The Defense of Marriage Act, Prop 8 and Divorce: What Now?

Following the U.S. Supreme Court’s ruling striking down the Defense of Marriage Act (DOMA) today as unconstitutional, and declining to rule on Prop 8, therefore allowing legal same sex marriage in California, there are numerous ramifications. Some of them have to do not with marriage, but with divorce.

For example, what are the financial ramifications for same sex couples during a divorce? CLFG San Diego member Justin Reckers of Pacific Divorce Management looks at a few of the issues including taxes, benefits, and spousal support in this article.

 

 

Prenuptial Agreements Not Only For The Wealthy

by Justin A. Reckers, CFP®, CDFATM, Director of Financial Planning
Pacific Wealth Management and Pacific Divorce Management

Most people who divorce do not have the financial concerns of Rupert Murdoch. The wealthy media mogul recently announced the impending divorce from his third wife, Wendi Deng, after 14 years of marriage.

Rupert Murdoch and Wendi Deng

You don’t have to be as wealthy as Rupert Murdoch and Wendi Deng to benefit from a prenuptial agreement.

Murdoch, CEO and chairman of News Corp., ranks number 91 on Forbes Magazine’s list of the world’s billionaires, with a net worth of $11.2 billion. Speculation is rampant about the possible settlement with Wendi Deng. Various media reports claimed Murdoch’s payout in his second divorce from wife Anna in 1999 cost $1.7 billion.

The media has assumed that Murdoch and Deng have a prenuptial agreement. I have no doubt given Murdoch’s marital history and the fact he has children with one of his former wives. But even with wealthy people, it isn’t always the case.

The idea of getting a prenup tends to fly by even the wealthiest clients. People still think if you get a prenuptial agreement, it means you are planning for divorce even before you say “I do.” They believe it seems cold and unromantic.

From my viewpoint as a financial planner, I disagree with this thinking. It can be very romantic to have this discussion about money. Discussing money values, learning how your future spouse views financial decision making, their experience with money management and agreeing up front to some ground rules for managing your family finances can be a source of safety, financial security and comfort.

When financial advisers work with soon-to-be-wed couples, we help them determine how best to divvy up assets and streams of income. We also work side-by-side with family law lawyers who draft the prenuptial agreements. We examine the tax implications of dividing certain assets should it be necessary, and we figure out the long-term impact of ensuring the spouse with less money receives sufficient income.

We make sure both parties think through the implications of their decisions, and that they consider the many life stages they will go through. How will they provide for their children if they are divorced? What if one of the individuals becomes ill or disabled and cannot earn an income? What happens as each spouse ages?

When a couple is focused on starting their new life together, they don’t often stop to picture what might happen down the road. Financial and legal experts can help insure important decisions are made with complete information and adequate consideration of the financial intricacies of marriage and divorce.

There are as many versions of prenuptial agreements as there are couples. One size never fits all. And prenuptial agreements aren’t financial straightjackets either. In some cases, spouses going through a divorce contest assets and whether their status is truly “separate.” It can become complicated when an asset considered separate property is sold, and then the money is reinvested. Is the new property still a separate property? Or is it now marital property? If it’s not part of the original agreement, this is where things can get a little complex.

It is smart to put a prenuptial agreement together before marriage as well as to update it periodically just as you would update your estate planning when circumstances change.

You don’t have to be as wealthy as Rupert Murdoch. You only have to be conscious of the emotions that often complicate financial decision making and be willing to be open and honest with the person you love.

January: Divorce Month

Divorce filings typically peak in January each year. Couples decide to wait until after the holidays, or postpone until the first of the year for tax reasons. Whatever the reason, it can mean serious changes in lifestyle and financial status.

In this article published January 31 on Morningstar Advisor.com, CFLGSD’s Justin A. Reckers, CFP, CDFA, AIF, director of financial planning at Pacific Wealth Management  and managing director of Pacific Divorce Management, LLC; and Robert A. Simon, Ph.D., forensic psychologist, trial consultant, expert witness, and alternative dispute resolution specialist offer sound advice to financial professionals to help them understand the emotions and thought processes going through a client’s mind when he or she seeks guidance as the result of a divorce. It’s advice anyone dealing with these circumstances can benefit from.

The advantage of collaborative divorce is that a financial professional is involved from the beginning and can help a couple work through the many difficult questions and decisions involved alongside attorneys and mental health professionals for a seamless, respectful process.

Read more here.

 

 

Fox 5 News Interview, January 7, 2013: Make 2013 A Better Year for Your Wallet featuring CFLGSD Member Justin Reckers

Justin Reckers, CFP®, CDFATM, AIF®, Managing Director of Pacific Divorce Management and immediate past board chairman of CFLG San Diego, was recently interviewed by reporter Christian de la Rosa of Fox 5 News in San Diego on tips to improve your financial health in 2013. See the report here for Justin’s excellent advice, whether you’re getting divorced or not.

Fiscal Cliff Divorce Planning

Jumping off the fiscal cliff

Don’t jump off the fiscal cliff in the midst of a divorce without a safety net in place.

With the fiscal cliff seemingly looming as a reality, Justin Reckers, CFP, CDFA of Pacific Divorce Management has advice on financial planning strategies if your divorce settlement could be affected by this situation. Read more here and talk to legal and financial professionals such as the team at CFLG San Diego if you need to take action before the end of the year.

 

 

Gift Giving: Can You Take Out the Emotion and Leave the Joy?

CFLG San Diego member Justin Reckers, CFP®, CDFATM, AIF®, managing director at Pacific Divorce Management, was recently interviewed for a story about advising financial clients about how to keep holiday spending under control. While Justin doesn’t specifically address divorced families, it’s not uncommon for divorced parents to try and make it up to their children by giving lavish gifts that they really cannot afford. This is great advice for them, and for anyone tempted to spend beyond his or her means.

Read the article here.