Info

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.
RSS Feed Subscribe in Apple Podcasts
2019
November
October
September
August
July
June
May
April
March
February
January


2018
December
November
October
September
August
July
June
May
April
March
February
January


2017
December
November
October
September
August
July
June
May
April
March
February
January


All Episodes
Archives
Now displaying: 2017
Feb 23, 2017

During your divorce, you may find the discovery process to be probing and invasive. Entering the process prepared with realistic expectations can be comforting and give you some semblance of control throughout the process. Be aware that the discovery process is not designed to make the turmoil of divorce more painful for you on a personal level. It is intended to allow your attorney to be prepared for whatever may come next—whether that means a trial or settlement negotiations.

The discovery process provides you with proof and evidence in situations where there are contested issues. Discovery allows spouses to request information from one another and additional parties throughout the divorce process. It can also be used to determine assets, income, and debts among other things. These can be critical to help put together a realistic picture for your trial or settlement negotiations.

What do you need to know to make your discovery process as painless as possible? Here are three keys to ensuring that you have a successful discovery process:

Discovery becomes necessary when communication is not clear.

Divorce can cloud communication when emotions are running high. This lack of communication can make the discovery process necessary, allowing attorneys to handle what you and your spouse are unable to communicate to one another.

When headed for trial, the discovery process is particularly imperative to assist the attorney in preparing for various arguments, situations, and accusations that the opposing counsel could present. It allows them to put together a comprehensive picture of all your income, assets, and expenses to see the status of your current finances.

The discovery process can give you a clearer financial picture, allowing you to make wise decisions for the future. Knowing where you and your spouse stand financially allows you to think ahead and get what you are entitled to during your settlement negotiations or trial.

Know what you can ask for during discovery.

The discovery process typically entails four major types of documentation that attorneys can request from your spouse or other parties. Understanding what those documents are can help you and your attorney construct a better case.

  • Interrogatory: This type of document lists questions that require your spouse to answer with facts regarding their interpretation of specific events. Your attorney could use a standard form with routine questions, or they may create unique questions that pertain to your particular situation. Be aware that the number of questions that you can ask during this process is limited.
  • Requests for reproduction: In a request for reproduction, both spouses must provide access to documents pertaining to contested issues in the divorce case. This could include tax returns, income statements, bank statements, receipts, photographs, and more.
  • Request for admission: A request for admission asks you or your spouse to admit or deny facts relating to your divorce. Unlike an interrogatory that allows them to answer open-ended questions, a request for admission is more like a “yes” or “no” answer.
  • Deposition: Depositions are more formal than interrogatories, involving a sworn statement transcribed by a court reporter. These scripts count as evidence during your trial, if necessary. This type of situation can also give your attorney an opportunity to see your spouse on the stand before a trial.

Begin to consider what documentation you can provide that would improve your case. What documents could you request from your spouse, or what questions could you ask that would get to the bottom of things? In some situations, you may want to consider requesting photographs that prove adultery, tape recordings, tax returns, or bank statements. Knowing what is available can help you build a better case.

Making a list of the items you would like to request in advance could be helpful in saving your attorney time. The more time you can save your attorney, the more money you can save on your final bill.

You can assist your attorney with discovery.

Attorneys should be willing to allow you to participate in the discovery process, which can mean anything from checking over interrogatories to making a list of useful documents in the request for reproduction. Your assistance can help make the facts clearer to quickly get available information. A clearer idea of the big picture is especially helpful if you and your attorney already know that a trial is imminent.

You should be able to help your attorney pinpoint specific areas that they will need to focus on during a trial or settlement negotiation, if necessary. Items should not be included merely to embarrass or spite your spouse. They should be facts and situations that are critical to the core contested issues in your trial.

Assisting your attorney during the discovery process is another way that you can save them time, and ultimately, save yourself money.

Discovering the Facts

The discovery process can feel incredibly invasive when you are involved in a grueling and emotionally taxing divorce. Providing necessary information when requested allows attorneys to create better cases. They can help you get a clearer picture of your marital financial status, which affects your soon to be single financial status as well.

Preparing adequately for the discovery process can assist you in obtaining all that you are entitled to receive. The discovery process can give you more security for your financial future. Knowing what to expect and how you can offer your own assistance to your attorney gives you an opportunity to save money in the present as well.

The discovery process only has to be as painful as you allow it to be. By entering the process prepared, you can feel more stable, emotionally grounded, and peaceful during this time.

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 16, 2017

When most people picture the arduous divorce process, it is seldom imagined without a sharp-dressed attorney in a courtroom. What many people do not consider is that they have ways to get divorced without an attorney, including doing it on your own. A do-it-yourself divorce can be a cost-effective method for some, for example, if you are able to avoid fighting over major issues and come to agreements with your spouse in advance.

A do-it-yourself divorce is not appropriate for every circumstance, as it does have risks. It is only recommended when your divorce is relatively amicable with few complicated financial issues. You and your spouse should agree on children and custody issues. Without a doubt, no abuse, bullying, or mental illness should be involved if you plan to make a do-it-yourself divorce work.

Interested in what it takes to stay out of court or even a lawyer’s office altogether? Here are three ways you can make a do-it-yourself divorce work for you:

1) Learn the local rules for divorce in your area.

Each state has its own set of rules and guidelines, some of which can even be dependent on the particular county where you live. Many individuals turn to online sites that tout legal advice and suggestions, including the popular Legal Zoom and Nolo. Unfortunately, these avenues often cannot and do not account for specific state rules involved in a divorce.

You need to check specifically with your state laws and other country resources to determine what is required and when. These resources can help you decide if you and your spouse need to file for separation, what specific paperwork needs to be filed, and when and where to file it. Contacting the courthouse clerk may put you on the path to finding the right resources for your situation. General questions can often be answered by the resources they have available or through a family court website.

Educating yourself on the proper rules and finding the right resources in the beginning can prevent you from being ensnared in red tape. Without a clear direction in mind for where you are headed, you could end up filing the wrong paperwork at the wrong time, effectively lengthening the time it takes for your divorce to be finalized.

2) Understand the intricacies of dividing assets.

Misconceptions regarding property division in the dissolution of a marriage tend to lead people astray. You may not want to trust conventional wisdom or even the advice of a friend. Splitting up your marital assets can be tricky, as not all states divide property straight down the middle between two spouses.

If you are unsure of the laws in your county or state, you could be getting less than what you are entitled to receive. In certain situations, one spouse may need more finances than the other, rendering them eligible for a greater share in the divorce settlement. A division of 60/40 or an even greater spread could be necessary depending on your unique circumstances.

Dividing property and marital assets is a complicated subject to tackle. Divorces that involve children and custody agreements, alimony, or more complicated financial situations, such as owning many investments or divvying up large retirement savings accounts, may be better left to an attorney. When things become messy and complicated with finances and children, you could be putting your financial future at risk by working through the situation imperfectly with a do-it-yourself divorce.

When you pursue a DIY divorce, you should know that splitting your assets evenly might not be the right move for you. You will need to consider the bigger picture: what do you need not just in the coming months but ten years from now? Your financial future can be made more secure by receiving all that you are entitled to during the divorce settlement, helping you to avoid regrets later on down the road.

3) Consider hiring other professionals to help you work through the process.

Healthy and open communication with your soon to be ex is a necessary component to a successful do-it-yourself divorce. When you cannot speak amicably with one another, the end result might be a less than ideal settlement for you. In the midst of the frustrating situation, you may agree to a settlement that is less than you deserve simply because you want to move on with the rest of your life.

Consider bringing in professionals (other than an attorney) to assist you with this part of the process. You can hire a mediator to help both of you with negotiating and discussing your settlement in a productive and healthier manner. A mediator is often an attorney, a retired judge, or some other trained professional. This person may also be able to help you develop a clearer settlement and give you an idea of what you could be entitled to receive. You are less likely to be bullied into signing an agreement you are unsatisfied with when you have a more neutral environment for productive conversations.

You may also want to consider hiring a Certified Divorce Financial Analyst (CDFA). These professionals can help you understand the financial intricacies of dividing your assets. They are trained professionals who work with you to ensure that you understand the long-term implications of a particular settlement in terms of your financial future and security.

Communicating privately with a spouse in an attempt to divide your property and work through your assets can lead you to agree to an unfavorable settlement. If you cannot communicate with one another productively, you will be putting your financial future at risk. In these situations, you should consider bringing in professionals to make your do-it-yourself divorce easier, less stressful, and more successful. Other professionals can help facilitate those conversations for less cost than an attorney and with a higher degree of specialty regarding negotiations and mediation.

When Do-It-Yourself Doesn’t Work

What can you do if you need to divorce on a dime but you are faced with more complicated issues that do not lend themselves well to a completely do-it-yourself divorce? When hiring a handful of additional professionals does not seem to be enough, you can also consider hiring an attorney for “unbundled” legal services.

Unbundled legal services allow you to purchase the time, expertise, and advice of an attorney without paying them to manage your entire divorce. If you feel comfortable enough filing and drafting your own paperwork, you have the freedom to do so without handing over a check to your attorney. When all you need is some advice to deal with trickier situations, including alimony, child support, or custody agreements, you may want to seek an attorney who offers this service. By only paying for what you need, you will still be saving a small fortune over a divorce that is handled entirely by an attorney.

Remember that even in the midst of a do-it-yourself divorce, you can still have professionals join your team for assistance. You can find those who are highly trained in the areas where you need assistance and often for less cost than an attorney. Work hard to educate yourself about state laws and regulations for your area so that you can manage your divorce as much as possible on your own. It is easily the most cost-effective way to handle your imminent divorce, but you must be prepared for the next steps to secure your financial future.

Find this information helpful? Please share it with someone else who needs it.

Shawn Leamon, MBA and Certified Divorce Financial Analyst, is the host of the Divorce and Your Money Show, the #1 show on iTunes that discusses personal finance issues in divorce. He is also author of Divorce and Your Money: The No-Nonsense Guide, available on Amazon. Learn more at www.divorceandyourmoney.com.

Disclaimer: Divorce and Your Money and its affiliates do not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances

Feb 9, 2017

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.

(1) Incorrect paperwork 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 a bullying 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.

Find this information helpful? Please share it with someone else who needs it.

Shawn Leamon, MBA and Certified Divorce Financial Analyst, is the host of the Divorce and Your Money Show, the #1 show on iTunes that discusses personal finance issues in divorce. He is also author of Divorce and Your Money: The No-Nonsense Guide, available on Amazon. Learn more at www.divorceandyourmoney.com.

Disclaimer: Divorce and Your Money and its affiliates do not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.

Feb 2, 2017

This was originally published on Divorce and Your Money here

Why You Must Read This Guide in 2017 if You’re Getting Divorced

Whether you oversaw family finances while married or this is your first time looking at taxes, this guide will help you. Divorce is complicated, and taxes are especially complicated. You need to pay special attention to taxes in the years you are going through divorce and the year you are officially single. Making a mistake with your taxes during the divorce process can affect you for decades and perhaps cost tens of thousands of dollars or more. This guide will help you easily navigate the complex elements of taxes during divorce.
 
In Your Easy 2017 Guide to Taxes in Divorce, you will learn the most important tax topics to consider during divorce. While taxes are never a fun subject, they are necessary, and you will receive reliable information that you need. In fact, the Internal Revenue Service (IRS) has various “publications” that provide detailed information on tax issues. IRS Publication 504, Divorced or Separated Individuals is a 28-page booklet about tax issues in divorce. If you love studying and reading about taxes, you can check it out and skip this guide, but I have read Publication 504 for you. I’m only going to give you the best parts in an easy-to-understand format.
 
We will cover four major topics: 
1) What filing status do you choose when you are getting divorced?
2) Paying or Receiving Spousal Support? Avoid these traps.
3) Child support is easy from a tax perspective.
4) Five important tax tips when negotiating your divorce settlement.
 
A quick disclaimer: I am not an accountant or an attorney. I’m a Certified Divorce Financial Analyst. I cannot provide tax or legal advice, and you need to consult experts about your specific case. Taxes and laws vary by state, and everyone’s situation is different. While this guide will help you understand the major issues, be sure to consult your own experts.
 
When you think about personal taxes, we are going to focus on Form 1040, which is the U.S. Individual Income Tax Return. Give it a quick review. It’s short and quite simple . . . until you start filling out each line of the form. We’re going to cover a few high-level issues related to Form 1040 that are particularly relevant as you’re getting divorced starting with “Filing Status.”
 
1) What Filing Status do you choose when you are getting divorced?Form 1040 provides five options:
•   Married filing jointly
•   Married filing separately
•   Head of household
•   Single
•   Qualifying widower
 
Except for “qualifying widower,” which is a special situation that is not related to divorce, we will go through each of these options in more depth, as your Filing Status helps determine how much tax you must pay on your income.  This is a very important section that you need to understand. Even though it’s just a quick checkbox, what you select affects how much and what tax deductions, exemptions, and credits you will receive—potentially for many years to come. (For our purposes, you don’t need to know the difference between deductions, exemptions, and credits, but you should know that the more you have, the less tax you will pay.)
 
Your Filing Status is mostly determined on December 31 of the tax year. If you were officially divorced in March or November 2016, meaning that a judge signed your final divorce decree, it means you were divorced for the whole year. Legal separation counts as divorce for our purposes as well but only if your state recognizes it. 
 
Filing Status Options
If on December 31 of the tax year you are:
 
Married
Married Filing Jointly
Married Filing Separately
Head of Household
 
Divorced or Legally Separated
Head of Household
Single
 
Married Filing Jointly
For most people going through divorce, this is the best option if you want to minimize your annual tax bill. When you file your taxes as married filing jointly, both you and your spouse will file a joint tax return. It will include each of your incomes, exemptions, deductions, and credits, and you will both sign the same return.
 
While Married Filing Jointly usually provides the most tax benefits, the major downside is that you are legally liable for what appears on the tax return. If you owe taxes, even if you did not earn the income, you are equally responsible for those taxes with your spouse. If tax penalties or other issues are involved, you are liable because you signed a joint return. You should be careful in the event it is later discovered there was an issue with the tax return you signed. This applies even after the divorce is over and even if the divorce decree states otherwise. If it’s later discovered there was an issue with a joint tax return, you are liable since your name is on the document. 
 
It is not all bad news, however, because if you do find yourself in a situation where you are unexpectedly liable for something on a joint tax return, you have some options if you look for information from the IRS regarding innocent spouse relief, separation of liability, or equitable relief.
 
Conclusion: For Married Filing Jointly, even though you will usually end up paying less in taxes, if you suspect tax issues or potential fraud may be involved, you may want to consider Married Filing Separately. 
 
Married Filing Separately
When you are still legally married, you and your spouse can file separate tax returns by selecting Married Filing Separately. If you select this option, from a tax perspective, you are only considering your individual income, exemptions, deductions, and credits. This option is usually more expensive from a tax perspective because many tax benefits are related to marriage. The IRS presents a set of warnings if you choose Married Filing Separately:
 
1. Your tax rate generally is higher than it would be on a joint return.
2. Your exemption amount for figuring the alternative minimum tax is half of that allowed on a joint return.
3. You can’t take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000 on a joint return). If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. See Pub. 503 for more information.
4. You can’t take the earned income credit.
5. You can’t take the exclusion or credit for adoption expenses in most cases.
6. You can’t take the credit for higher education expenses (American opportunity and lifetime learning credits), the deduction for student loan interest, or the tuition and fees deduction.
7. You can’t exclude the interest from qualified savings bonds that you used for higher education expenses.
8. If you lived with your spouse at any time during the tax year:
    a. You can’t claim the credit for the elderly or the disabled, and
    b. You will have to include in income a higher percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.
9. The following credits and deductions are reduced at income levels that are half those for a joint return.
    a. The child tax credit.
    b. The retirement savings contributions credit.
    c. The deduction for personal exemptions.
    d. Itemized deductions.
10. Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).
11. If your spouse itemizes deductions, you can’t claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.”
 
As you can see, you will probably face a higher tax bill when you are Married Filing Separately than Married Filing Jointly. So why would you do it? It all boils down to liability. If your spouse does something suspicious, such as incorrectly filing taxes, hiding money, or is involved in illegal activities, and you sign a joint tax return, it means you are liable for many of those consequences. So even though you may face a higher tax bill, a separate return means that you are only liable for what you put on your own tax return, not what your spouse does. 
 
Head of Household
Filing as Head of Household is an option whether you are married or already divorced and have children. If you are still legally married, however, there is a special set of requirements you must meet here
 
If you have children, filing as Head of Household will lead to the lowest tax bill as opposed to filing as Single. The main requirements for qualifying for Head of Household are 1) you have a child who lives with you more than half the year and 2) you need to have paid more than half the costs of keeping up the home. A full set of rules is provided in Publication 504
 
The benefits of claiming Head of Household status is that you have higher deductions, more credits, and an overall lower tax rate than if you file your taxes as Single. In general, but not always, Head of Household has more benefits than Married Filing Separately. 
 
If you have more than one child, it is possible that both you and your (ex-) spouse can file as Head of Household. You both must meet certain requirements, but it is a possibility.
 
Single
If you don’t have any children or if you cannot claim Head of Household status, you must file as Single, which means you will pay the highest tax rates. As the saying goes, “It is what it is.”
 
2) Paying or Receiving Spousal Support? Avoid these traps.
Spousal support, also called alimony or maintenance, is a payment made to a former spouse as part of a divorce or separation agreement. Spousal support is taxable for the recipient and tax deductible for the payer. If you receive spousal support, that money counts as income to you, and you must pay taxes on it. If you are paying spousal support, those payments are deductible from your income. 
 
Only payments specifically made as part of the divorce or separation agreement are considered alimony for tax purposes, meaning that voluntary or bonus payments are not included.  Temporary spousal support is regarded the same as permanent spousal support from a tax perspective. Certain types of payments do not qualify as spousal support:
•   Child support
•   Noncash payments
•   Money for keeping up 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
 
You can, however, make payments to a third party on behalf of an ex-spouse and qualify for spousal support. For example, payments for such things as 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. 
 
Advanced Tip: Since spousal support is taxable income for the recipient, you can use income from spousal support payments to contribute to retirement accounts. 
 
3) Child Support is easy from a tax perspective.
Child support has different tax rules than spousal support. Child support is not tax deductible for the payer and is not taxable for the recipient. Child support comes from after-tax money. What does that mean in practice? If you are paying child support, it is much more expensive than receiving child support because you do not receive any tax benefits for paying it. If you are receiving child support, it’s a big benefit for you because that money is not taxed. 
 
4) Five important tax tips when negotiating your divorce settlement.
Tip 1: Get your own CPA in the years during and immediately after divorce. 
You need to have your own CPA when you are getting divorced and the year immediately following your divorce. It will cost you a little more money than simply using your spouse’s CPA or software, such as HR Block or TurboTax, but the many complex pitfalls that may occur during divorce can cost you dearly if you’re not careful. What if your spouse makes a mistake in preparing the tax returns? What if your spouse commits fraud? Anything can happen during divorce, and you need your own CPA to help you avoid major issues.
 
Taxes are complicated, and having a CPA to help you immediately following your divorce can ensure that you save money in tax payments. You need to be aware of several tax breaks and changes during divorce, and it’s better to complete things correctly than to find out years down the line that you have been paying too much!
 
Tip 2: Property transferred as part of the divorce is generally tax free . . .
You should know that most property transferred “incident to divorce” is tax free. Property includes such things as homes, cars, and investment accounts. If transferred as part of the divorce, there is no tax benefit or disadvantage to receiving the assets. For any assets you receive, you need to know the “tax basis” or “cost basis.” This amount is usually the purchase price of the property (though it can get complicated when discussing such assets as homes). If you sell any asset later, the cost basis will be relevant for calculating capital gains. Also note that there is no step up or change in cost basis for assets transferred as part of divorce. 
 
Advanced Tip: Consider getting spousal support paid in a lump sum, as you can avoid counting that money as future income if the money is transferred as part of the property settlement. 
 
But don’t ignore the tax consequences.
If you plan on selling all or part of any property you receive during divorce, you need to understand the tax consequences. Some assets (e.g., stock that has increased in value, retirement accounts, homes) may have very substantial tax consequences if you need the funds. Imagine negotiating for an investment account in divorce worth $1,000, and when you sell it for money you find out after taxes that it’s worth only $500? It’s a common situation that many people forget about during divorce. Consider getting help from your CPA or Certified Divorce Financial Analyst (CDFA) to help you analyze the tax impact of selling your property. 
 
Tip 3: Selling your home while married can save $250,000 in taxes.
If you plan to sell your home in the near future, you can take advantage of substantial tax benefits by selling the house while still married. You can exclude the first $500,000 of capital gains taxes (the tax you pay when property increases in value) on your main residence when you are still married. If you wait until you are divorced, that exclusion reduces to $250,000, so you could end up paying much more in taxes than necessary. 
 
Tip 4: Don’t forget the tax refund.
Are you and your soon to be ex-spouse expecting a tax refund? Don’t forget to negotiate who keeps the refund. Don’t let your spouse steal it from you, and you should not steal it from her either. 
 
Tip 5: Child-related tax benefits are very valuable. 
If you have children, you should consider negotiating for various child-related tax benefits, such as the Standard Deduction, Dependency Exemption, Child Credit, and American Opportunity Credit. If you have primary custody of the children, you will have an easier time receiving child-related tax benefits. You can negotiate as part of your settlement to keep many child-related tax benefits even if you don’t have primary custody. Depending upon your circumstances, this can be a valuable benefit that most people forget about.
 
Final thoughts
Taxes are usually one of the last items on people’s lists when it comes to divorce, even though it requires just as much time and attention as every other element in the divorce process. Failure to properly consider your options with taxes can lead to tens of thousands of dollars in expenses and years of regret. Make sure you make the right tax decisions for your situation to help protect your financial interests and future. 
 
For further reading, please consider the following IRS Publications available on https://www.irs.gov.
 
17—Your Federal Income Tax
504—Divorced or Separated Individuals
521—Moving Expenses
523—Selling Your Home
590—Individual Retirement Arrangements

Find this information helpful? Please share it with someone else who needs it.

Shawn Leamon, MBA and Certified Divorce Financial Analyst, is the host of the Divorce and Your Money Show, the #1 show on iTunes that discusses personal finance issues in divorce. He is also author of Divorce and Your Money: The No-Nonsense Guide, available on Amazon. Learn more at www.divorceandyourmoney.com.

Disclaimer: Divorce and Your Money and its affiliates do not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.

Feb 1, 2017

Why You Must Read This Guide in 2017 if You’re Getting Divorced

Whether you oversaw family finances while married or this is your first time looking at taxes, this guide will help you. Divorce is complicated, and taxes are especially complicated. You need to pay special attention to taxes in the years you are going through divorce and the year you are officially single. Making a mistake with your taxes during the divorce process can affect you for decades and perhaps cost tens of thousands of dollars or more. This guide will help you easily navigate the complex elements of taxes during divorce.
 
In Your Easy 2017 Guide to Taxes in Divorce, you will learn the most important tax topics to consider during divorce. While taxes are never a fun subject, they are necessary, and you will receive reliable information that you need. In fact, the Internal Revenue Service (IRS) has various “publications” that provide detailed information on tax issues. IRS Publication 504, Divorced or Separated Individuals is a 28-page booklet about tax issues in divorce. If you love studying and reading about taxes, you can check it out and skip this guide, but I have read Publication 504 for you. I’m only going to give you the best parts in an easy-to-understand format.
 
We will cover four major topics: 
1) What filing status do you choose when you are getting divorced?
2) Paying or Receiving Spousal Support? Avoid these traps.
3) Child support is easy from a tax perspective.
4) Five important tax tips when negotiating your divorce settlement.
 

A quick disclaimer: I am not an accountant or an attorney. I’m a Certified Divorce Financial Analyst. I cannot provide tax or legal advice, and you need to consult experts about your specific case. Taxes and laws vary by state, and everyone’s situation is different. While this guide will help you understand the major issues, be sure to consult your own experts.
 
When you think about personal taxes, we are going to focus on Form 1040, which is the U.S. Individual Income Tax Return. Give it a quick review. It’s short and quite simple . . . until you start filling out each line of the form. We’re going to cover a few high-level issues related to Form 1040 that are particularly relevant as you’re getting divorced starting with “Filing Status.”

1) What Filing Status do you choose when you are getting divorced?

Form 1040 provides five options:
•   Married filing jointly
•   Married filing separately
•   Head of household
•   Single
•   Qualifying widower
 

Except for “qualifying widower,” which is a special situation that is not related to divorce, we will go through each of these options in more depth, as your Filing Status helps determine how much tax you must pay on your income.  This is a very important section that you need to understand. Even though it’s just a quick checkbox, what you select affects how much and what tax deductions, exemptions, and credits you will receive—potentially for many years to come. (For our purposes, you don’t need to know the difference between deductions, exemptions, and credits, but you should know that the more you have, the less tax you will pay.)
 
Your Filing Status is mostly determined on December 31 of the tax year. If you were officially divorced in March or November 2016, meaning that a judge signed your final divorce decree, it means you were divorced for the whole year. Legal separation counts as divorce for our purposes as well but only if your state recognizes it. 

Filing Status Options

If on December 31 of the tax year you are:

Married

Married Filing Jointly
Married Filing Separately
Head of Household

Divorced or Legally Separated
Head of Household
Single

Married Filing Jointly

For most people going through divorce, this is the best option if you want to minimize your annual tax bill. When you file your taxes as married filing jointly, both you and your spouse will file a joint tax return. It will include each of your incomes, exemptions, deductions, and credits, and you will both sign the same return.
 
While Married Filing Jointly usually provides the most tax benefits, the major downside is that you are legally liable for what appears on the tax return. If you owe taxes, even if you did not earn the income, you are equally responsible for those taxes with your spouse. If tax penalties or other issues are involved, you are liable because you signed a joint return. You should be careful in the event it is later discovered there was an issue with the tax return you signed. This applies even after the divorce is over and even if the divorce decree states otherwise. If it’s later discovered there was an issue with a joint tax return, you are liable since your name is on the document. 
 
It is not all bad news, however, because if you do find yourself in a situation where you are unexpectedly liable for something on a joint tax return, you have some options if you look for information from the IRS regarding innocent spouse relief, separation of liability, or equitable relief.
 
Conclusion: For Married Filing Jointly, even though you will usually end up paying less in taxes, if you suspect tax issues or potential fraud may be involved, you may want to consider Married Filing Separately. 

Married Filing Separately

When you are still legally married, you and your spouse can file separate tax returns by selecting Married Filing Separately. If you select this option, from a tax perspective, you are only considering your individual income, exemptions, deductions, and credits. This option is usually more expensive from a tax perspective because many tax benefits are related to marriage. The IRS presents a set of warnings if you choose Married Filing Separately:
 
1. Your tax rate generally is higher than it would be on a joint return.
2. Your exemption amount for figuring the alternative minimum tax is half of that allowed on a joint return.
3. You can’t take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000 on a joint return). If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. See Pub. 503 for more information.
4. You can’t take the earned income credit.
5. You can’t take the exclusion or credit for adoption expenses in most cases.
6. You can’t take the credit for higher education expenses (American opportunity and lifetime learning credits), the deduction for student loan interest, or the tuition and fees deduction.
7. You can’t exclude the interest from qualified savings bonds that you used for higher education expenses.
8. If you lived with your spouse at any time during the tax year:
    a. You can’t claim the credit for the elderly or the disabled, and
    b. You will have to include in income a higher percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.
9. The following credits and deductions are reduced at income levels that are half those for a joint return.
    a. The child tax credit.
    b. The retirement savings contributions credit.
    c. The deduction for personal exemptions.
    d. Itemized deductions.
10. Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).
11. If your spouse itemizes deductions, you can’t claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.”
 
As you can see, you will probably face a higher tax bill when you are Married Filing Separately than Married Filing Jointly. So why would you do it? It all boils down to liability. If your spouse does something suspicious, such as incorrectly filing taxes, hiding money, or is involved in illegal activities, and you sign a joint tax return, it means you are liable for many of those consequences. So even though you may face a higher tax bill, a separate return means that you are only liable for what you put on your own tax return, not what your spouse does. 

Head of Household

Filing as Head of Household is an option whether you are married or already divorced and have children. If you are still legally married, however, there is a special set of requirements you must meet here
 
If you have children, filing as Head of Household will lead to the lowest tax bill as opposed to filing as Single. The main requirements for qualifying for Head of Household are 1) you have a child who lives with you more than half the year and 2) you need to have paid more than half the costs of keeping up the home. A full set of rules is provided in Publication 504
 
The benefits of claiming Head of Household status is that you have higher deductions, more credits, and an overall lower tax rate than if you file your taxes as Single. In general, but not always, Head of Household has more benefits than Married Filing Separately. 
 
If you have more than one child, it is possible that both you and your (ex-) spouse can file as Head of Household. You both must meet certain requirements, but it is a possibility.

Single

If you don’t have any children or if you cannot claim Head of Household status, you must file as Single, which means you will pay the highest tax rates. As the saying goes, “It is what it is.”

2) Paying or Receiving Spousal Support? Avoid these traps.

Spousal support, also called alimony or maintenance, is a payment made to a former spouse as part of a divorce or separation agreement. Spousal support is taxable for the recipient and tax deductible for the payer. If you receive spousal support, that money counts as income to you, and you must pay taxes on it. If you are paying spousal support, those payments are deductible from your income. 
 
Only payments specifically made as part of the divorce or separation agreement are considered alimony for tax purposes, meaning that voluntary or bonus payments are not included.  Temporary spousal support is regarded the same as permanent spousal support from a tax perspective. Certain types of payments do not qualify as spousal support:
•   Child support
•   Noncash payments
•   Money for keeping up 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
 
You can, however, make payments to a third party on behalf of an ex-spouse and qualify for spousal support. For example, payments for such things as 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. 
 
Advanced Tip: Since spousal support is taxable income for the recipient, you can use income from spousal support payments to contribute to retirement accounts. 

3) Child Support is easy from a tax perspective.

Child support has different tax rules than spousal support. Child support is not tax deductible for the payer and is not taxable for the recipient. Child support comes from after-tax money. What does that mean in practice? If you are paying child support, it is much more expensive than receiving child support because you do not receive any tax benefits for paying it. If you are receiving child support, it’s a big benefit for you because that money is not taxed. 

4) Five important tax tips when negotiating your divorce settlement.

Tip 1: Get your own CPA in the years during and immediately after divorce. 

You need to have your own CPA when you are getting divorced and the year immediately following your divorce. It will cost you a little more money than simply using your spouse’s CPA or software, such as HR Block or TurboTax, but the many complex pitfalls that may occur during divorce can cost you dearly if you’re not careful. What if your spouse makes a mistake in preparing the tax returns? What if your spouse commits fraud? Anything can happen during divorce, and you need your own CPA to help you avoid major issues.
 
Taxes are complicated, and having a CPA to help you immediately following your divorce can ensure that you save money in tax payments. You need to be aware of several tax breaks and changes during divorce, and it’s better to complete things correctly than to find out years down the line that you have been paying too much!

Tip 2: Property transferred as part of the divorce is generally tax free . . .

You should know that most property transferred “incident to divorce” is tax free. Property includes such things as homes, cars, and investment accounts. If transferred as part of the divorce, there is no tax benefit or disadvantage to receiving the assets. For any assets you receive, you need to know the “tax basis” or “cost basis.” This amount is usually the purchase price of the property (though it can get complicated when discussing such assets as homes). If you sell any asset later, the cost basis will be relevant for calculating capital gains. Also note that there is no step up or change in cost basis for assets transferred as part of divorce. 
 
Advanced Tip: Consider getting spousal support paid in a lump sum, as you can avoid counting that money as future income if the money is transferred as part of the property settlement. 
 
But don’t ignore the tax consequences.
If you plan on selling all or part of any property you receive during divorce, you need to understand the tax consequences. Some assets (e.g., stock that has increased in value, retirement accounts, homes) may have very substantial tax consequences if you need the funds. Imagine negotiating for an investment account in divorce worth $1,000, and when you sell it for money you find out after taxes that it’s worth only $500? It’s a common situation that many people forget about during divorce. Consider getting help from your CPA or Certified Divorce Financial Analyst (CDFA) to help you analyze the tax impact of selling your property. 

Tip 3: Selling your home while married can save $250,000 in taxes.

If you plan to sell your home in the near future, you can take advantage of substantial tax benefits by selling the house while still married. You can exclude the first $500,000 of capital gains taxes (the tax you pay when property increases in value) on your main residence when you are still married. If you wait until you are divorced, that exclusion reduces to $250,000, so you could end up paying much more in taxes than necessary. 

Tip 4: Don’t forget the tax refund.

Are you and your soon to be ex-spouse expecting a tax refund? Don’t forget to negotiate who keeps the refund. Don’t let your spouse steal it from you, and you should not steal it from her either. 

Tip 5: Child-related tax benefits are very valuable. 

If you have children, you should consider negotiating for various child-related tax benefits, such as the Standard Deduction, Dependency Exemption, Child Credit, and American Opportunity Credit. If you have primary custody of the children, you will have an easier time receiving child-related tax benefits. You can negotiate as part of your settlement to keep many child-related tax benefits even if you don’t have primary custody. Depending upon your circumstances, this can be a valuable benefit that most people forget about.

Final thoughts

Taxes are usually one of the last items on people’s lists when it comes to divorce, even though it requires just as much time and attention as every other element in the divorce process. Failure to properly consider your options with taxes can lead to tens of thousands of dollars in expenses and years of regret. Make sure you make the right tax decisions for your situation to help protect your financial interests and future. 
 
For further reading, please consider the following IRS Publications available on https://www.irs.gov.
 
17—Your Federal Income Tax
504—Divorced or Separated Individuals
521—Moving Expenses
523—Selling Your Home

Find this information helpful? Please share it with someone else who needs it.

Shawn Leamon, MBA and Certified Divorce Financial Analyst, is the host of the Divorce and Your Money Show, the #1 show on iTunes that discusses personal finance issues in divorce. He is also author of Divorce and Your Money: The No-Nonsense Guide, available on Amazon. Learn more at www.divorceandyourmoney.com.

Disclaimer: Divorce and Your Money and its affiliates do not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.

Want more free divorce advice and tips?

Subscribe to the Divorce and Your Money Podcast, trusted by over 50,000 people across the United States.

Jan 30, 2017

“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 of Cordell & Cordell, the largest family law firm in the United States

Your divorce lawyer is essential for advising you on the legal aspects of your divorce. However, most divorce layers 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.

I am going to show you the five most common financial mistakes your attorney could make when crafting a divorce settlement—and what you can do to protect yourself.

1) Failing to navigate steep tax consequences

When you think about finances in divorce, it is not important what you get, but what you get to keep. There are tax consequences to almost every major financial decision. However, while divorce attorneys are great at helping you negotiate a settlement, they often fail to account for the tax implications.

Retirement accounts (such as IRAs, 401ks, and pension plans) have different rules when it comes to withdrawing money from the account when you need it. You may think an account is worth $100, but after you pay all the taxes and penalties, you only have $50 left.

If your attorney does not help you navigate the tax consequences of every potential asset and account, you can find yourself agreeing to a settlement that is not fair, and does not make financial sense later.

What if you plan to sell your marital home after divorcing? Many divorce attorneys fail to advise a way to save $250,000 in capital gains taxes: selling your home while you are still legally married. That information could mean a lot more money in your pocket after the divorce is over.

How should you file your income taxes? There are tax traps regarding spousal and child support, which marital status you choose, and how you handle a tax refund when you are getting divorced. A wrong decision while getting divorced can cost you for the rest of your life.

2) Mishandling 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 went to law school to make the proper investment and financial decisions for you? Numerous times, I have seen even the highest-profile family law attorneys make easily preventable mistakes when dividing investments during divorce.

Let us look at a few basic examples:

Mutual Funds: Mutual funds are common, but they come with risks you 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 investments associated with it? If so, 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.

Stocks: If you are thinking about keeping an individual stock, do you know its cost basis (which has a huge impact on calculating future taxes if you sell it)? If the stock is a big portion of your overall assets, do you know how to “hedge" it or diversify the risk? There are some incredibly complex considerations regarding stocks, and many books are dedicated to this subject alone. Taking the word of your family law attorney (or worse yet, your spouse) without getting specialized help could be an expensive mistake.

Alternative Investments: Are 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 involve periods of up to 10 years in which you cannot sell them. Therefore, if you need the money, you could find yourself in a tough financial position.

3) Forgetting to look 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 occurrence 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, which is secret money that you may be entitled to receive. Your spouse may do things like 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.

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

4) Neglecting to secure support payments with insurance

What happens if your spouse unexpectedly stops making child or spousal support payments because they die or become disabled? Support payments may be an essential income source for you, and a sudden loss of payments 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.

5) Overlooking a post-divorce financial plan

One day, your divorce will be over—even if it does not feel like it now. Before you sign the settlement papers, are you sure 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 you made a major mistake later down the line.

Divorce attorneys generally do not prepare long-term financial plans for you. All too often, I see people like you put in this position: Just a few years after the divorce, they are scrambling for money or considering bankruptcy.

You may regret having chosen to keep that house, or choosing a bigger retirement account (versus cash in a bank account today). You do not want to end up in a position where you are asset-rich but cash-poor. Most of the time, divorcesettlements are tough to change, so you must be sure you can afford the settlement when you sign on the dotted line.

Keep your attorney from f***ing up your settlement — and your life

Get specialized help. You are paying your lawyer for advice about the law. Be sure to have someone help you handle the complex financial issues during divorce, such as a Certified Divorce Financial Analyst (CDFA). CDFAs are trained by theInstitute for Divorce Financial Analysts.

Their mission is to "assist the client and his or her attorney to understand how the decisions he or she makes today will impact the client’s financial future.” Some CDFAs operate in general regions, and others like me help people across the country.

Fortunately, there are some great FREE resources out there. For instance, I host the Divorce and Your Money Show, which is the #1 podcast in the United States that discusses the financial issues in divorce.

You can also check out these courses:

By doing your homework and not being afraid to get help, you can successfully navigate your divorce. Then you will end up with the settlement you deserve.

Do not get f***ed.

Find this information helpful? Please share it with someone else who needs it.

Shawn Leamon, MBA and Certified Divorce Financial Analyst, is the host of theDivorce and Your Money Show, the #1 show on iTunes that discusses personal finance issues in divorce. He is also author of Divorce and Your Money: The No-Nonsense Guide, available on Amazon. Learn more atwww.divorceandyourmoney.com.

Disclaimer: Divorce and Your Money and its affiliates do not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.

Jan 26, 2017

Going through a divorce is one of the toughest things that can happen in your life. There are legal issues, financial complications, and of course, intense emotional strains. The process can be made all the more confusing because of poor,  conflicting feedback; you might find this shoddy advice online or hear it from family and friends. Therefore, where do you turn for trustworthy information?

The good news is that you are not alone. There are some reliable blogs and online resources to help you survive the divorce process. As someone who has helped thousands of people get through divorce, I only recommend a handful of blogs. Some of my favorite resources are listed below.

Overall Best Divorce Blog: Huffington Post Divorce

Huffington Post Divorce has the most comprehensive information for people going through a divorce. The blog includes a wide range of interesting topics, including legal issues, co-parenting, and even celebrity issues. There are a wide range of contributors, from individuals (sharing their own experiences and lessons) to experts (e.g., attorneys, therapists, financial analysts, and sex therapists).

The only downside to Huffington Post Divorce is that the amount of information on the site can simply be overwhelming. They have numerous posts every day, and it can be hard to find information about a specific subject. But overall, it has the most complete information related to divorce anywhere online.

Runner-Up for Best Divorce Blog: AvvoStories Divorce

Avvo is a site that provides ratings and reviews for attorneys across the country in various areas of the law. They have a great blog on divorce called AvvoStories, which covers a wide variety of divorce subjects, usually written by former attorneys, authors, and freelance contributors.

Although AvvoStories is not as comprehensive as Huffington Post Divorce, it does focus on some unique, lesser-known subjects, which you will not find articles about anywhere else. For example, AvvoStories discusses divorce concierges and divorce masters. Overall, AvvoStories serves as one-stop shopping for reading, researching, getting answers to questions, and connecting with an attorney.

Best Blog for Divorcing Women: Divorced Girl Smiling by Jackie Pilossoph

In the Divorced Girl Smiling, Jackie Pilossoph shares her experiences and offers advice since her divorce. Her recently redesigned blog covers a wide variety of topics, including separating, co-parenting, and dating after divorce. Pilossoph is also the author of the highly entertaining novel Smiling and the creator ofDivorced Guy Grinning, another great blog.

I recommend Divorced Girl Smiling for women looking for practical advice that feels like it is coming from a close friend or peer. The site has a lot of great information, and the writing is both informative and entertaining.

Best Blog for Divorcing Men: Dad’s Divorce by Cordell & Cordell

Cordell & Cordell claims to be “the largest family law firm in the nation focused on men's divorce, child custody, fathers rights, men’s rights, child support and other family law matters.” Their blog provides essential information on the divorce process, child custody issues, child support, property division, and spouse support. They even offer an attorney directory, a variety of divorce guides, and advice about divorce laws in specific states.

This blog is great for men going through contentious divorces. Oftentimes, men feel like divorce laws (especially custody-related ones) are biased in favor of women. As a response, Dad’s Divorce provides very helpful information about protecting men’s interests.

Overall Best Blogs by Divorce Coaches: Moving Past Divorce by Terry Gaspard and Tracy Clifford

This blog is written by Terry Gaspard, MSW, LICSW, and Tracy Clifford, a mother/daughter team who grew up in divorced families. Their mission is to help women make healthy choices in their relationships, and they are authors of the excellent book Daughters of Divorce: Overcome the Legacy of Your Parents' Breakup and Enjoy a Happy, Long-Lasting Relationship.

The blog is geared toward people seeking tools to help cope with the emotional challenges involved during and after divorce. There are also great guest posts from other experts, including Rosalind Sedacca, Lisa Gabardi, and LJ Burke. In addition, the website includes a comprehensive list of recommended books.

I recently interviewed Terry Gaspard on the Divorce and Your Money Show. She was an excellent interviewee; you can listen to the interview here.

Since My Divorce by Mandy Walker

Mandy Walker is a divorce coach who went through a divorce of her own. Her blog provides advice about many facets of divorce, including emotional and legal challenges.

She also has a great Story Catalog, which includes a large collection of stories about men, women, and children who experienced divorces. They offer unique perspectives that are not regularly found on other sites about divorce.

I recently interviewed Mandy Walker on the Divorce and Your Money Show. You can listen to the interview here.

Overall Best Blog for Financial Planning during Divorce: Divorce and Your Money by Shawn Leamon, MBA, CDFA

Shawn started his career as a financial advisor, then branched out into financial planning for divorces. He created “Divorce and Your Money” to help people going through a divorce make smart financial decisions, save money, and protect their assets.

This website is a great resource for financial guidance when facing a divorce. The podcast is free and offers great information on the go, which is a big plus for busy people who do not have time to sit down and read. The blog covers a large range of topics related to financial concerns during divorce.

The site offers resources for everyone going through divorce, as well as coaching for people who want more individual attention (generally for those who have larger assets). He also offers an affordably priced course called Divorce 101: Your Complete Divorce Plan.

(Full Disclosure: The author is affiliated with Divorce and Your Money.)

Runner-Up Blog for Financial Planning during Divorce: Think Financially by Jeff Landers, CDFA

Jeff Landers writes an informative financial blog for women. He is one of the most prolific writers in the divorce industry, is a regular commentator for Forbes, and is the author of several divorce books, including DIVORCE: Think Financially, Not Emotionally® Volume I: What Women Need To Know About Securing Their Financial Future Before, During, and After Divorce (Volume 1).

He also offers consultation services for those with more complex financial issues. If you want information, his books are the best resource.

Is there a blog you love that I missed? Leave a comment below.

Notes: Blogs focused on family law are excluded from this list, as laws vary by state. I have exclusively focused on blogs that help with the emotional and financial elements of divorce.

This post contains affiliate links.

Find this information helpful? Please share it with someone else who needs it.

Shawn Leamon, MBA and Certified Divorce Financial Analyst, is the host of theDivorce and Your Money Show, the #1 show on iTunes that discusses personal finance issues in divorce. He is also author of Divorce and Your Money: The No-Nonsense Guide, available on Amazon. Learn more atwww.divorceandyourmoney.com.

Disclaimer: Divorce and Your Money and its affiliates do not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.

Jan 23, 2017

Surviving Divorce after 50

Divorce is always complicated, but the stakes are even higher when you are getting a so-called “gray divorce.” The divorce rate for people over 50 has doubled over the past decade. And many of them have been married for over 20 years. A big driving force is increasing life expectancy. Today, when you are 50 years old, it is easily conceivable that you will live for another 30, 40, or even 50 years. Even if your relationship with your spouse is decent, do you want another 30 years of the status quo? Or is it time for a change?

Marriages end for all kinds of reasons, including poor behavior, growing apart, boredom, and financial issues. But surviving a divorce after 50 comes with unique challenges:

Retirement Is Coming (or you’re in the thick of it)

Even if you had your retirement under control before you started pursuing a divorce, it is going to look a lot more uncertain after you are facing it. The prospect of losing a large chunk of your savings, perhaps even half of your retirement, can be a daunting realization.

The picture becomes even more complex because retirement assets are some of the most complicated to split during a divorce. Pensions, IRAs, and 401Ks all have different rules and requirements, as well as tax consequences and other complications.

Health Concerns Are at the Forefront

Additional health concerns occur when you are over 50. You may have already experienced them, and others are essential as preventative measures. Your medical expenses have likely increased, and you might even be considering long-term care. To understand what options you will have available to you after the divorce is over, you must be well-informed throughout the process.

You May Be Supporting Adult Children

Your children are probably adults if you are getting divorced later in life. However, they are still an important concern as you proceed through a divorce.

The pain of watching parents split is never easy, no matter how old you are. Your adult children may intellectually understand that all relationships do not last forever, but you must still keep them at the forefront of your concerns. The future of your relationship will depend on it.

In addition, even though your children may be in college or working full-time, you may be accustomed to providing for financial support for them (or your grandchildren). Although divorce may be inevitable, you should realize that every dollar you spend paying attorneys is less support that you may be able to provide your children in the future.

In the coming guide, I am going to walk you through the key issues in a grey divorce, as well as some helpful tips to keep you from making financial mistakes that could hurt you for the rest of your life.

4 Ways to Avoid Devastating Financial Mistakes that Could Derail Your Retirement

1) Choose the Right Method of Divorce

Divorce does not have to be a fight. The traditional litigation method may be the least effective way to split, so you should investigate two alternatives: mediation and collaborative divorce. If you are civil with your spouse, you should seriously consider these methods:

Mediation

Mediation occurs when you hire a neutral third party, such as a retired judge, to help navigate all the issues in your divorce or resolve particular sticking points.  In order for this third part to be the mediator, both you and your spouse have to agree on this person.

You can both still have attorneys help you navigate your wishes and negotiations, but the process is generally less formal and contentious. You, your spouse, the mediator, your attorneys, and any other advisors, such as a Certified Divorce Financial Analyst, sit in a conference room and knock out the key issues.

The downside to mediation is that the outcome is non-binding. If you do not come to a resolution, or if one of you changes your mind later, then the process could be waste of time and money. You will have to do your homework, think about the relationship with your spouse, and really consider if mediation will work for your situation.

Collaborative Divorce

Collaborative divorce is another method to seriously consider. It is structured on the premise that trying to fight and “win” is a poor way to resolve divorce. Collaborative divorce is actually a better idea than trying to sit down and solve problems. You and your spouse will work with a team of collaborative divorce professionals, and come up with a more amicable settlement (that is mutually beneficial).

At the outset of the collaborative divorce process, you, your spouse, your attorneys, and other advisors must commit to this process—in order to come to a resolution. If you do not, you may end up having to go to court. Then your attorneys and advisors have to resign from your case.

The goal is to come up with a peaceful resolution to your divorce without a fight, so there is a strong emphasis on mediation and negotiation.

Litigation

Sometimes you have to litigate the divorce. In other words, you and your spouse hire different attorneys to represent your interests. If you do not come to a settlement out of court, a judge will decide those issues for you.

Although litigation is the most well-known kind of divorce, it is also the most expensive. Quite simply, litigation is a fight. In fact, the cost of litigation is directly proportional to the amount of acrimony you have with your spouse. The process can drag along for years, and oftentimes, the only winner is an attorney.

That said, perhaps you and your spouse do not get along. Or there is abuse or another issue that prevents you from using mediation or collaborative divorce. If so, litigation may be the best option for you.

Fighting is Expensive

There are many advantages to mediation or collaborative divorce, particularly when you are older. These processes are usually cheaper, faster, and less formal than the traditional route of litigation. Perhaps more importantly, using one of the alternative methods can help maintain a better long-term relationship with your soon-to-be ex-spouse and your children. The direct combat of litigation can end up bankrupting you, and it can leave a trail of damaged relationships in its wake.

2) Prepare Financially

Understand Your Current Financial Situation

If you were not previously involved in the family finances, now is the time to understand what has been going on. You should collect your tax returns, payroll stubs, regular bills, bank and investment statements, real estate information, and other documentation to gather a comprehensive snapshot of your current situation and your financial history.

When the divorce is over, you will be living independently, and you will need to take charge of your current finances. [Check out this course Divorce 101: Steps to Take Before Divorce to help you as you plan.]

Create a Post-Divorce Budget

Splitting your current lifestyle in two is difficult, and you need to understand all the costs involved.  In addition to expenses related to the divorce, your existing assets will be split in two—and not necessarily 50/50.

In other words, you incur many new expenses to maintain a home of your own: moving costs, new furniture, a new mortgage or rent payments, and new heating, internet, and electricity bills.  As you think about what your needs will be after the divorce, create a budget. Then you can protect your future and understand your needs. You may realize that the lifestyle you were accustomed to while you were married may look different after your divorce.

Open Individual Accounts

As you move on with your life, you will need your own checking and savings accounts, credit cards, and other financial information. The joint accounts you once had will eventually need to be closed, and you will maintain all the assets with just your name on them. If you need credit (such as a mortgage or car loan), your personal credit history will be the determining factor after the divorce. Start now by creating accounts in your name only.

Hire a Team of Divorce Professionals to Help You

Divorce is always a difficult process. But when you are over 50, it is an even higher-stakes endeavor. One of the best ways to protect yourself and your future is to build a qualified team of divorce professionals, who will assist you with the process.

There are three major areas of divorce: legal, financial, and emotional. You should hire a specialist to help you with each area. Given that divorce is a legal transaction, you will need an experienced divorce attorney to help you. To help with the complex financial considerations in divorce, hire a Certified Divorce Financial Analyst. A therapist can help you work through the often-devastating emotional effects of divorce, and can keep you focus on the big picture.

Don’t Forget about Social Security

After the age of 62, Social Security can serve as an important source of income for you. After divorce, you may have the option to claim your own Social Security benefits (or those of your ex-spouse’s). To receive your ex-spouse’s Social Security, you must meet certain criteria:

  • You must have been married for 10 years or more.
  • You must be over 62 years old.
  • Your ex-spouse must be eligible to receive Social Security benefits.
  • Benefits you are entitled to receive from your own work must be less than the benefits you would receive from your ex-spouse’s work. These specifics can be determined by going to the Social Security Administration website, and doing the calculation yourself.

Social Security has a lot of rules, and they can be confusing. Here are a few things to keep in mind:

  • Social Security benefits are not marital assets, so you do not need to negotiate them during a settlement.
  • You should learn your spouse’s anticipated Social Security benefit—to see if you should be claiming 50% of his or hers, or claiming your own benefit.
  • If you do claim your spouse’s Social Security benefit, it will not have any direct impact on your spouse—as it is a government-sponsored program.
  • Once you are eligible for benefits, you should start claiming them—since there is no way to catch up on missed benefits.

3) Divide Retirement Assets the Right Way

During divorce, retirement assets are the most complex to divide. There are three general categories of retirement assets: defined contribution plans, defined benefit plans, and individual retirement accounts. We will review each one to help you understand what is involved during divorce.

Defined Contribution Plans

With a defined contribution plan, the employer contributes a certain amount of money to the employee’s retirement plan—throughout the duration of that person’s employment. Upon reaching a certain age, funds can be withdrawn from the policy. The amount of money you have depends on the investment performance of the funds over time.

The most common types of defined contribution plans include the 401(k), 403(b), 457, Thrift, Profit-SharingMoney Purchase, and Employee Stock Ownership plans.

Defined Benefit Plans

Commonly called a pension plan, defined benefit plans guarantee an employee a specified monetary benefit once they reach retirement. The contribution formula takes age, duration of employment, and salary into account. Determining the value of a defined benefit plan is complicated, so the employee’s life expectancy is often a substantial factor in calculating the future value of benefits.

Individual Retirement Accounts (IRAs)

An IRA is one of the most common retirement plans. So participants are allowed to contribute a certain percentage of their annual income and deduct the contributed amount from their taxable income. IRAs have several types, including Tradition, Roth, SIMPLE, and SEP.

Dividing IRAs Is (usually) Easy

Dividing an IRA during divorce is simpler than other retirement plans, because it does not require a QDRO. A simple signed letter or a court order must indicate how to split the assets. And the IRA can be transferred to the other party without any negative tax consequences (when done properly). Future tax obligations will fall under the responsibility of the new IRA owner.

When to get a Qualified Domestic Relations Order (QDRO)

In divorce proceedings, couples typically require a QDRO to distribute their defined contribution or benefit plan. As per the divorce decree, the QDRO summarizes the division of a retirement plan.

It must contain the following:

  • Personal Information - Details and mailing address of the retirement plan.
  • Gains and Losses - Due to the investment market’s volatile nature, the potential gains and losses have to be accounted for when splitting a retirement plan. Parties may also decide on a set figure (without considering any potential gains and losses).
  • Valuation Date - Retirement plans are valued at different intervals. In the QDRO, it is necessary to include the valuation date closest to the official divorce date.
  • Surviving Spouse Provisions - To safeguard his or her own interests, it is important to have the former spouse listed as the beneficiary. In the event that the retirement-plan holder dies before the approval of the QDRO, the former spouse would still be entitled to a portion of the plan.

The QDRO is complicated and requires an expert who has experience drafting this agreements. If you are going to need one, present the QDRO to the plan manager long before the completion of divorce. Then you can ensure that you have covered the proper details, so you will avoid hang-ups later.

4) Review Your Estate Planning and Medical Coverage

When divorcing after 50, one of the most complex areas to consider is how to handle estate planning and insurance issues. Each of these issues could easily span a book (or an entire career), so we will only focus on the high-level concerns you should think about during divorce.

Contemplating your mortality is never fun, but it is an essential part of protecting your wishes.

Estate Planning

After divorce, you will need to make sure you update your essential estate-planning documents. You and your estate attorney should investigate creating the following documents: a will, durable power of attorney, and healthcare proxy. You should also check and update the beneficiary designations on all of your accounts and insurance policies to ensure that they meet your wishes. If you have never looked at or prepared these documents before, the time after your divorce is a great place to start.

You probably do not want to end up in either one of these situations: your ex-spouse ends up receiving a large chunk of your assets, or is responsible for making essential medical decisions for you.

Life insurance can also play a key role in the estate-planning process, as it can provide your family with quick access to funds upon your death. And it can also play a role in minimizing estate taxes.

Medical Coverage

Medical costs and medical insurance only get more important with age. With the high costs of medical expenses, health insurance is one of the most important assets you can have. If you are covered by your spouse’s insurance plan when you start a divorce process, it is time to think about how that will affect your health insurance coverage in the future.

You can include health insurance coverage as part of the divorce decree—particularly if you were not working outside the home, and have easy access to health insurance after the divorce.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) was created to protect employees and their dependents from losing group-insurance coverage because of divorce or job loss. Therefore, under COBRA, you may be eligible for temporary insurance coverage through your spouse’s employer. COBRA has eligibility conditions. For instance, the company in question must employ at least 20 people. But if it is available, you may continue coverage for up to 36 months (at your own expense).

Other options to consider include the health insurance marketplace, Medicare, or Medigap. Medical coverage is a complex subject, so make sure you investigate your options—sooner, rather than later

Parting Thoughts

When facing divorce after 50, half of your assets (and your whole financial future) are at stake. So you need to make sure you focus on your long-term financial security. You should think about your retirement. How are you going to have enough cash for daily living? Know that the lifestyle you lived before the divorce will not necessarily continue.

The decisions you make today will affect you for the rest of your life. So prepare well, and avoid making financial mistakes you will regret.

Find this information helpful? Please share it with someone else who needs it.

Shawn Leamon, MBA and Certified Divorce Financial Analyst, is the host of the Divorce and Your Money Show, the #1 show on iTunes that discusses personal finance issues in divorce. He is also author of Divorce and Your Money: The No-Nonsense Guide, available on Amazon. Learn more at www.divorceandyourmoney.com.

Disclaimer: Divorce and Your Money and its affiliates do not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.

Jan 19, 2017

This article was originally published on BlogHer.com. Read the original article here.

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:

1) Are they 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.

2) 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.

3) 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 meeting 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. 

Find this information helpful? Please share it with someone else who needs it.

Shawn Leamon, MBA and Certified Divorce Financial Analyst, is the host of the Divorce and Your Money Show, the #1 show on iTunes that discusses personal finance issues in divorce. He is also author of Divorce and Your Money: The No-Nonsense Guide, available on Amazon. Learn more at www.divorceandyourmoney.com.

Disclaimer: Divorce and Your Money and its affiliates do not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.

Jan 12, 2017

12 Ways to Avoid Common Divorce Settlement Mistakes in 2017: How to Get a Divorce Without Losing Everything

Approximately 95 percent of divorces are settled out of court. If you or your attorney make a mistake during the divorce settlement, it can affect you for the rest of your life.

Your divorce settlement agreement will cover three main areas:

  • Dividing property
  • Spousal support
  • Child support and custody

In 2017, you will need to know what to ask for in your divorce settlement agreement to avoid big regrets later. Shown below are twelve ways to financially get the most out of your divorce.

1) Keep the Big Picture in Mind

Divorce is complicated on many levels: emotionally, legally, and financially. Facing the end of “happily ever after” can be gut wrenching. Given the complexities involved, it can be difficult to stay focused on the big picture. Treat divorce like a business transaction by determining your goals during and after the divorce so that the decisions you make today will set you up for the best position in the future. Before you start a fight about the kitchen chairs, make sure you view every decision during divorce through this lens: “Will this be helpful in the long run?” By staying focused on the big picture, you can avoid small squabbles that will end up being more hurtful than helpful.

2) Hire Your Own Attorney

You should not share the same attorney with your spouse. Perhaps your spouse has suggested that you share an attorney to save money. Nevertheless, as you try to decide what should be included in a divorce settlement, it is imperative that you have an experienced family-law attorney to stand up for your interests. Otherwise, you could regret it later.

3) Look for Hidden Assets

Do you suspect that your spouse might be hiding money from you? During divorce, it is an all-too-common occurrence. Failing to look for hidden assets can cost you a lot of money that you might be rightly entitled to receive.

Your spouse could hide assets from you by

  • transferring them to a friend;
  • reporting a lower income and higher expenses;
  • creating fake or inflated debt;
  • withdrawing a lot of money and putting it into a safe deposit box;
  • overpaying taxes to the IRS;
  • undervaluing assets, such as antiques and collectibles.

If you suspect that your spouse is hiding assets from you, you should consider having a private investigator or forensic accountant review your financial details.  Hiding assets during a divorce is a crime that has penalties. You need to protect yourself if you have any suspicions.

4) Know How Much You Owe

Debt is a highly contentious part of divorce, and it is one of the common reasons why marriages end. Debt includes credit cards, any other form of credit, mortgages, and any loans.

Early in the divorce process, check your credit report to see every account with your name on it. If your name appears on an account, you are legally responsible for it—regardless of what your divorce settlement states. To avoid a detrimental impact on your credit, keep your payments current on joint accounts.

In divorce, you need to plan, do your homework, know how much you owe, and stay on top of any outstanding debt both during and after the divorce process. Poor credit can keep you from getting a mortgage or a car loan—or just moving on with your life.

5) Find Out What Your Assets Are Really Worth

It is not always easy to determine the value of certain large assets. For example, if your home has not been recently evaluated by a certified appraiser, you may not know how much the home is currently worth due to fluctuations in prices. Determining the value of the home is not as simple as logging in to an online appraisal website, such as Zillow or Redfin. Furthermore, the value of jewelry, art, antiques, and other collectibles is difficult to assess, so it may be wise to get an expert opinion.

One common negotiation tactic that your spouse may use is attempting to mislead you about the value of assets, which can lead to a one-sided divorce settlement. Do not let that happen to you. Properly appraise any valuable assets you have questions about.

6) Learn the Rules of Retirement Plans

Pensions, an IRA, a 401(k), and other types of retirement plans have their own set of rules. They also have specific procedures you need to follow during divorce. If you are deciding whether or not you should keep a retirement plan, you need to know the various financial and legal complexities involved.

For example, many defined benefit and contribution plans require a Qualified Domestic Relations Order (QDRO) to split the retirement plan. Failing to follow the necessary rules can cause you to have a variety of post-divorce headaches.

7) Evaluate the Liquidity of Assets

Not all assets can be immediately sold. Some may take months or even years before you can receive the cash you need. For example, if you want money from your home, it may take months to sell or refinance. Investment and retirement accounts may require different time periods, ranging from a few days to several years before you can access the funds in the account.

For example, hedge funds and private equity funds may have multiyear lockups that prevent withdrawals from your account. For every asset you are thinking about keeping during divorce, you need to know how hard it will be to liquidate when you need the funds. Otherwise, you could find yourself needing money but not being able to access it.

8) Realize Tax Consequences

Taxes can have a major impact on your divorce settlement. If you receive spousal support, that money is considered your taxable income, but if you are paying spousal support, those payments are tax deducible. On the other hand, child support is not taxable for the recipient or the payer.

When evaluating your home, investment accounts, and other assets, taxes get even more complicated.  If you do not understand the tax consequences of your settlement, you could find yourself in an unwanted position: $1,000 is only worth $500 after you pay your taxes.  To ensure that taxes will not take too much of a bite out of your divorce settlement, consult a Certified Divorce Financial Analyst (CDFA) or CPA.

9) Understand Every Word in Your Divorce Settlement

Divorce settlements are often long, complex documents. They have many legal terms and phrases, which will affect you for the rest of your life.

You might be unclear about part of the settlement or have a question about its significance. If so, be sure to ask your attorney for further clarification. The settlement may have a mistake, or a clause may not accurately reflect your best wishes.

Asking questions—no matter how small—can save you a lot of regret and heartache.

10) Determine if You Can Afford the Settlement

Is the settlement something you can afford over the long term? Even though the settlement may make sense over the next year, it may not make sense in five, ten, or twenty years. As part of the process, you should create an appropriate budget for your life as a single person, which includes your estimated income, expenses, and taxes.

You should determine if the divorce settlement allows you to live comfortably in the future or if you will need to make lifestyle adjustments. To make sure it is financially feasible for you, have a CDFA help you analyze both the short- and long-term implications of the settlement.

11) Secure Support Payments with Insurance

Spousal support, child support, and other divorce settlement payments can occur over the course of many years (and in some cases, a lifetime). What happens if your soon to be ex-spouse unexpectedly becomes disabled or passes away but still owes you support?

This situation can cause a host of financial complications, so you need to protect yourself. One method is to secure your divorce settlement with life insurance and/or disability insurance.

If your ex-spouse is no longer able to make payments for some reason, you will then have insurance that can take care of any unpaid support. Many people fail to utilize this option. Should something unforeseen happen to your ex-spouse, you will have a good layer of protection.

12) Create a Post-Divorce Financial Plan

Even though you have signed the divorce settlement, you may not have finished the divorce process. You will have to make sure that everything occurs during the settlement—as you agreed.

For example, if your spouse is supposed to remove your name from a joint account, you must follow up to ensure that it has been removed in a timely manner. If you are supposed to receive part of a retirement plan at some point, you need to mark your calendar accordingly; then you can ensure that you do not forget about it later on.

Your tax status will change after the divorce, so you should consult a CPA to help you navigate your tax situation. You should sit down with a financial planner and plan for retirement—adjusting for your new life.

 

Find this information helpful? Please share it with someone else who needs it.

Shawn Leamon, MBA and Certified Divorce Financial Analyst, is the host of the Divorce and Your Money Show, the #1 show on iTunes that discusses personal finance issues in divorce. He is also author of Divorce and Your Money: The No-Nonsense Guide, available on Amazon. Learn more at www.divorceandyourmoney.com.

Disclaimer: Divorce and Your Money and its affiliates do not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.

« Previous 1 2 3 4 5