Six Tips for Separating Emotions from Economics in Divorce

Financial Infidelity and The Money Trap

by Ginita Wall, CPA, CFP®, CDFA 

They say that a bad marriage is like a game of cards. You start out with two hearts and a diamond – but end up wishing for a club and a spade. When those feelings surface during a divorce, it leads to unproductive conflict and often results in a less than optimal settlement.

In divorce it is important to focus on the real problems to come up with real solutions. If spouses are at war, they are likely to see each other as the problem and the divorce as the solution. But they won’t get to true resolution until they recognize that simply isn’t true. The real problem is how to divvy everything up in divorce, and divorcing spouses won’t arrive at the best solution for their family until they collaborate on resolving their issues by working together, not against each other.

No matter how much spouses despise each other, they often equally despise spending money on a divorce battle, so even though they are on the outs they may be willing to work together to settle matters and keep the costs down by staying out of court.

When you are going through a contentious divorce, the key is to avoid letting uncertainty whip either of you into an emotional tizzy. The more frenzied your emotions, the longer the proceedings and the more costly the divorce. Collaborative divorce can be a Godsend in reaching optimal resolution at a reasonable cost.  In collaborative divorce, you’ll have all the professionals at the same table, working with the same facts, and engage coaches to keep everyone on track. That keeps uncertainty and miscommunication down, which helps everyone focus on the issues that are most important.

The job of the professionals in collaborative divorce is to help clients figure out how to divvy up the assets and debts so that each spouse emerges from divorce with a fair share of the pot that will let them begin anew. Here are six tips the divorcing spouses can use to separate emotions from economics:

Don’t let guilt rule you. “Please release me, let me go,” pleads the country song, but don’t give up everything to buy your freedom. Your spouse will still be unhappy that the marriage is ending, and you’ll be unhappy when you find yourself impoverished by your foolish gesture. The needs of each person are important, and the goal is to reach the best agreement possible as you balance those needs.

Don’t give in just to get it over.  When going through divorce, carefully consider your current needs and your needs in the future. You can’t depend on your soon-to-be-ex have your best interests in mind, and you can’t depend on your attorney to know exactly what is best for you and your family. Don’t try to shortcut a divorce. The only way out is through, and it will take your conscious involvement to reach a resolution that will work for you.

Don’t make nice to get him or her back. It’s all right to hope against hope that your divorce will end in reconciliation, but don’t bend over backward to make it happen. Stand up for yourself and get your share. If you successfully reconcile, and some couples do, that’s wonderful, but if you don’t, you’ll still be able to take care of yourself financially.

Leave revenge at the door. Legally, it doesn’t matter who did who wrong. Revenge is costly, and funding a wild rampage by not giving an inch is bound to turn out badly. You won’t win every battle, no matter what, and if you stubbornly stick to your guns despite all reasonable offers to settle, who knows, you might even end up paying part of your spouse’s attorney fees.

Don’t succumb to threats, or threaten your spouse. Money and power are emotionally linked, but in divorce it isn’t smart to try to use money to control your spouse and get your way. If you launch a full-blown court battle and argue every financial issue, be assured that most of what you can’t agree on will end up being split between your attorneys, with a sizeable amount going to the financial professionals. That is money that could be used to fund your family’s future if you stay out of court.

Focus on problem-solving, not fighting. Don’t let meetings with your ex turn into posturing to show who is in control or how smart you are. Settling your divorce is the problem you confront, and it won’t get solved through fighting. You can’t get everything you want in divorce, so figure out what is most important to you and let the rest go. You’ll end up with a better agreement, a less tumultuous relationship, a happier family, and a healthier future.

Broken Trust: Advice About Estate Planning During A Divorce

by Meredith L. Brown, Esq.
Brown & Brown

Many couples prepare Wills and Trusts in connection with a happy life event, such as the birth of a child. Frequently these documents are placed in a safe deposit box, never to be updated or even thought about again.

When the unfortunate life event of divorce happens, couples often opt to defer consideration of their old estate planning. No one wants to think about their mortality on a good day, much less when divorce is on their mind. This decision is understandable, but it is probably unwise and potentially costly.

First, a note of caution: if a Petition to dissolve the marriage has already been filed, the law requires that specific steps be taken before changes are made to Wills and Trusts. Similarly, there is an automatic restraint against making changes to beneficiary designations on any insurance. Couples must be sure to comply with these rules.

Family law does not place restrictions on changes to your Advance Health Care Directive after you have filed for divorce. Most couples designate their spouse as their legal voice when it comes to treatment and end of life decisions. Even in divorce situations where couples are amicable, it may not be appropriate for a soon-to-be ex spouse to make these decisions in the midst of a divorce.

How do you decide whether to change your existing estate plan?

The first (and obvious) step is to read and understand your documents. Most couples prepare documents that leave the estate to the survivor between them. Then, ultimately, the estate goes to their children. But this is not always the case, particularly in second marriages.

If you acquired assets after your Trust was created (for example a new home), determine whether title was taken in the name of your Trust. If you hold assets outside of your Trust, you could have the cost of a probate proceeding.

Even if you haven’t done any estate planning but own real estate or other titled assets with your spouse, be sure to check the deed or other title documents. Certain forms of title such as joint tenancy carry with them an automatic right of survivorship. You should consider whether you wish to change the form of title to one without survivorship rights. But before you make any changes, be sure to comply with the notice requirements mandated by law.

Second, ask yourself:  if you were hit by the proverbial truck before your divorce is final, would you want your spouse to receive your share of the estate? If you have children, do you trust that your former spouse will preserve your share of the estate so that your children ultimately receive everything? Would you feel differently if your former spouse sold the marital residence? What if he or she remarried?

Keep in mind that even if you decide to change your estate planning by preparing new Wills and Trusts, your former spouse may still have control over assets you leave to your children, if they are still under age 18. If you do not wish for this to happen, you will need to designate someone else as the guardian of the estate of your children.

As you may guess, determining how your assets are distributed upon your death can be complicated like many other aspects of your life when you file for divorce.  But this is something you need to address for the well-being of yourself and your children. You don’t have to go it alone.  Investing in the advice of an attorney with expertise in estate planning as well as a skilled financial specialist is an investment well worth making.

If you pursue a Collaborative Divorce, a financial specialist is part of your divorce team.  This can be extremely helpful if you are also working through a complex estate plan. It’s another smart reason to consider the Collaborative Process for your divorce.

Division of Marital Assets in Divorce: Fairness and Respect

A recent Forbes Magazine article offers advice specifically to women about assets in a financial portfolio that they might overlook when working on the division of those assets in a divorce.

From a practical standpoint, it’s true that people don’t always clearly identify or think about all of their “assets” at the time of divorce. But those of us involved in the Collaborative Divorce approach believe the focus of a divorce should not be oDivorce and Fighting, Boxing Glovesn “stuff.”  Advocates of Collaborative Divorce focus on the process of making good decisions without alienating one partner from the other and coming out at the end with respect and with the relationships among members of a family preserved moving forward. Simply because two parents will no longer be married doesn’t mean family ties vanish.

It is also troublesome that there are still individuals addressing women in this way, reinforcing an unfortunate stereotype that we firmly reject. Collaborative Divorce is about fairness, cooperation, and equal treatment whether for men or women, whether in traditional or same-sex marriages.

If you’re considering divorce, consider the healthier alternative provided by a Collaborative Divorce. Contact one of our members to learn more about the Collaborative Divorce process and how it can benefit you and your family. A divorce doesn’t have to be a fight, and it doesn’t have to hurt.

 

 

Four Tips for Making Divorce Easier on You and Your Family

by Myra Chack Fleischer, CLF-S, Fleischer & Associates

Making the decision to get divorced is never easy. If you have been there, done that, no matter when you file you know it can be consuming and is usually the result of a thought processing lasting weeks, months, even years. If there are children involved, it is even more gut wrenching.

This is why our group so strongly recommends the collaborative divorce process to mitigate the impact to your children and your family as a whole.

But once you have crossed that bridge in your mind, heart and soul, now is the time to be ruthlessly practical. Even if you choose collaborative divorce, you must also prepare yourself and your children. This is not selfish. This is healthy, this is smart and this is in your long-term best interests.

It is natural to feel overwhelmed, and there is a lot to do. As a family law attorney with experience representing hundred and hundreds of divorcing clients, there are some priorities you need to address BEFORE you break the bad news, hire an attorney, file any paperwork, or decide to avoid the court system entirely. This advice applies equally to men and women, straight or gay.

Gavel and Wedding Rings

  •  Make sure you get copies of all your financial records.

This includes bank statements, investment and retirement accounts, credit cards, loans and any other debts. You will also be able to quickly tell and later prove if there are significant changes or movement of assets, and this may help you make the decision about whether collaborative divorce is right for you.

  • Make sure you have a source of funds if you do not work outside the home.

Create a financial strategy with your attorney or a divorce financial planner before any formal filing for divorce.

  • Make sure you disclose anything damaging about you and your situation to your attorney.

The last person you want to be blindsided by any misbehavior or skeletons in your closet is your attorney. He or she cannot help you to mitigate the impact if he or she knows nothing about it. Sure, it can be some embarrassing stuff to admit to extramarital affairs, criminal acts, struggles with your physical or mental health, or tweeting racy photos.

But believe me, divorce attorneys, divorce financial planners and divorce coaches have heard it all and then some. We are not shockable, and we will not think less of you. Professionals involved with divorce proceedings are committed to confidentiality. Most of it can be handled. It’s entirely possible that by getting these issues acknowledged and out of the way, the healing process can begin and a collaborative divorce may be possible. But if not, it’s better to learn this early in the divorce process.

  • Listen to professional advice.

If your attorney, divorce financial planner or divorce coach tells you something or asks you to do something, there is a reason for it. Usually it is to protect your interests and make things easier (and maybe less costly) for you and your family in the long run. We know how to engage the legal system to your best advantage, and we have plenty of experience that tells us what works and what does not work. Don’t ruin the good counsel you are getting by ignoring it.

 

 

Taxes and Divorce: Six Tips For Women

Filing Taxes After DivorceCLFG San Diego member Justin Reckers, Director of Financial Planning at Pacific Wealth Management and Managing Director at Pacific Divorce Management, shares this recent article from Forbes Magazine with tips to help women (and men, too) who were divorced in 2012 or going through a divorce now that will help you avoid paying higher taxes than necessary or any potential penalties.

Read the article here.

The IRS offers a publication via its website for divorced or separated individuals, Publication 504. It covers filing status, exemptions, alimony, and property settlements among its topics. You may find it helpful: get it here

Don’t Let a Gray Divorce Put You In The Red Financially

 

 

 

 

 

 

 

 

 

 

 

 

The issues surrounding a “Grey Divorce” – divorcing in your 50s, 60s, or later years  – present many of the same issues that occur when divorcing at earlier ages.

However, the fact the divorce is happening later in life can present unique financial challenges.  There is less time to financially recover from a divorce that happens late in one’s working career or in retirement.

It’s imperative that both spouses work together to openly evaluate and understand the potential financial impact of a gray divorce. This is where considering collaborative divorce can present distinct advantages.

A collaborative divorce, one in which the parties agree to work together with experts to problem solve outside the courts, can preserve financial and emotional resources while achieving a resolution that respects everyone’s needs.

One of those experts is a financial professional, who can help you evaluate common issues in the divorce process involving money.

Some of those common issues you may be facing in a gray divorce:

  • What happens to the marital home?  Often one spouse is attached to the idea of remaining in the house.  However, this may be an unrealistic dream given the financial realities of the divorce.
  • What will future income flows look like from such sources as pension plans, Social Security, and investment income?
  • Prior to retirement, is this income level adequate for both spouses?  Will these income flows be adequate at the desired retirement age, or should one consider working longer before retirement?
  • How are assets like pensions, investments, real property, business interests, life insurance, etc. to be appraised and divided?
  • Are there specific health issues that need to be understood and addressed?  What assumptions are to be made regarding medical coverage, benefits, and costs?  Have provisions for long term care been adequately addressed?
  • Are there special needs for the children and/or grandchildren that need to be addressed?
  • What impact will the divorce have on existing estate plans, wills, trusts, Powers of Attorney, medical directives, beneficiary designations, gifting strategies, legal title to assets, and any other applicable items?
  • Has credit eligibility and creditworthiness for both souses been addressed?

Divorcing in one’s golden years can happen at a time when retirement is approaching and incomes may start to shrink.  There is less time to recover from the financial impact of a divorce at an older age. Carefully and realistically assess the financial, emotional, and legal impact of the divorce in light of the unique challenges it may pose.

 

 

Love and Real Estate with CFLGSD attorney Shawn Weber on “The Real Estate Radio Hour”

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Attorney Shawn Weber discussed collaborative divorce, mediation, deferring sale of the family residence, and the phenomenon called “nesting” during his Valentine’s Day  appearance on the Real Estate Radio Hour on San Diego AM 1700 ESPN Radio.  Shawn has become the show’s resident expert on “Love and Real Estate.” It’s a perfect topic for February and Valentine’s Day.

Click this link to hear the podcast.

Love and Real Estate: Radio Interview featuring attorney Shawn Weber

Just in time for Valentine’s Day! Attorney and CFLG San Diego member Shawn Weber Real Estate Radio on ESPN AM 1700 San Diegojoins hosts David McElveen and Ryan White on ESPN 1700 AM Radio for an interview on “The Real Estate Radio Hour” on January 24, 2013.

Weber talks about his new guide answering common questions about real estate ownership for people changing marital status, including the advantages of collaborative divorce. Listen to the interview here.