan is almost guaranteed to change. How much it changes depends on the amount invested. In the agreement, make sure to indicate whether the amount dispersed will reflect those gains and losses, or will remain stagnant after the date of signing.

4) Not considering tax implications during division

All plan types are not equal. When dividing assets and retirement accounts, understand the tax implications that come along with each of them. In the case of a pre-tax account (e.g., a 401K) the government will be entitled to its share when it is taken out during retirement. In contrast, an after-tax account (e.g., a Roth IRA) is not deducted upon withdrawal.

In other words, if a divorcing couple is agreeing to split a 401k and a Roth IRA that are equal amounts, then the spouse receiving the Roth IRA will gain more—since that money will not be taxed. To avoid being short-changed, make sure you understand the tax implications during the settlement.

5) Disregarding a loan balance

If a loan balance exists on a defined contribution plan, it must be addressed in the QDRO. Should the loan balance amount to more than the entitled payout, the account will show insufficient funds.

Perhaps a loan balance has been worked into the QDRO, but there are recurring repayments on it. If so, the document needs to define whether the payment sum will reflect the loan balance on the date of signing (or the date of division).

6) Failing to get a QDRO Pre-Approved

QDRO forms and retirement plans are complicated, and you can impair yourself in a situation where you have agreed to a legally impossible division of a retirement plan in your divorce decree - potentially causing months of delays and thousands of dollars in legal expenses to change after the fact. How do you prevent this from happening? Get your QDRO pre-approved before finalizing your divorce. By contacting the plan sponsor in advance, you can avoid costly delays in splitting a retirement plan.

Use a QDRO Attorney for Help

A QDRO attorney can help ensure that retirement plans are split properly and help you avoid mistakes. A QDRO form is highly specialized and requires deep technical knowledge beyond the purview of most divorce attorneys. You need the help of a specialist. Here are some of the companies that specialize in drafting a QDRO.

QDRO Solutions

http://www.qdrosolutions.net/

QDRO Solutions is based in Mt. Pleasant, South Carolina. It is one of the top firms in the United States for drafting QDROs, as their founder wrote The Complete QDRO Handbook: Dividing ERISA, Military, and Civil Service Pensions and Collecting Child Support from Employee Benefit Plans. You can learn more about QDRO Solutions in this interview here. [Insert Interview] 

QDRO Consultants

There are multiple firms that use the name QDRO Consultants.

QDRO Consultants Ohio

https://qdros.com

There is a QDRO Consultants firm based in Medina, Ohio. While the information about their team is not clear, members of the firm have authored two books: Dividing Pensions in Divorce and Value of Pensions in Divorce. The Ohio-based firm also has a website dedicated to attorneys at https://www.qdrodrafting.com/. At the moment, they offer a 7-12 business day turnaround time for QDRO forms.

QDRO Consultants Nevada

http://qdroconsultantsllc.com/

There is also a QDRO Consultants based in Reno, Nevada, owned by Melinda C. Cameron. The firm has a very clean website describing the drafting process and a QDRO costs $725. They also have packages for initial consultations. 

QDRO Express

QDRO Express, based in Taylor, Michigan, is owned by Robert Treat. According to the website, the firm specializes in QDROs in Michigan and Ohio, but also works nationally. Their QDRO fees start at $500 and increase from there.

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.

Apr 25, 2017

This was originally published on Divorce and Your Money here

How Much Does a Divorce Cost?

Divorce is expensive. An uncontested divorce can cost between $200 and $600, depending upon your state’s filing fees. And a contested divorce can cost more than $30,000. The price of divorce is directly proportional to how much you fight with your soon-to-be-ex spouse.

Ideally, before you begin the divorce proceedings, you must have a plan to pay for the divorce costs. There are some tried-and-true options (e.g., paying out of pocket and selling assets) and other, newer ideas.

10 Ways to Get a Divorce When You Have No Money

1) Start with a Free Divorce Lawyer Consultation

Many divorce lawyers offer a free 30-minute or 60-minute consultation to review the details of your case. This consultation is your chance to get free advice from a divorce attorney before paying expensive hourly fees. You can also visit multiple attorneys to see which one may serve as the best fit for your case. One word of caution, though: the top-tier divorce attorneys in most cities charge for an initial consultation because they have a steady stream of clients.

2) Take Money from a Joint Account

If you have a joint account with your spouse, you are entitled to half of it. Therefore, when you start thinking about divorce, move your half of the assets to a separate account under your name only. You also need to be aware of any legal consequences this action may have in your respective state, so consult with your divorce attorney. Don’t allow your spouse to steal funds from your joint account, leaving you with no funds to pay for your divorce.

3) Open a Secret Bank Account

When you are contemplating a divorce, you should have a separate bank account which your spouse does not have access to. This account should only be under your name, preferably at a bank other than your normal one.

As soon as the divorce process starts, money starts to disappear. Your spouse can transfer funds or take away assets via a number of scenarios. However, you will need funds to pay for divorce expenses, including your attorney. You also have to pay for your everyday living expenses while the process is going on.

4) Ask Friends and Family for Help

If you go to your family or friends for help, they may be more comfortable if you structure it as a loan. To set up the repayment terms, you can find a template for a personal loan online. Then you will show your friends or family members that you are serious about paying them back.

5) Sell Unwanted Belongings

Look around your home for items you could sell. You may have electronics, art, collectibles, physical goods, old cars, and cameras. They could help you get enough money to cover some of your bills and regular expenses. But be careful when selling things; down the road, your spouse may ask you for reimbursement for any joint property.

6) Open a New Credit Card

If your credit is good, consider getting a new credit card. I do not advocate taking out a lot of debt, as it always comes back to haunt you later. However, it may be a viable option if you are struggling to cover divorce expenses — or even just groceries.

7) Borrow from Your Retirement and Investment Accounts

Rules vary greatly among retirement accounts, but some will allow you to borrow from them:

  • 401(k) plans - Some of these plans will allow you to borrow 20-50% of the plan’s value at a low interest rate.
  • IRAs - IRAs are more difficult to borrow against, so you may have to pay taxes and penalties. But if you have a short-term need, you can use a rollover to have access to tax-free funds. You will need to deposit the amount you took from a qualified IRA rollover account within 60 days.
  • Investment Accounts - You have the option of taking out a margin loan. These loans are complicated, so I do not necessarily advocate them unless you understand them in detail. Taking out loans without a good grasp of the terms could hurt you in the long run.

8) Get a Home Equity Line of Credit

With this option, you are borrowing against the value of your home, which must be worth more than you owe. This route requires a lot of approvals, including your spouse’s if their name is listed on the home.

9) Try Crowdfunding Your Divorce

Crowdfunding platforms have recently become more popular. They allow family, friends, and even strangers to donate to a cause or start a business. You can also utilize these platforms to help pay for the expenses of your divorce.

When it comes to divorce, there are three companies that focus on this particular service: Plumfund.com, DedicatingDollars.com, and FundedJustice.com. Set up your profile, and explain why you need the funds. Publish your profile. Then, send the profile link to your friends and family.

Letting people know you need help can be uncomfortable, but every dollar helps. Each of the platforms listed above has its own rules and fees. Be sure to do your homework about each one. Crowdfunding platforms dedicated to divorce can help you through this difficult time.

10) Make Your Spouse Pay for Divorce

There is an easy way to get your spouse to pay for a divorce, and of course, there is the hard way.  Perhaps your relationship is good, and the divorce was a mutual decision. If so, you can simply ask your spouse to cover the costs on your end and work out your own arrangements.  However, if your spouse is unwilling or it is a complicated divorce, then there are legal provisions that can assist you.

Almost every state has a provision for having the higher-earning spouse pay for the cost of the divorce.  The specific criteria will be different state to state, and the courts will judge on a case-by-case basis. But generally, they will want to know if you have access to money and an income—and if the other spouse can really afford to pay for the divorce.  A good attorney should know the state laws and have an idea about your specific situation.

If the court rules in your favor, you may qualify for what is called an advance on an equitable distribution.  In other words, if you are going to be owed alimony or child support, you can have an initial lump sum available to you to pay for the costs of the divorce.  However, you will have to pay those funds back over time via deductions on the payments you receive later.

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.

Apr 17, 2017

This article was republished by Investopedia here.

Whether you believe your divorce will be relatively amicable or long and painful, one of the most important things you and your spouse can do is separate your finances during the process.

By taking care of the financial aspect of your failing marriage, you will give yourselves the freedom and flexibility to begin moving on with your lives. Fiscal responsibility is important, and you will want to ensure that your name is only attached to the debt and accounts that you are personally responsible for. 

Here are the first three essential steps you should take to begin separating your finances during your divorce:

1. Contact Lenders to Remove Spouse’s Name from Outstanding Loans

You should begin by separating your accumulated debt. Perhaps your divorce decree is final, or you have already been able to amicably divide your debt. If so, you need to find out the necessary next steps for removing your spouse from the loans. In some cases, it may mean refinancing items or taking out an entirely new loan.

Without removing your spouse’s name from outstanding loans, you will not be able to remove your spouse from your credit report. Having your spouse’s name on your credit report does not necessarily affect your credit. However, the waters can be muddied if your spouse does not follow through on making payments. In these instances, your credit can plummet rather quickly.

2. Quickly Take Care of Credit Card Debt

If you know that you are assuming responsibility for a certain amount of credit card debt, you have a couple of options: pay it off or transfer the balance to a new card. If paying off your accumulated debt is not a possibility, you can open up a new card in your own name. By transferring the balance from your joint account into a new individual account, you can cancel joint credit cards.

To avoid having your soon-to-be ex rack up additional debt on credit cards they still have access to, you will want to take care it quickly. Also, then you will not be left in limbo about who is responsible for paying the bill each month.

3. Remove Yourself from Joint Bank Accounts

Removing your name or your spouse’s name from joint bank accounts can be tricky if your spouse will not agree to have their name removed. Perhaps they refuse to give consent to drop their name from the account, or to split your singular account into two separate ones. If so, you can find a workaround. You may want to open an individual account and transfer the money into your own name.

Remember that even if you claim that money as your own, your spouse may still have rights to it.

Separating your finances during your divorce is necessary for keeping your credit and other aspects of your financial health from plummeting. Fortunately, doing so does not have to be time consuming or cumbersome. You can create individual accounts and remove your spouse from joint accounts with relative ease. Then you can begin to move on with your life. 

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Shawn Leamon, MBA, CDFA is author of Divorce and Your Money: The No-Nonsense Guide and host of the Divorce and Your Money Show on iTunes. Learn more at  www.divorceandyourmoney.com.

Apr 13, 2017
This was originally published on Divorce and Your Money here
 
Often, people going through a divorce do not know exactly what they are entitled to—and what might be awarded to a soon-to-be-former spouse. I want to give you some important details on spousal support that everyone going through divorce should know.

What is Spousal Support?

Spousal support, also called alimony, is payments made from one spouse to another after divorce. The overall purpose of spousal support is to lessen the burden on the spouse who earns lower wages than his or her former spouse. An amount of money is awarded to one of the spouses per a written agreement, or by a court-mandated decision.

During a marriage, one spouse oftentimes sacrifices a career to stay home and raise children. In such a case, whoever has given up his or her career is obviously unable to continue the standard of living that existed during the marriage. As a result, spousal support is awarded.

Is Alimony Taxable?

Yes. Alimony is taxable as income to the recipient. Only payments specifically made as part of the divorce decree or separation agreement are considered alimony for tax purposes, meaning that voluntary or bonus payments are not included. From a tax perspective, temporary spousal support is equivalent to permanent spousal support. However, certain types of payments do not qualify as spousal support:

•   Child support

•   Noncash payments

•   Money for maintaining the payer’s property, such as repairs on a home

•   Use of the payer’s property, for example, lending a home to a former spouse

Is Alimony Tax-Deductible?

Yes, spousal support is tax-deductible to the person paying it. Child support, however, is neither taxable to the recipient nor tax-deductible to the payer.

Can you make spousal support payments to a 3rd party?

Yes. You can make payments to a third party on behalf of an ex-spouse and qualify for spousal support. For example, payments for medical expenses, taxes, and tuition can still qualify as spousal support. Payments must be made in cash, so transferring property or providing a service for payment does not count as spousal support in the eyes of the IRS.

How is spousal support calculated?

Every state is different, and each divorce is unique. In fact, the court system has a wide range of criteria when deciding whether spousal support will be awarded. Typically, many factors are considered, including the financial condition of both parties, the duration of the marriage, the standard of living while the marriage existed, physical and emotional issues, and the time that is needed for the recipient to be self-supporting.

How long does alimony last?

Spousal support is not terminated until the date specified on the divorce decree, or until the court makes that decision. If the recipient marries again, spousal support from the former spouse is almost always terminated.

Although not typical, there are situations when it is permanent. If the spouse is elderly (or has medical issues that hinder him or her from working), he or she may very well receive alimony for the rest of his or her life. If the payer passes away, the payer’s estate (and money from life insurance policies) may very well be granted to the former spouse.

Can you change spousal support?

Sometimes life happens, and your circumstances change. The spouse paying support may lose their job, become disabled, or retire. If these circumstances change, it can be grounds to change spousal support. Spousal support can be terminated if the spouse receiving support remarries or (in some states) moves in with someone else. Spousal support can even change if there is a change in child custody (separate from changing child support).

Even though it is possible to change spousal support, it will not be easy. You will be starting another legal battle, which can get very expensive. If you want to pursue that option, you should have a compelling reason for justifying a change. You will not be able to guarantee the outcome, even if you have a convincing case. If you are the person paying spousal support, you should accept that it may not be possible to change it. If you are receiving spousal support, make sure you are getting enough to live on, and budget accordingly.

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.

Apr 11, 2017

It is never easy to tell your spouse that your marriage has officially reached its end. Preparing yourself for the emotional implications of breaking the news to your spouse is difficult on its own, and it is even more difficult to plan how to do it. However, when you tell your spouse that you will be filing for divorce, it will set the tone for how your divorce process may proceed. For instance, it determines if you will continue having civil discussions. Therefore, the importance of proper planning cannot be understated.

When it comes to having this conversation with your spouse, there are a few general guidelines that all parties involved should try to adhere to. These suggestions do not vary, regardless of who your spouse is. So, for a more successful conversation right from the beginning, you should always follow these basic tips when telling your spouse that the marriage is over:

1) Select an appropriate time and place.

The best place to tell your spouse that your marriage is over is not in the middle of a crowded restaurant. Rather, select a relatively private setting and a time when you can talk without interruptions. If there are children involved, see if a trusted friend or family member can keep an eye on them for a while; it will be more appropriate to talk while your children are not listening.

2) Remain calm.

There is no need to fuel the emotional fallout that can occur during this conversation. Instead, you should strive to maintain your calm and composure, even when it becomes difficult.

3) Be prepared for an emotional reaction from your spouse.

Particularly if your spouse is blissfully unaware that you have reached your capacity to endure the relationship, be prepared for an emotional response. This aspect may take more preparation on your part, but you should be able to remain stoic and calm, despite their emotional reaction. If you are struggling with your own emotions over this decision, seek guidance from a professional therapist or counselor in advance.

With those guidelines firmly in place, you may also want to consider how having a conversation regarding the end of your union will look different depending on whether or not you will be telling your husband or your wife. For more detailed information regarding the best way to break the news, you can see the crucial tips you need to know below.

How to Tell Your Wife You Want a Divorce

Sharing the news with your wife can be an especially emotional ordeal. Before you begin the conversation, you should be certain that you have all speaking points prepared and arranged in advance. This preparation grants you a significant degree of control over the situation, and allows you to keep the conversation as brief as possible. By knowing in advance exactly what you want to say, you can stay on track throughout the conversation and steer clear of your own emotional reaction.

It may help to ensure that you are not blindsiding her with this information. In other words, she should already be aware that there are difficulties and struggles within the marital relationship. Excessive distance in a relationship is not necessarily a clear indicator that the marriage is headed toward dissolution.

Men should be particularly aware of their tone of voice throughout the conversation. Make an effort not to sound gruff or hostile. Instead, strive to maintain a gentle tone that is clear and calm.

How to Tell Your Husband You Want a Divorce

Breaking the news to your husband can be especially difficult for wives to work through. Remember, before you begin the conversation, you need to keep it simple. It is not the time to bring up past hurts or betrayals. A simple script that you have prepared in advance should focus on general unhappiness or primary issues within the relationship. While you tell your spouse that you plan to file for divorce, do not air out your grievances, as it can only make things worse.

Another key tip is to make use of “I statements,” instead of “you statements.” This tactic keeps your husband from feeling defensive and building up an emotional reaction while you speak. By taking responsibility for your own feelings through word choice, your husband will feel less like you blame him for the end of the marriage.

Consider curbing conversations about the specifics of the divorce until a later date. It will be far better to have a team of professionals help you navigate conversations further into the process. Particularly when it comes to negotiations, you will want professionals to help you get what you are entitled to, in order to secure a firmer financial future for yourself.

Keep the Conversation Simple

If you cannot handle the idea of telling your spouse on your own, consider enlisting the help of a third party, such as a therapist or counselor. With someone else present, it may be easier to handle the emotional responses you could face when discussing divorce.

This third party could be especially important if you have an abusive spouse. In situations when you are concerned about your safety, it is always best to refrain from telling your spouse in private. Ensure that you have a third party present or other witnesses that can assist in the fallout from the conversation.

Remember to be kind to your spouse during these conversations. Even when you are met with an emotional response, it is best to remain neutral instead of becoming defensive. To reiterate, this conversation can often serve as an indicator for the future conversations you will need to have regarding the specifics of your settlement. So be sure to guide the conversation toward brevity and simplicity.

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.

Apr 7, 2017
 
 

This article was republished by Investopedia here.

At any point in your lifetime, finalizing a divorce can be stressful. But divorcing after the age of 50 comes with its own unique challenges. Those who divorce later in life can find themselves scrambling to secure financial freedom before their anticipated retirement.

In addition, as you advance in age you need to look more towards your estate and making directives for end-of-life care. While it may still be a long way off, making plans now can help you secure both financial freedom for your retirement and peace of mind for the new beneficiaries of your estate. 

1. Create a Budget Geared Toward Retirement

You should always create a new budget before the end of your marriage to account for income changes and the extra expenses that come from living on your own. When you are looking at a divorce that occurs later in life, you will need to create a budget that projects what your living expenses will be - both in the immediate future and once your retirement is official.

How much will you need monthly to comfortably move forward? To be secure on your own, this bottom line may mean working for a few extra years.

2. Boost Retirement Savings With Annual Catch-Up Provisions

Your retirement savings could be cut in half when your divorce is finalized, depending on which state you live in. If your retirement savings do not put you where you hope to be for your soon to be single lifestyle, you will want to contribute a little more money to your retirement accounts.

When you craft your new budget, try to add in a line item that will take advantage of the provisions allowed by the IRS for your retirement savings. Below are the IRS’ catch-up provisions for individuals over the age of 50:

You may also be able to make catch-up contributions to a 403(b), non-SIMPLE 401(k), SARSEP, or governmental 457(b) retirement savings plan. For more details on how much extra you can contribute each calendar year, refer to the IRS or your specific plan.

3. Modify Estate and End-of-life Directives

While you might be hyper focused on your impending retirement, you do not want to forget to make changes to your estate. Alter your living will to exclude your soon-to-be ex from what remains of your single estate. You may want to include children, grandchildren or charitable organizations as the beneficiaries of your remaining retirement savings and assets upon your death.

You also do not want to forget to change your power of attorney. Nothing would be worse than having a medical emergency and only your ex has the authority to make medical decisions on your behalf. While you are visiting your legal representative to make changes to your living will, you will also want to remove your spouse as your power of attorney.

Divorcing later in life can be daunting because of the financial headache involved in reconfiguring your retirement and planning your new estate on your own. However, it is possible to secure your financial freedom even as those items loom large on the horizon. Consider the helpful tips that will put you on the path to independence and a comfortable retirement.

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.

Apr 7, 2017

Why You Need a Divorce Lawyer

It can be tempting to try to navigate the waters of your divorce on your own. After all, a do-it-yourself divorce is easily the least expensive method of finalizing the end of your marriage—in theory, that is. Trying to complete your divorce on your own can have serious implications for your financial future, especially if you are not considering all future possibilities.

Hiring a divorce attorney in the beginning is an absolute necessity to save you the financial and emotional headache that accompanies a do-it-yourself divorce. Where can you go wrong without a divorce attorney? You absolutely MUST hire a divorce attorney to help you for three main reasons.

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1) Incorrect divorce papers can cost you time and money in the end.

The reality is that most of us do not have the expertise for filing our own legal paperwork. This unfamiliarity can lead to mistakes in determining which documents to complete and how to file them as well as obtaining a court date and managing any potential court proceedings. Many people are now turning to online resources, such as Legal Zoom, for advice on handling their divorce without an attorney. These sites fall short, however, as they do not and cannot cover all regulations for each individual state and circumstance.

Forgetting to file the proper paperwork or missing critical items in your settlement can also lead to added expense with future legal proceedings, leaving you financially strapped in the years ahead. Consider issues involved with alimony and child support. Laws differ from state to state, and these are definitely some of the more complicated aspects of a settlement to negotiate. Most individuals also have a hard time considering the long-term tax consequences of certain financial decisions and divisions regarding your settlement agreement.

Hiring an attorney to assist you will save you money and time in the end. Fortunately, you can even hire an attorney who will “unbundle” your services. If you and your spouse are relatively amicable and good communication is possible, you can sort out most of your divorce on your own. An attorney who unbundles their services can be used just for limited consultations, filing paperwork, or drafting your documents.

Unbundling a full-service divorce attorney can provide the legal assistance you need to file your divorce properly as well as save you money in the grand scheme of things by helping you avoid future court dates and proceedings to correct your mistakes.

2) Getting less than you deserve can hurt your financial future.

State rules differ on how they divide your assets, and not all states believe in splitting marital assets 50/50. You will also need to be aware that not everything is necessarily considered a marital asset. Do you know what you are actually entitled to during your divorce under your state laws?

Sticky situations regarding property that belongs to only one spouse as well as such things as retirement accounts and shared debt can be difficult to divide. If each spouse maintained his or her own property and retirement accounts before the nuptials, it may be difficult to determine what is considered a marital asset in the present situation. Most individuals cannot plan for the long-term tax implications of those divisions, and they lack the insight to know exactly what they could be entitled to receive.

If you get less than you deserve in the settlement now, your financial future is at stake. Hiring a divorce attorney can help you achieve a fair and equitable settlement with everything you are entitled to receive. Taking care of the division of property and assets properly the first time allows you to avoid future legal proceedings (and the costs associated with them) to make corrections.

3) You need to protect yourself from an abusive spouse.

In the case of an abusive situation (whether it is physical, verbal, emotional, or otherwise), you need to do everything you can to ensure your protection. Attempting to negotiate a divorce settlement behind closed doors with an abusive spouse is a recipe for disaster—both for your physical safety and your financial future.

If your marriage is coming to an end due to the behavior of your abusive or bullying spouse, you definitely need to hire a divorce attorney right away. The right attorney can help put distance between you and your spouse to prevent them from manipulating or frightening you into agreeing to an unfair settlement. Without effective communication, you are really putting yourself at risk for having an inequitable settlement that will put for your financial future further at risk.

A bullying or abusive spouse is also likely to seek his or her own attorney. Attempting to navigate your divorce on your own while your spouse has legal assistance does not set you up for success. Should your case make it to trial, it is likely that you will not fare well in the court proceedings on your own.

An attorney can help you think through every situation that could arise in the future that would be affected by your settlement and divorce negotiation. Their emotional distance from a highly charged situation can give you some much-needed perspective to protect yourself from your spouse and get what you are entitled to from what remains a marital asset.

You NEED a Divorce Lawyer

At a minimum, hiring a divorce attorney to provide legal assistance in filing your paperwork is a wise investment for your newly single lifestyle. Attempting to settle your divorce without legal assistance, especially in complicated situations involving alimony or children, can put your entire financial future at risk and cost you more in the long run.

Divorce is a business transaction, and protecting yourself both physically and financially should be a top concern for you. A divorce attorney could be just the ally you need to ensure that you have the emotional distance necessary to fight for all that you are entitled to receive during the divorce process. It is well worth the expense of some minor legal fees to be in the best spot for your financial future.

Do It Yourself Divorce? Don’t.

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Some people think they don’t need to hire an attorney because they don’t have many assets to split, and an attorney is not worth the cost. Many online resources can do the job of attorney, so here are some reasons why you should consider DIY (or “pro-se”) divorce.

Every state has different requirements regrading divorce. You need to follow many specific rules and complete certain forms and documents. If you fail to do so, your divorce may be delayed. Court clerks cannot help you legally in this matter, as they are not attorneys. Some of these forms are very complicated and can be difficult to understand. Online help does not necessarily apply for every state, so this seemingly simple process can end up costing you greatly.

Consider these three financial and legal reasons why DIY divorce can be a bad idea.

  • Not knowing your rights
  • Not considering tax consequences
  • Losing sight of the bigger picture by focusing on short-term matters

Divorce is a complicated process, and you might not be aware of your rights. Each state has varying rules on the amount of alimony and child support that needs to be paid. You could be losing a significant amount of money by following this path. In case of an abusive or bullying spouse, having an attorney by your side can potentially save you from agreeing to a settlement that is not good for you. Don’t take the word of your spouse or use their attorney. Your attorney can protect you, your interest, and make sure you take all legal implications into consideration. Your attorney can also protect you and ensure that you receive what you are entitled to during the divorce process.

The next most important issue is not understanding the financial picture after the divorce, both from a taxation and budgeting perspective. Divorce can have drastic tax implications.

Losing sight of the bigger picture by focusing on short-term things is another drawback of this method. The expression “You can’t see the forest for the trees” often applies in divorce where you can put yourself in a bad position. Professionals can help you, as they have a better perspective and will potentially save you from making a decision you will regret later.

How Do You Choose a Divorce Lawyer Near You?

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A divorce attorney is the single most important individual of your divorce team. Just as a good attorney can get you a good settlement, a bad attorney can hurt your settlement. As divorce is a legal transaction and process, the attorney is in charge during this whole process.

When you think about your divorce attorney, you should know that they will need to know everything about your married life. They will dig deep into details of your marriage and the factors that might have contributed to the divorce. They will have a close and intimate relationship with you during this whole process, which is why it needs to be someone you are comfortable with as you deal with them on a regular basis.

Litigation, Mediation or Collaborative Divorce? 

Before doing anything, you need to take a step back and determine the right process that you might want to pursue for your divorce. These options are litigation, mediation, and collaborative divorce. Once this choice is made, choosing an attorney will become much easier.

Choosing a divorce attorney is a 3-step process.

  1. Make a list of potential candidates.
  2. Interview the candidates.
  3. Select an attorney.

1) Get a Divorce Attorney Near You

Laws can vary greatly, depending on the state where your proceedings are taking place, which is why you need an attorney who is an expert in divorce settlements of your state. The first step in the process is making a list of potential candidates. You can get referrals from friends or family, and the American Association For Matrimonial Lawyers has attorneys listed by state.  You should have at least three, but five or ten would be great.

2) Consider a Free Consultation with a Divorce Attorney 

When you meet with the attorney, you will go through a prescreening process. Once that is done, it is time for the initial consultation session. You can ask such questions as does the attorney regularly represent the husband or the wife? Is the attorney going to handle your case or hand it to a junior associate? What is their likely strategy and timing? You also need to know how much the attorney costs. You need to ask if they have any expertise in your particular case. Your attorney needs to be well versed in the area of your case. You need to ask them about the experts they work with and plan to bring in.

3) Choose the Best Divorce Attorney for You

Once the second stage is over, you can now pick the right attorney for your divorce case. You need to know what you can afford, if they have a friendly personality, did they impress you with their strategy, and if you felt comfortable and were able to get along with them well. You need to use your best efforts in making this critical choice.

Questions to Ask a Divorce Lawyer during the Initial Consultation

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Starting the search for a brand new divorce attorney can be stressful and overwhelming. Just a quick glance through the phone book reveals countless options, but how will you know which attorney is the right one for your divorce? You should know what you are looking for from the very first phone call and know what to expect from your initial consultation meeting. Head into that first meeting educated about what services they can provide and what you believe will work best for your divorce.

A relationship with your attorney is the same as any other business relationship you maintain. Can you work with this person? Do you actually want to work with this person? Making key decisions such as this one at the very beginning of the process is far better than making them six months into your divorce proceedings.

When you are beginning a relationship with a new divorce attorney, here are a few tips for determining if they are the right fit for you:

Is the divorce attorney experienced and persuasive?

When you first meet an attorney, take note of whether or not you feel they have a particularly powerful presence. Are they persuasive enough to represent your interests and persuade the opposing counsel? This character trait cannot be underestimated when you are initiating a business relationship with an attorney. After all, your settlement is uncertain if they cannot convince opposing counsel or a judge of all that you deserve.

Another key characteristic of having a successful divorce attorney and client relationship is their experience level with family law. Ask questions regarding how many years they have been practicing family law, what other trades they serve, and how many divorces they process each year. You are keeping an eye out for an attorney that is highly specialized in family law and divorces, not a “jack of all trades” who dabbles in family law, construction law, and seven other specialties.

The amount of experience they have can be a good predictor of whether or not they have enough knowledge of the laws surrounding divorce to handle your case quickly, efficiently, and ensure that you receive all you are entitled. When they are highly specialized, they should have a greater amount of education regarding the laws and more experience in putting it into practice – both of which are great attributes for you as the client.

You also need to consider their experience and relationship with your spouse’s attorney, if you are privy to who that may be. A hostile relationship between your attorney and the opposing counsel could take the focus off your proceedings and shift it toward their relationship and motives with the other attorney.

How will you interact with them?

Customer service is a critical consideration, beginning with the very first phone call. Is the receptionist polite and informative? Does the attorney return your phone call in a timely manner? Answering either of those questions in the negative could be an indicator that you will not be pleased with the customer service they will provide throughout your proceedings.

Ask what the policy is regarding your communication with them. You should know what days they spend in the office, and what timeframe you can expect them to return your phone calls and emails within. If they spend several days each week out of the office, inquire whether someone else in the office will be well-versed with the specifics of your case in case you have pressing questions when the attorney is not available.

Furthermore, how will they charge for the work and communication that is involved in your case? You should have a detailed account of how the billing rates work, including if they differ among categories such as legal advice, filing paperwork, and making copies. Knowing how they count the minutes that you are in communication with them is an important consideration as well. Does your attorney charge per hour, in fifteen minute increments, or do they tally up each individual minute? The billing schedule can make a substantial impact on what the final bill for your divorce will be.

What service options do they provide?

Entering into an attorney-client relationship, you should already have a fair idea of what you believe you will need for your proceedings. The first question might be whether the attorney or their firm has relationships with other qualified professionals who can assist in trickier situations. Do they have a Certified Divorce Financial Analyst, forensic account, mediator, or other attorneys they can consult with in the event of needing outside advice and opinions from specific experts? When your attorney manages close relationships with other trades and services, it is far more convenient for you to reach out for additional assistance if necessary.

You should also inquire whether they offer “unbundled” legal services or mediation. This allows you to cut some of the costs associated with divorce proceedings by only paying for the specific services that you are in need of. Whether you desire just legal advice, someone to help draft and file documents, or whether you need someone to manage all of the proceedings from start to finish, knowing what your options are can be helpful.

This even allows you to determine if you want to make the switch to a more do-it-yourself approach if you see your bill rising faster than you anticipate. This is a good time to begin asking questions about what you can do yourself to speed the process along and save on the costs. Are they open to a more do-it-yourself arrangement with you when it comes to documentation or filing paperwork? Asking upfront can save you money in the end if you decide that you are capable of handling some of these issues on your own.

Come to the initial consultation prepared.

While not a requirement, it does not hurt to come to the meeting prepared with the important documents that you will need to discuss. These could include a selection of recent tax documents, paystubs, bank statements, proof of adultery or abuse, and more. It may even be helpful to have your marriage license and important documents relating to you children (health papers, psychological papers, addresses, etc.).

By bringing all of the additional documentation that you believe is pertinent to your case, you are granting the attorney a clear look at what marital assets and liabilities will need to be divided. What do you have in retirement accounts, real estate, savings, and investments? Looking at the bigger picture may allow them to make clearer determinations of what the next steps and plans might look like.

Before you leave your initial consultation, you should receive some proposed game plan or plan of action from the attorney regarding what they believe the best steps to take are. You will need to evaluate whether you agree with their evaluation, especially if they believe it could end up going to trial. If you believe that your divorce could be settled more amicably (and for less cost), then you might want to reconsider your relationship with this attorney.

Because this is a significant business relationship that you will be a part of for the coming months, you should consider meeting with multiple attorneys if you are not satisfied with the initial consultation. There is nothing wrong with moving back to the drawing board before you commit to an attorney for the long haul. You never know how long your divorce proceedings could last, so be certain that you are satisfied with your attorney’s experience, qualifications, customer service, and cost.

How to Get a Low Cost Divorce Attorney

Divorce can be many things: emotional, messy, frustrating, and stressful. But more than anything else, divorce can be expensive. The price of splitting your life in two could include court costs, attorney fees, financial experts, and therapists.

These expenses may be hard pills to swallow, but they can quickly become detrimental to your financial future if you’re not careful. To protect yourself, you want to ensure that you stay in control of both the process and its price tag. Here are a few things you can do that will minimize the cost of your divorce:

1) Reach Agreements Prior to Meeting with Your Divorce Attorneys

Cutting down on your divorce attorney’s billable hours is one of the easiest ways to save money during a divorce. Rather than hashing things out in front of your divorce lawyers, consider how much you’ll save if you and your spouse are amicable enough to work things out together. Provided that you’re on speaking terms, it’s very likely that the two of you can be successful in negotiating initial agreements.

This phase is a good time to discuss the specific arrangements of your children. Try to come to an agreement about the topics of custody and support. Being their parents, you both need to have their best interests in mind.

By privately drafting a list of negotiations, you could save thousands of dollars in attorney fees.

2) Keep Attorney Correspondences Short and Sweet

Don’t waste your money on communications with your lawyer. Each of those emails and phone calls costs money, but you can lower these costs by keeping correspondences brief. It’s guaranteed that you’ll have questions, but write them all out first. Then call your lawyer and ask all of your questions at the same time.

Your attorney’s receptionist is usually your first point of contact, so see if he or she can answer those questions for you. In addition, when providing information, be direct. But still provide enough detail to avoid back-and-forth emails that can hike up your bill.

3) Hire a Certified Divorce Financial Analyst

You’ve already hired an expensive lawyer. At first, hiring yet another professional may sound counterintuitive to minimizing the cost of your divorce. But when it comes to consulting with a Certified Divorce Financial Analyst (CDFA), the long-term savings ultimately outweigh the short-term costs.

A CDFA will be able to paint you a picture of your financial future. He or she can help you draw up budgets before and after your divorce. A CDFA is trained to know the tax benefits you’ll be able to take advantage of. He or she can assist with the long-term planning that you would otherwise hire a financial planner to do.

4) Don’t Sweat the Small Stuff

In many divorces, an excess of time and money is spent on couples squabbling over how to divide up the little things. To avoid this, brainstorm a list of the items you’ll need to settle on. Rank everything on the list by its importance to you. Then next to your rankings, note how your spouse might prioritize each item.

See if there are any proposals you’ll be able to bring to the negotiations. If you agree to let your spouse keep the boat, maybe he’ll let the dog live with you? In the end, drafting a list of your priorities will allow you to know which points you truly want to push for—and which you’re willing to let go of. The less time spent arguing, the cheaper your divorce will be!

Signs That You Might be Getting Screwed by Your Divorce Attorney

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Whether you are far into the divorce process or are just dipping your toe in the water, you likely already know that attorneys are a necessary part of the process. As critical as they may be during the finalization of your divorce, they are professionals who have the potential to profit from your emotions. When your emotions make it difficult to sort out your case, you can quickly see your bill going up.

Unfortunately, when all is said and done, some divorce attorneys may try to manipulate your emotions to score a higher paycheck. Your relationship with your attorney can be compared to relationships with other professionals (e.g., your plumber, your accountant, and even your personal trainer). You hired them to complete a specific job, and you need to manage your relationship with them accordingly.

Want to know how to respond more effectively in each situation? Here are a few items that attorneys tend to focus on:

Warning Sign: Your attorney is not a family law specialist.

Hiring an attorney is a significant investment of your resources, and you will want to hire someone who knows what they are doing in a courtroom. If your attorney seems clueless about family law, you may not get all that you are entitled to during settlement negotiations. Because your divorce decree and settlement are final, it is imperative that you ensure that your attorney is working as hard as they can to get an equitable resolution on your behalf.

How will you know if your attorney is not a divorce specialist? Your attorney could be a “jack of all trades, master at none.” In other words, he or she regularly practices family law, construction law, and personal injury lawsuits. If so, he or she may be lacking the in-depth knowledge and finesse needed to handle divorce cases with the attention, diligence, and education that they require.

Each area of law requires attorneys to stay abreast of upcoming legal changes through continuing education, which is common with most professions. To have the most up-to-date knowledge and expertise that you will need to win, an attorney that claims to have multiple specialties will not be able to comply with all possible continuing education courses. Costly mistakes can occur when your attorney lacks the expertise for completing a routine case or a more complicated divorce.

It might be acceptable for your attorney to have to research a specific question once in a while. After all, nobody knows everything. However, if you find yourself asking general questions and being met with silence or uncertainty, it may be a sign that your attorney is not as well versed in divorce proceedings as you need or want them to be.

Warning Sign: Your attorney wants you to focus on smaller items.

In the end, does it really matter which spouse got the spatula or the serving spoons? Do not allow your attorney to distract you by focusing on items that are of inconsequential value. It could take forever to divide up each item within the household, especially if you have a vast amount of bric-a-brac.

Every item that you and your spouse argue over adds expensive minutes to your attorney’s final bill. The reality is that paying your attorney to split up these insignificant items will likely cost more than those items are truly worth.

Instead, you need to focus on which items are priorities for you. If the dining room table that your great grandfather made has extreme sentimental value for you, make sure to put it on your settlement list. However, if you could care less about the ceramic carafes your spouse uses for coffee, there is no point in arguing about them.

Because attorneys are paid by the hour, the longer you and your spouse spend fighting over trivial items, the more you will both be paying your attorneys. Try to focus on the big picture, and settle amicably with your spouse (if possible). Keeping open, healthy communication with your spouse can allow you to quickly and efficiently divvy up those household items, without costly over-involvement from your divorce attorney.

Warning Sign: Your attorney encourages you to discuss emotional details.

Does it really matter what the last intense argument you had with your spouse was? If the details do not specifically pertain to the case and questions at hand, then they do not need to be discussed with your attorney. Your attorney is not your therapist; he or she is not specially trained to help you sort out any lingering emotional drama that you may be experiencing about the dissolution of your marriage.

When you find yourself recounting the latest episode that proves your spouse’s incompetence, stop immediately. If you find yourself needing to spend those precious, expensive hours with your attorney detailing the drama, it is time for you to consider other outlets for your frustration. Hire a therapist who can help you work through the situation, or head out for a drink with your friends. Either way, it is likely to be both more cost-effective than venting to your attorney.

Warning Sign: Your attorney wants you to go to trial, instead of taking the settlement.

When you and your spouse can reach a reasonable settlement, you might be tempted to sign on the dotted line. However, what happens when your attorney insists that you go to trial? Attorneys will sometimes lobby for this next step because it adds a hefty number of hours onto their final bill. Reaching a reasonable settlement makes going to trial an unnecessary expense.

As we discussed in the first section, amicably sorting out your settlement with your spouse can save you a ton of money. If you can reach an agreement with him or her, you will save money upfront, and you will not be leaving the situation in the hands of a judge (who could rule against you). An amicable resolution could save you a ton of attorney fees and court fees.

Make sure that you understand all of the options available to you. Mediation, collaborative divorce, and settlement are less expensive options than going to trial. If your attorney encourages you to go to trial, but you believe you can settle in less time via one of these other avenues, do not hesitate to speak up for yourself. You should be comfortable voicing your opinion with any professional that you hire. After all, you are the one who issues his or her paycheck at the end of the day.

Warning Sign: Your attorney does not know your case well enough.

Some attorneys can find themselves swamped with too many cases at once. Unfortunately, that means that each individual case suffers. Then it is impossible for them to remember all the intricate details of each client’s unique situation. An inability to remember the details from your specific divorce case can lead to long-term mistakes that you will have to live with.

Without remembering the information you present, they may struggle to help you divide your assets with your spouse, as well as offer legal advice about the best next steps. Also, if they are spread too thin across a multitude of cases, they may have difficulty staying up-to-date with legal changes. They may make mistakes as they struggle to keep up with the amount of work they need to do.

It should be a huge red flag if your divorce attorney continuously asks you the same questions, especially if it pertains to your personal information. Hearing the same questions over and over again indicates that they either did not adequately record the information the first time, or they cannot remember who you are. In either scenario, it could be a sign that your attorney does not know your case well enough, and you should move on to another firm.

Warning Sign: Your attorney does not value relationships.

Under the best of circumstances, divorce is a painful proceeding. Attorneys who do not value relationships can make the experience even more grueling than it already is. Working with them becomes a difficult chore in the midst of emotional turmoil.

Furthermore, they might not just struggling to maintain their relationships with their clients. If divorce attorneys cannot maintain professional demeanors with their opposing counsels, they may be unnecessarily antagonistic. Achieving a settlement or handling negotiations will be a more laborious process, and it could be more time-consuming as well. Keep in mind that attorneys typically charges by the hour. Therefore, the more time your attorney spends negotiating a settlement with his or her opposing counsel, the higher your bill will be at the end of the day.

You need to determine if your attorney falls into this category, but fortunately, it should be apparent rather quickly. When you first enter an office, a cold, unfriendly staff can indicate a poor working environment. If you get the same chilly vibe from the attorney, it is likely a sign that he or she does not value his or her relationships.

What are some other signs? They will likely be difficult to get in touch with— dodging phone calls and rarely replying to emails. If this behavior only occurs once, it simply is an oversight, but if it becomes a pattern, it is a sign that your attorney will not make your business a priority.

If attorneys speak to you in a condescending manner, it is another sign that they do not know how to communicate with others. If they struggle to be respectful and communicative toward you (a paying client), how much worse will it be in the courtroom when they must persuade the opposing counsel and the judge of your proposed settlement?

Remember that Divorce is a Transaction

Do not forget that divorce is little more than a business transaction. As you divide up your assets and finances from your married life, try to keep your emotions surrounding the process from interfering. Take care of yourself as you need to (by venting to friends or hiring a therapist), but do not allow your feelings to sway your decision-making during the divorce process.

The goal is not to make your spouse suffer, but to make sure that you both get an equitable settlement. An attorney can capitalize on the emotional turmoil you are going through, which could cause you to fork over more money than you anticipated. Play it smart; know in advance when you are being manipulated into increasing your attorney’s billable hours.

Your attorney is a professional that you have hired to protect your interests and help you obtain what you deserve during your divorce. You should feel comfortable and confident about speaking your mind and managing the relationship you enacted. You should be in charge of your attorney during your divorce.

Recognize the Red Flags

Your divorce attorney may be waving warning signs right in front of you. If you notice even one of these attributes in their practice, it could be enough to make you consider moving on to another attorney—before you are too far along in the proceedings. Having a subpar divorce attorney can be costly in the end; it may mean that you do not receive all you are entitled to, that they are prone to legal mistakes, or that they will make the overall process more expensive and miserable than it needs to be.

Keep your eyes open and your mind sharp for situations that make you feel uncomfortable. Ultimately, your instincts regarding your divorce attorney will prove correct. Hiring the right attorney can mean the difference between a settlement you are pleased with and a settlement that leaves you disappointed and bitter.

Apr 5, 2017

Divorce is hard, so you should learn how to prepare for a divorce. These 17 divorce tips for men and women will help you.

1) Be Certain You Want a Divorce

Divorce is a last resort and not the only option in an unhappy marriage. Divorce is often expensive, messy, complicated, and painful. Have you exhausted all your options to save your marriage? Divorce does not necessarily solve many of the reasons you may be unhappy. Consider marriage counseling or living apart for a while as an interim solution. If the pain of staying in the marriage is worse than the fear of a single life, then maybe it is time to go. Just be sure you do not regret your decision to get a divorce.

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2) Accept that Divorce is Happening

You are getting a divorce. The vows you made, the life you created, the marriage you had—it is all ending. Divorce is the death of a marriage. You never thought it would happen to you. You are probably experiencing a range of conflicting and confusing emotions, including denial, anger, guilt, sadness, fear, relief, and everything in between. All these feelings are normal under the circumstances, but it is time to step up and prepare for the divorce process.

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3) Hope for the Best, but Prepare for the Worst

Divorce can be unpredictable. Initially, you may think you and your spouse will work things out civilly, but the next thing you know years have passed without any clear resolution, and you have a stack of legal bills. In other cases, you may think you are going to have a lot of conflict with your spouse, but it turns out that both of you want to resolve the process quickly and efficiently. Or maybe you are somewhere in between. Every divorce is unique with its own dynamics, and it is hard to foresee the outcome. While you should be optimistic about getting through the process favorably, prepare yourself for a fight. Even in the best of circumstances, divorce takes twice as long and is twice as expensive as you think it will be. Prepare yourself.

4) Plan for the Cost of Divorce

Divorce can be very expensive. You will need funds to pay for an effective team, which will do their best to assist you in managing the process and securing a financial future for yourself. Before you even consider filing for divorce, you may want to think about setting aside some cash on your own. This money can then be used to cover the cost of retaining an attorney, hiring a certified divorce financial analyst, and enlisting the help of a therapist to work through your own emotional issues surrounding the end of your marriage.

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5) Setup New Bank Accounts and Credit Cards

You may not be able to get rid of your old joint accounts just yet, but you can certainly begin to set up new accounts for your soon-to-be single life. Make sure that you form these new bank accounts and that you transfer some funds into the account. Most notably, you will want to switch any direct deposits from your employer into your individual account.

You should also consider opening new credit card accounts that are only in your name. This tactic can help you build up your own credit for the time when you may need to purchase a new car, get a new mortgage on your own, or encounter any number of other scenarios that require a good credit score. Your credit score will need to reflect that you have the capability to responsibly borrow and repay your loans without the assistance of your spouse.

6) Gather Your Financial Records

Ideally, you will have five years’ worth of documents, including tax returns, payroll stubs, benefits information, bank statements, investment accounts and property information.  Make copies of everything and keep them outside of the house — either in a private safe deposit box or at the home of a trusted friend or family member. Having evidence of all of your financials will help speed up discussions during the divorce, and it will safeguard you in case something goes missing.

7) Inventory Your Assets

While you are gathering your financial records, begin an inventory of all of your assets. Separate property usually includes anything you owned before the marriage, any gifts given solely to you, or inheritances. Anything acquired during the marriage is usually considered marital property.

Take digital, date-stamped photos of your valuables such as jewelry, antiques and collectibles. This may seem extreme now, but it is not uncommon for things to disappear once the process starts.

8) Build a Team of Professionals to Help You

As CEO of your divorce, you need to have a team of specialized professionals to help you navigate the complex process. The three key players are an experienced family law attorney, a Certified Divorce Financial Analyst (CDFA), and a therapist. A family law attorney—the most important person on your divorce team—will help you navigate the legal elements of the case and represent your interests. A divorce financial planner (CDFA) does the math, from helping you complete your all-important Statement of Net Worth/Financial Affidavit to determining the long-term impact of different settlement proposals. A therapist will help you work through your emotions to keep you focused on the big picture.

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9) Set Realistic Goals for Your Future

What do you want after the divorce is over? Do you want to stay in the house or maybe receive (or pay) a certain amount of spousal support? What about custody of children? You need to determine your most important goals for the divorce process and stay focused on the big picture. If you are mired in the little details and start fighting for that coffee mug you got on vacation years ago, you end up racking up expenses and only hurting yourself in the end.

10) Cut Unnecessary Expenses

It is no secret that divorces are costly. From the moment you sense that your marriage is heading in that direction, you need to redraw your budget and determine how you will accommodate not only the expenses associated with divorce, but also for your new, single life. In order to help build your savings, it is likely that you will have to adjust your lifestyle and cut out anything unnecessary.

11) Monitor Your Credit Report

In order to emerge from the divorce as fiscally unscathed as possible, you need to be fully aware of your current financial situation. To paint the clearest picture, obtain a copy of your credit report, paying close attention to any outstanding debts.

If there is anything that does not add up, you will want to ask your attorney for assistance before you ask your spouse for full disclosure of records. Additionally, it is wise to monitor your credit report throughout the divorce process to avoid any surprises later on.

12) Treat Divorce as a Business Transaction where You are the CEO

As cold as it sounds, the difference between marriage and divorce is a piece of paper. While marriage is about love, divorce is about money. As you go through the divorce process, treat it as a business transaction, as the decisions you make will affect you for the rest of your life. Put your emotions aside, and step up as CEO of your divorce. You must make rational decisions regarding dividing property, child custody, and spousal and child support.

13) Keep Healthy and Fit

The bedtime pint of ice cream starts looking very tasty when you are going through a stressful situation. Or maybe you are thinking about dusting off that bottle of vodka or having an extra cigarette. You are sleeping less. Days between visiting the gym become fewer and fewer, and soon you realize that you are gaining weight and feeling extra sluggish. Do not let that happen to you. Divorce is exhausting mentally and physically; one of the best things you can do to lift your mood and reduce stress is by staying healthy. Physical strength can serve as a good foundation for mental stamina. Go to the gym, take a walk, do some yoga, and clean up your diet. Your body—and your mind—will thank you for it.

14) Lean on Friends and Support Groups

Divorce can be a lonely time, but you should know that you do not have to go through the experience alone. Speak with close friends to help you manage the process, and share what you are feeling. Consider joining divorce support groups, such as DivorceCare and Second Saturday, and many churches and religious institutions can also help. Having others by your side makes it easier to get through the dark times and toughest days in one piece.

15) Take Care of the Children

Divorce can have a traumatic effect on children, with repercussions for the rest of their lives. What do you want them to say about your divorce ten or twenty years from now? Learn how to tell your children about divorce, and try to understand what they are seeing from their eyes. They may act out, have falling grades, or exhibit changes in behavior that you need to monitor closely. If you love your children, do everything you can to protect and reassure them during this volatile process.

16) Act Civil with Your Spouse

If possible, be civil with your spouse. Whether by text, email, or in person, try to avoid a high-emotional confrontation with every communication. You are getting divorced for a reason, of course, but it does not mean you should create extra conflict in every possible situation. Even if your spouse is mean, abusive, or unpleasant, when communicating, treat him or her with respect. Tense and unpleasant communication can not only hurt you if you go to court, but it can also lead to much larger legal bills and often add unnecessary complexity to your divorce.

17) Know You Will Make It

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Divorce can feel overwhelming, but you will get through it. Focus on one minute, one hour, or one day at a time. This time in your life will end, even though it may not seem it will at the moment. It is not going be easy, but divorce does not have ruin your life either. Just take one step and then another and another, and those steps will add up, and soon you will be done with the process. You will have the rest of your life ahead of you, and divorce will be in the rearview mirror. You can do it. You will do it. Have faith and believe in yourself.

Apr 5, 2017

This was originally published on Divorce and Your Money here

Divorce is Hard

"I want to make sure that the settlement you sign works for you—not only for the coming years, but for the coming decades.” - Shawn Leamon, MBA, CDFA

During a divorce, you only get one chance to get things right. It is a messy, complicated, difficult process—emotionally, legally, and financially.

At its core, divorce boils down to 3 areas:

1) Dividing property

2) Spousal and child support

3) Child custody

An attorney will help you navigate the complex, confusing family law process. But who helps you make the appropriate financial decisions? It is easy to make costly financial mistakes during the divorce process. That is where a Certified Divorce Financial Analyst comes in.

What is a Certified Divorce Financial Analyst?

A Certified Divorce Financial Analyst (CDFA) helps you and your attorney understand the financial impact of decisions during the divorce process. A CDFA is an experienced financial professional like a financial planner or accountant, who has completed the training, education, and certification process from the Institute for Divorce Financial Analysts (IDFA). According to the IDFA, there are more than 5,000 CDFAs in the United States and Canada.

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A CDFA can help you formulate a better divorce settlement agreement by:

1) Making Your Divorce Process More Efficient and Less Expensive

“The longer it takes for your divorce, the more expensive it will be.” - Shawn Leamon, MBA, CDFA

A CDFA can help you collect, organize, and prepare financial information for both you and your attorney and identify which financial information that is most important. You may have considered working through a myriad of financial details with your divorce attorney or (more likely) a paralegal, but generally, neither is a financial expert.

Therefore, you can save time and money on expensive hourly fees by having a CDFA handle routine financial details and many of the critical calculations. For example, A CDFA can help you prepare a marital balance sheet, which is an easy-to-understand summary of your assets and debts. Or a CDFA can help you complete the all-important financial affidavit or statement of net worth, which is required in almost every case.

2) Understanding Tax Consequences of Your Divorce Settlement

“In divorce, it is not what you get, but what you get to keep.” - Shawn Leamon, MBA, CDFA

In divorce, a dollar is not always worth a dollar. The equivalent amount of cash in a bank account is worth more than cash in a retirement account, which is worth more than a home at the same value. Why is that?

Every asset has its own tax liabilities when you use the money. Therefore, if you take money from a retirement account, you may have to pay income taxes and potential penalties for withdrawing the funds. Spousal support has tax consequences, while child support does not.

A CDFA can help you understand how much you get to keep when deciding between different assets.

3) Managing Expectations and Keeping You Focused on the Long Term

“Divorce may be the most important business deal you will ever make.” - Shawn Leamon, MBA, CDFA

Given the high emotions involved when facing the end of your marriage, it is helpful to have a neutral person help you make rational decisions. A CDFA can help you understand different divorce-settlement scenarios, including how they may impact you. They can also help you navigate potentially rash decision-making.

It is easy to want to fight too much or too little, or waste money fighting for something that is unimportant in the long run. A CDFA can help you keep the big picture in mind, so you make decisions that will put you in the best position for your future.

4) Creating a Post-Divorce Financial Plan

“Before you sign that settlement, ask yourself: ‘Can I afford it?’” - Shawn Leamon, MBA, CDFA

One day, your divorce will be over—even if it does not feel like it right now. Before you sign the divorce-settlement papers, are you sure that the agreement will make sense for you in the long term? Many settlements may make sense for the first year or two, but you can find yourself realizing that you made a major mistake later down the line.

A CDFA can help you prevent the worst-case scenario: Just a few years after the divorce, you could be scrambling for money or considering bankruptcy. A CDFA can help protect you from ending up asset-rich but cash-poor. Most of the time, divorce settlements are tough to change, so you must be sure you can afford the settlement when you sign on the dotted line.

What are Certified Divorce Financial Analyst Fees?

Certified Divorce Financial Analyst fees vary depending upon your location, needs and financial complexity of your divorce. Some Certified Divorce Financial Analysts charge an hourly fee, which can range from $150 to $450 per hour. Other Certified Divorce Financial Analysts cost several thousand dollars for more complex cases or when handling a high-stakes or high-asset divorce.

Your Attorney Can Make Costly Financial Mistakes

"Attorneys often tend to feel they have the knowledge and experience to take care of many complex financial matters on their own, even though most do not hold any sort of business degree. This can create costly mistakes for their clients if they do not fully understand the complicated financial concerns at hand.”

Joseph E. Cordell, Partner at Cordell & Cordell (the largest family law firm in the United States)

Your divorce lawyer is essential for advising you about the legal aspects of your divorce. However, most divorce lawyers are not financial experts, and your attorney can make costly mistakes that could end up hurting you for many years after your divorce is over.

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Here are just a few common mistakes divorce lawyers can make:

1) Errors dividing investment accounts

Investment accounts are one of the most complicated financial assets in the world. There are hundreds of thousands—if not millions—of different investment options. After a decade of exclusively working in the financial services industry, there are some areas that I still find complex.

How can you expect someone who studied law to make the proper decisions about investments and finances for you? Numerous times, I have seen even the highest-rated family law attorneys make easily preventable mistakes when dividing investments during divorce.

For example, a common mutual fund may come with risks that your attorney may not consider as you negotiate with your soon-to-be ex-spouse. Is the money in a taxable or tax-deferred account? Is there is a high-portfolio turnover in the fund? In other words, is there frequent buying and selling of the investments associated with it?

If the answer is yes to any of the above questions, there could be a large, unexpected tax liability that you will not discover until the end of the year. Furthermore, there are hundreds of different strategies and structures of mutual funds, so you should be very selective about which ones you fight to keep.

What if you are thinking about keeping an individual stock? Do you know its cost basis? If you sell the stock, the cost basis will have a huge impact on calculating future taxes. If the stock is a big portion of your overall assets, do you know how to hedge it or diversify the risk? Regarding stocks, there are some incredibly complex considerations, and many books are dedicated solely to this subject. Taking the word of your family law attorney—or worse yet, your spouse— without getting specialized help could be an expensive mistake.

Are you trying to split a hedge fund or private-equity fund? Do you even know what these assets are? Be very careful. Many of these funds cannot be sold for up to 10 years. Therefore, if you need the money, you could find yourself in a tough financial position.

2) Failing to search for hidden assets

You may have suspicions that your spouse is hiding money from you. Sometimes it is obvious, but other times it can be difficult to tell. When your marriage is on the rocks, it is a very common for money to start disappearing.  If you and your spouse own a business, then hiding money becomes much easier.

Given the financial complexities of identifying red flags, many divorce attorneys often inadequately search for hidden assets (secret money that you may be entitled to receive). Your spouse may transfer money to friends, report lower income or higher business, create fake or inflated debts, withdraw money in cash and hide it, overpay the IRS and keep the refund, or mislead you about the value of assets.

Since finding hidden assets may require you to employ a forensic accountant or private investigator, it is complicated, and it could be expensive. That said, failure to examine this kind of misdeed could cost you a lot of money.

3)  Neglecting to secure support payments with insurance

What happens if your spouse unexpectedly stops making support payments (child or spousal) because they die or become disabled? These payments may be an essential income source for you, and a sudden loss of them could cause a host of financial complications.

Many attorneys fail to advise this cost-effective way to protect you: getting insurance to make support payments should the unforeseen happen. The specific implementations can take many forms, but if you are the beneficiary of the policy, you will be protected.

However, you should make sure you own the policies, and that any premium payments are kept current. Otherwise, you will find yourself at a loss when you need the funds.

Conclusion: A CDFA can help level the playing field during divorce.

Attorneys handle the law, while financial experts handle the math. Divorce is a legal transaction with important financial implications for your future. Although your attorney is an expert in your state’s laws, they are not necessarily a financial expert. In fact, most attorney’s service agreements will have you disclaim any financial responsibility. Therefore, if your attorney discourages you from hiring a CDFA, that is a red flag.

A CDFA can serve an essential addition to your divorce team, regardless of whether or not you are going through litigation, mediation, arbitration, or a collaborative divorce process.  As The Wall Street Journal identified, a CDFA can help "watch out for tax snafus, help clients obtain health insurance after a split, and demystify tough-to-value private-equity or hedge-fund investments.”

If you have any financial questions or considerations, consider hiring a CDFA to help you.

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.

Apr 5, 2017

This was originally published on Divorce and Your Money here

Divorce can easily become one of the most tumultuous, stressful times in your life—emotionally, physically, and financially. During a divorce, emotions can range from relief to devastation.

There is no wrong way to feel when it comes to the end of your marriage, but you must remain vigilant about staying focused during the entire process. Particularly in the very beginning, you might miss out on key items that could ensure future financial stability –because you let your emotions clouded your viewpoint.

To take control of the situation early on, making preparations is one of the most significant things you can do. Whether you plan to meet with a divorce attorney or a certified divorce financial analyst, you should have all of your critical documents in order. A good divorce financial planner will tell you to get your paperwork together before you file for divorce.

How do you know what you should prepare? To make sure you are gathering everything you may need, a divorce checklist is below. And to ensure that you have all of the most critical documents on hand, it is broken into manageable pieces.

Want to listen to this episode on your mobile device? Just use one of the following links:  iTunes | Google Play Music | RSS Feed or click on the episode player above.

Divorce Financial Checklist Documents

It will be more difficult for a divorce financial planner to get an accurate idea of your marital money matters without having the pertinent information. Keep in mind that these professionals are specifically trained to help you navigate a successful settlement and secure a financially stable future. Without all of the relevant data to review, you could miss out on your share of significant assets, investments, or accounts.

You will need to keep in mind that documents should cover your long-term history, not just the most recent transactions. The gold standard is to cover five years’ worth of data with your documentation. Perhaps this information is unavailable, or the marriage did not survive this long. If so, three years’ worth of data should suffice to help your team assemble a settlement that you will be satisfied with.

Which financial documents are the most important to put together first? The divorce financial checklist will give you the most thorough rundown of the most commonly requested items:

  • Income Tax Returns
    • Personal tax returns
    • Partnership and corporate tax returns
    • W-2 forms
    • 1099 forms
    • K-1 forms
    • Amendments to returns
  • Employment Records
    • Pay stubs
    • Benefits information
  • Financial Records
    • Bank statements
    • Monthly expense reports
    • Investment properties and rental (or lease) agreements
    • Financial statements prepared for banks or loans
    • Loans or other forms of debt (including mortgage information)
  • Prenuptial or postnuptial agreements
  • Investment Account Statements
    • Brokerage accounts
    • Money market funds
    • CDs
    • Mutual funds
    • Other investment accounts
  • Information about Retirement Savings Accounts
  • Wills and Trust Agreements

Personal Records

Your financial information is not the only consideration that a divorce financial planner will need to take into account. Your personal data, including significant details regarding your marriage and any children involved, can also assist the planner with helping draft an appropriate settlement that all parties will be satisfied with.

One of the most important steps to take before divorce is to understand what each person in the marriage brought to the union. Take a look at the checklist below to get an idea of the important documents you need to round up for your divorce attorney or divorce financial planner:

  • Date of marriage
  • Date of birth and social security numbers for you and your spouse
  • Date of birth and social security numbers for any involved children
  • Information on previous marriages, including divorce decrees
  • List of property acquired before and during your marriage
  • Insurance policies
    • Life insurance
    • Car insurance
    • Homeowners insurance
    • Annuities
    • Other types of policies
  • Personal property (including jewelry, artwork, collection, and antiques) acquired before or during your marriage
    • Appraisals
    • Invoices
    • Contracts
    • Safety deposit boxes and their contents
  • Judgments and pleadings that either spouse was party to

Want to listen to this episode on your mobile device? Just use one of the following links:  iTunes | Google Play Music | RSS Feed or click on the episode player above.

Want to listen to this episode on your mobile device? Just use one of the following links:  iTunes | Google Play Music | RSS Feed or click on the episode player above.

Final Divorce Settlement Checklist

Before you consider heading to your divorce attorney to initiate the end of your marriage, it is critical to be prepared for what happens afterward. By following these steps before filing for divorce, you will gain some sense of control over an otherwise emotionally charged and draining situation.

This divorce checklist will help you assemble documentation at your own pace. Then you will be ready for whatever your divorce financial planner may need. In addition, gathering up documents to prove and support your current marital financial situation allows you to more adequately prepare for your future.

By completing an accurate assessment of your lifestyle, income, and expenditures, a divorce financial planner can help you prepare for your future as a newly single individual. If you utilize this divorce financial checklist, you will more clearly see what you could be entitled to during your divorce (with a greater degree of accuracy).

Want to listen to this episode on your mobile device? Just use one of the following links:  iTunes | Google Play Music | RSS Feed or click on the episode player above.

Are you about to make costly financial mistakes?

Do not allow emotions to cloud your judgment. Let a divorce financial planner examine your documentation. He or she can assist you with a fair, reasonable settlement and secure your financial future.

We offer 1-on-1 financial coaching services to help you analyze the financial issues you are facing. Attorneys are experts at the law, but many end up making serious financial mistakes that you may regret for the rest of your life. All you have to do is visit us at www.divorceandyourmoney.com/coaching to learn more!

Do you want to download this divorce checklist in pdf? Just click here.

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.

Apr 5, 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.

Apr 4, 2017

This was originally published on Investopedia.com. Click here to see the original article.

Getting your affairs in order is the first critical step toward having a successful end to your marriage. Unfortunately, many people become quickly overwhelmed at the sheer volume of tasks they must accomplish before divorce. Here is a short guide to some of the first financial steps you need to take:

1) Gather up all pertinent documentation.

You will need to have a clear picture of your marital finances. To accurately portray your financial situation, it helps to have clear documentation of the lifestyle you and your spouse had together. Before you head to any appointments with an attorney or other members of your divorce team, ensure that you have copies of some of these important documents: (For more, see: How to Manage Your Finances Through a Divorce.)

  • Tax documents
  • Home and mortgage information
  • Loan applications
  • Bank statements
  • Credit card statements
  • Investment account statements
  • Retirement savings account information

2) Take inventory of your marital possessions.

Take a good look at the assets you and your spouse own jointly, which can include homes, cars, art, and collectibles. When taking inventory of your marital assets, don’t forget to consider retirement savings accounts, investment accounts, and other various types of property. You should also know the overall income that you and your spouse brought into the household each year. For example, tax documents should help prove the annual income levels for the year.

Having a good inventory of your marital possessions and assets is crucial for getting what you are entitled to. It is difficult to negotiate a settlement without information regarding what to divide up or sell. Even the most effective mediator or divorce attorney will not be able to get you a fair settlement without understanding the full financial picture of your marriage.

3) Prepare for the cost of divorce.

Divorce can be very expensive. You will need funds to pay for an effective team, which will do their best to assist you in managing the process and securing a financial future for yourself. Before you even consider filing for divorce, you may want to think about setting aside some cash on your own. This money can then be used to cover the cost of retaining an attorney, hiring a certified divorce financial analyst, and enlisting the help of a therapist to work through your own emotional issues surrounding the end of your marriage. (For more, see: Get Through Divorce With Your Finances Intact.)

4) Set up new bank accounts.

You may not be able to get rid of your old joint accounts just yet, but you can certainly begin to set up new accounts for your soon-to-be single life. Make sure that you form these new bank accounts and that you transfer some funds into the account. Most notably, you will want to switch any direct deposits from your employer into your individual account.

You should also consider opening new credit card accounts that are only in your name. This tactic can help you build up your own credit for the time when you may need to purchase a new car, get a new mortgage on your own, or encounter any number of other scenarios that require a good credit score. Your credit score will need to reflect that you have the capability to responsibly borrow and repay your loans without the assistance of your spouse.

5) Get acquainted with your credit report.

Taking charge of your credit is a crucial element to securing your future financial freedom. Good credit is a standard requirement for everything from personal loans to mortgages.

You are entitled to one free credit report each year, which can easily be obtained online.  Become familiar with the items that are included in your reports, and keep an eye out for unfamiliar loans and transactions. You are responsible for any account that has your name on it, even if it is shared with your spouse.  Identifying accounts early can help to manage your debts post-divorce.

Preparing in advance saves money later.

While there are no fixed rules regarding the timing of completing these five necessary tasks, it is better to finish them sooner rather than later. If your affairs are in order prior to filing for divorce, your spouse cannot make it more difficult to obtain copies of the documentation you desperately need. In the case of a narcissistic or bullying spouse, you may find it incredibly hard to gain access to records that you need once the divorce process has been set in motion.

Without all your information and affairs in order, you may not be able to negotiate a settlement that is fair or that helps secure your financial future. If you follow through on the completion of these five essential steps, it can make a huge difference in the overall outcome of your divorce settlement. (For more, see: Divorce Planning Checklist: What You Need to Know.)

Shawn Leamon is the host of the “Divorce and Your Money” podcast and managing partner of LaGrande Global, with offices in Dallas, New York and Hanover, New Hampshire.

Apr 4, 2017

This article was republished by Investopedia here.

During your divorce proceedings, the division of assets goes beyond household income and bank account holdings. To fairly divide the funds accumulated throughout your marriage, the funds placed in 401(k) accounts will come up as well. Every state has its own specific protocol, but you can confidently head into this process by thoroughly understanding the way courts strive to fairly divide these retirement account holdings for each spouse.

1. Determine Marital vs. Separate Property

The first task in the division of 401(k) accounts is identifying the amount of funds placed in the accounts during the marital period. Funds placed in these accounts prior to the marriage are usually not considered assets eligible for distribution to both parties in the divorce. In general, assets owned by either spouse before the marriage, including 401(k) funds, are considered separate property. However, if you have any 401(k) accounts with contributions made after you were married, you will likely be dividing those funds as part of the marital pie.

2. Calculate the Division of Shared Assets

The state you live in will determine the way your overall assets are divided during the divorce proceedings. In community-property states, the 401(k) funds that qualified as marital assets will likely be split 50/50 between both parties. However, in equitable-distribution states, the judge may split the assets differently because they are looking at the entire picture (although the main goal remains the equal division of assets).

Now is the time to identify all other shared assets that qualify for division between you and your spouse. You do have some leeway in negotiating the way the assets will be divided, if your spouse agrees with the plan. (For related reading, see: Divorcing? The Right Way to Split Retirement Plans.)

3. A Qualified Domestic Relations Order Finalizes the Split

In addition to obtaining a properly completed divorce decree, your lawyer—or an expert retained by your lawyer—must fill out and submit a qualified domestic relations order regarding your retirement account. This document indicates that the account must be split according to the divorce order.

Upon approval by the judge and account administrators, your name will be added on the 401(k) as an additional payee. Since this document finalizes the agreements made prior to it, it must be filed with the court to confirm and enact the distribution plan.

Final Thoughts

With the above steps, you should be able to claim the retirement assets during the divorce that are owed to you. Taking the time to appropriately navigate through the distribution of 401(k) plans that were established during your marriage will help protect your financial future. To avoid serious financial repercussions at the finalization of your divorce, you can work with a trusted advisor. Then you will be sure you have completed each vital step.

Find this information helpful? Share 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 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.

 

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.

Feb 28, 2017

This article was originally published on Nerdwallet. See the original article here.

By Shawn Leamon

Learn more about Shawn on NerdWallet’s Ask an Advisor

The marital home is many couples’ most valuable asset, so deciding what to do with it during divorce can be difficult. You and your soon-to-be ex have two basic options: sell the home, or one of you stays in it. If you stay, there are two ways to handle the mortgage.

Each option has pros and cons, so you’ll have to weigh what’s right for you carefully.

Sell the home and pay off the mortgage

If you sell your home and pay off your mortgage, you can put both behind you. You can also use the profits to pay down other shared debts. However, if your home appreciated substantially while you owned it, you might owe capital gains taxes on the proceeds.

And depending on the state of your local housing market, you might not be able to sell your home for a profit. If you still owe a balance on your mortgage after the sale, you and your soon-to-be ex-spouse will need to decide how to best pay it off, unless the bank approves a request to release you from liability.

» MORE: How to sell your house

One spouse keeps the home

Perhaps you want to retain some sense of normalcy for your kids, or you have an underwater mortgage. If selling your home isn’t the ideal solution, one of you might want to take it over, along with the mortgage payments. Here, you (or your soon-to-be ex) have two ways to approach this choice.

REFINANCE

If you refinance the mortgage, the new home loan will be in your name only with new terms based on your creditworthiness alone. The interest rate and monthly payments on a refinance could become more expensive. Your ex might need to sign a “quitclaim deed,” which would remove his or her property rights.

KEEP THE MORTGAGE

You can also try to assume the existing mortgage without refinancing. In other words, you remove your ex’s name but keep the same loan terms. If you go this route, the lender will still need to determine your individual creditworthiness.

In this case you would also need a quitclaim deed; otherwise your ex-spouse would still have rights to the home. For instance, in the event of the sale, he or she would be entitled to a portion of the proceeds. More importantly, as a practical matter, almost no bank would allow one person to assume a mortgage without also having sole ownership of the home.

The ease with which this can be done varies. Sometimes it can be done for a few hundred dollars. In some cases, such as with expensive homes in restrictive condo buildings, it can cost tens of thousands of dollars.

Know your options

It can be tough to keep a clear head during this emotional, tumultuous time, but you should still be making rational decisions about your finances. Understanding your options can help you and your soon-to-be ex-spouse make the right financial decisions.

Shawn Leamon is the host of the “Divorce and Your Money” podcast and managing partner of LaGrande Global, with offices in Dallas, New York and Hanover, New Hampshire.

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