Does Divorce Threaten Your Financial Future

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The 5 Most Important Things You Need To Know BEFORE You Sign On The Dotted Line

October 14
6:30 pm to 8:30 pm Pacific/9:30 pm to 11:30 pm Eastern

• Are you thinking about divorce and worried about your finances?
• What should you do about the house? Do you have to split retirement accounts?
• Did you know that some decisions will cost you a LOT more in taxes?
• Will you have enough money now? What about the future?
• How much is the divorce going to cost and how can you reduce the expenses?

Don’t let a lack of financial expertise stand in the way of negotiating a fair divorce settlement.

Q&A time included.

Class will be held on teleconference line to preserve your privacy (long distance charges apply).

Cost: $29.00

Creative Solutions for Approaching Financial Settlements in Family Law Cases

October 3, 2008 from 8:30-12
$65 including continental breakfast

Location: Wyers Haskell Davies conference room
216 Columbia Ave. Hood River

CLE’s offered*

As family law practitioners, we know clients are often unprepared to create a fair and equitable financial settlement on their own or even know the financial implications of today’s decisions on the prsent and future value of their financial estate.

Most couples know some basics, but figure they’ll put it all in the “pot”, minus the house, of course, and split the difference. This rather simplistic division is not due to a lack of willingness or interest on their part, but more due to the fact that they “don’t know what they don’t know.”

This workshop will show you how to:

• Prevent financial “mistakes” in our clients’ divorces
• Learn how technology can enhance the process and lead to settlement
• Review Ethical and Liability issues (i.e. QDRO preparation timeliness, pension plan specifics, tax disclaimers, etc.)
• Find out how a Certified Divorce Financial Analyst can help your clients come to settlement more easily and alleviate the attorney of the need to stay on top of all of minutia of their client’s finances.

A cast study approach will be used to illustrate the concepts.

The Absentee Parent

You want to be able to continue having a great relationship with your kids after separation or divorce. This means focusing on the kids rather than your ex-partner. You need to be parents rather than partners.

Breaking up is difficult enough without losing touch with your kids…you are feeling the loss of that everyday contact and you believe your children miss you too. You may not always be sure of the best way to be involved with your children. Remember – you are important to your children so make contact and hang in there for them.

Even if you live a long way from your children, you are still their parent. No matter who your children live with, they need and deserve to know that they are loved and wanted by both of their parents.

Children can be frightened by the strong emotions that often come from parental breakups. You may have to work to regain their trust. Your children need to feel safe with you and this can take time.

Studies support the importance of children generally having both parents in their lives. This helps their self-esteem, wellbeing and their success in life as they get the benefit of both parents’ strengths and experience.

Separation often means that you have to parent one-to-one for the first time and this can be a challenge. At the same time, it is a new chance to get to know your child as a person and show them they are important to you. Kids have their own ways of doing things. Let them know you love them for who they are.

Plan what you are going to do with your children. Outings don’t have to cost a lot of money but they just need to be enjoyable for the kids and yourself. The kids will enjoy just spending time with you and knowing you are still an important element of their life.

Phone calls can’t replace being with your children but they are a great way of staying in touch. Whatever happens, you are making contact and kids realize that you care.

Think about what you are going to say before you pick up the phone. The more you talk with your children, the more things will flow and you will discover how special they are.

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Anne Wolski has worked within the health and welfare industry for more than 30 years. Go to www.magnetic-health-online.com to see many wonderful health articles, many of them written by doctors and others who have been involved in the health industry for many years.

Role of the Financial Planner in the Divorce Process

The use of financial planners in the divorce process is relatively new, but is a rapidly growing trend. The reasons for this are simple. The divorce process involves to a large extent the untangling and subsequent division of assets and income. Despite a lack of formal training in personal finance, attorneys and mediators have historically been thrust into the roles of financial analyst and adviser. This has been an area fraught with danger, both from the divorce professional’s and the client’s point of view. While accountants and actuaries have participated in the process, their services have usually focused on the valuation or investigation of assets, not on personal finance.

Financial planners are recognized experts in personal finance. Because they have traditionally helped individuals achieve long-term financial goals, such as saving for college or retirement, they have specialized training and skills that enable them to analyze financial issues in their long-term context. They are thus able to peak into the future and provide insight into how a particular allocation of assets and income might play out over time.

A divorce financial planner can help individuals going through divorce focus on the difficult financial issues at hand, which sets a more positive and productive tone for discussion and makes the process more efficient and cost-effective. It empowers individuals to make wise and workable decisions regarding the hard, but often necessary lifestyle adjustments. People frequently feel more secure about the choices they make, are able to reach workable settlements more quickly and are less likely to be forced to revisit support issues in the future.

Here are some of the things you can expect a divorce financial planner to do for you:

• Help stabilize your financial situation.

• Prepare accurate and realistic post-divorce budgets.

• Calculate your respective needs and paying abilities.

• Legally minimize taxes.

• Analyze alternative settlement scenarios and determine their workability.

Our thanks to http://www.divorceinteractive.com for this article.

7 Don’ts When Going Through A Divorce

The normal point of belief is to trust your spouse, but when you are in the process of a divorce, you will have to imagine you are engaged in “warfare.” As strange as that may sound, it is a reality in most cases. Your life will change drastically in a very short time so you must think defensively in order to protect your future.

Following are a few points to ponder:

1. Don’t , in any case, use your spouse’s lawyer, even if they claim they are saving money. Their lawyer is NOT your friend! Your future will be about money! Protect it! Find your own lawyer, one you trust.
2. Don’t sign anything legal until your lawyer okays it. Even if they say “trust me, I wouldn’t hurt you.” Oh yes, they would.
3. Don’t make any verbal promises. Your spouse could be recording you and in some states, recorded messages are legal. If not, a savvy lawyer could use your words against you and influence the judge.
4. Don’t date anyone else until you are divorced or legally separated. Check with your lawyer on your legal rights. It could be used to your disadvantage, even if your spouse is already cheating on you.
5. Don’t depend on your spouse’s credit rating. Establish your own credit in only your name, before the divorce. Without it, you will not be able to rent an apartment, buy a car or many other necessities. Your personal good credit is like gold to you, married or not.
6. Don’t wait until you are divorced before you make plans of living alone. Investigate a safe environment in which to live, in case you have to sell your home and divide the spoils. Work on a personal budget so you will know what to ask for in the proceedings.
7. Don’t suffer alone. Join a Support Group, seek counseling, legal, financial and emotional. Waiting until you are in a heap on the floor may lead you to make bad decisions. You may not be thinking clearly and need someone to help you clear your thoughts.

In some cases, divorce becomes un-declared warfare. Being unprepared could mean the soft of heart will be the one who suffers most. The above suggestions are the bare minimum to be aware of. Educate yourself on your rights. Read, go to divorce informational groups, check the net for ideas of self protection.

Listening to friends legal suggestions is a mistake, unless they are a lawyer, or have official information. Divorce is unpleasant enough on its own terms, but making mistakes because of a lack of knowledge can be avoided.

This is a Guest Post courtesy of Patricia Hubbard. For more tips and tools on how to survive divorce and loss and make healthy relationship choices you are invited to visit http://askpat.typepad.com. Patricia Hubbard has Facilitated a Support Group for Separated, Divorced and Widowed people for the past 12 years.

5 Financial Mistakes in Divorce

Avoiding these 5 financial mistakes during a divorce could save you thousands of dollars after your divorce is final. Many people act on emotion rather than logic and therefore make mistakes they later regret. Here are the 5 financial mistakes you must avoid.

1. Holding on to the marital home at all costs

In a divorce situation one spouse may decide they can afford to keep the house and buy the other spouse out by giving them their share. However, keeping the three or four bedroom marital home may be a financial undertaking that neither party can absorb in the post-divorce environment. Especially with economic times the way they are right now, the amount you buy out your spouse for now may not be the same amount of equity you will get when you go to sell in a year or two. A good divorce attorney or Certified Divorce Financial Analyst will help you decide whether it is a good financial decision to purchase the home. Often it is not a good move.

Home values are declining throughout the country and it is a good idea to get your money out of the marital home and then downsize. If you wait to sell the home, your half of the equity could end up vanishing as your home value diminishes in a declining real estate market. Maintenance and child support to the recipient parent can help fund the mortgage and taxes, but some parties find that the burdens of keeping the marital home post-divorce outweigh the benefits, especially in this current home market/mortgage environment.

2. Failing to make a clean financial break.

Clean separation of assets and debts is another difficult task, but one that needs to be done. During the divorce process it is usually a roller coaster ride. Some days are okay and some days are nightmares. You should not take a chance on your spouse running up debt that could negatively affect your credit score. Once a debt is reported to your credit bureau it is very difficult and time consuming trying to get it removed

3. Counting on your ex to honor financial commitments.

Depending on your former spouse to comply with financial arrangements is also a huge mistake. Although both parties in a divorce are held to a court-ordered divorce agreement, creditors are not bound by the terms of the divorce judgment. If your ex fails to pay on debts or loans, you may suffer the consequences when applying for future financing. If the divorce procedures are going smooth you would think you never have to worry but all it takes is one argument and usually there are bitter feelings that could lead to one spouse not cooperating. You can prevent this by not depending on that spouse for any financial commitments unless it is in writing.

If you can pay off debts during the divorce process, that is the best way to go. If you have joint debts and your spouse declares bankruptcy, the creditors will go after you, no matter what the divorce decree states.

4. Forgetting to change your will and beneficiary forms.

Wills and trusts can also be seriously impacted by divorce proceedings. Parties in divorce should separately seek counsel for the redrafting and execution of new estate plans, reflecting the wishes of the maker of the will and/or trust prior to the time of the divorce.

5. Overlooking taxes.

Finally, never forget which amount of money in your divorce settlement is maintenance, and which amount is child support. While child support payments are not taxable to the recipient, maintenance payments are. Having a great accountant could come in handy to keep great records of your finances if you are too busy to do so.

This is a guest post by Michigan divorce attorney Jannelle J. Zawaideh who specializes in family law including child support, child visitation rights, spousal support, alimony, property division, and paternity matters. Call the Law Offices of Jannelle J. Zawaideh to schedule your FREE initial consultation to discuss any family law or marital options you may have. Michigan Divorce Lawyer Jannelle J. Zawaideh has the most reasonable rates to meet your budget. You can also visit http://www.themichiganlawyer.com for more information.

Divorce Debt

Question: My spouse and I are getting divorced and we have a lot of debt. Do you have any tips I should know about?

Answer: Yes, this is a very important topic. In your divorce, you’ll probably each take some of the debt (and whatever assets are available). The divorce decree will state who is taking responsibility for which debts.

The thing you have to know, however, is that the credit card companies don’t give a “hoot” about the divorce papers. If it’s a joint account, you are still responsible and if your spouse isn’t able/willing to pay it, they will come after you. This is true for state and federal income taxes, too.

A client recently came to me with this very situation. Her ex-husband had been paying on the debts just fine until he had a very bad motorcycle accident and ended up in bankruptcy. The creditors came after her for the balances.

The best thing you can do is to get all the joint debts paid off out of the proceeds of the assets if at all possible.

Credit and Divorce

Mary and Bill recently divorced. Their divorce decree stated that Bill would pay the balances on their three joint credit card accounts. Months later, after Bill neglected to pay off these accounts, all three creditors contacted Mary for payment. She referred them to the divorce decree, insisting that she was not responsible for the accounts. The creditors correctly stated that they were not parties to the decree and that Mary was still legally responsible for paying off the couple’s joint accounts. Mary later found out that the late payments appeared on her credit report.

If you’ve recently been through a divorce?or are contemplating one?you may want to look closely at issues involving credit. Understanding the different kinds of credit accounts opened during a marriage may help illuminate the potential benefits and pitfalls of each.

There are two types of credit accounts: individual and joint. You can permit authorized persons to use the account with either. When you apply for credit?whether a charge card or a mortgage loan?you’ll be asked to select one type: Individual or Joint Account

Individual Account: Your income, assets, and credit history are considered by the creditor. Whether you are married or single, you alone are responsible for paying off the debt. The account will appear on your credit report, and may appear on the credit report of any “authorized” user. However, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), you and your spouse may be responsible for debts incurred during the marriage, and the individual debts of one spouse may appear on the credit report of the other.

Advantages/Disadvantages: If you’re not employed outside the home, work part-time, or have a low-paying job, it may be difficult to demonstrate a strong financial picture without your spouse’s income. But if you open an account in your name and are responsible, no one can negatively affect your credit record.

Joint Account: Your income, financial assets, and credit history?and your spouse’s?are considerations for a joint account. No matter who handles the household bills, you and your spouse are responsible for seeing that debts are paid. A creditor who reports the credit history of a joint account to credit bureaus must report it in both names (if the account was opened after June 1, 1977).

Advantages/Disadvantages: An application combining the financial resources of two people may present a stronger case to a creditor who is granting a loan or credit card. But because two people applied together for the credit, each is responsible for the debt. This is true even if a divorce decree assigns separate debt obligations to each spouse. Former spouses who run up bills and don’t pay them can hurt their ex-partner’s credit histories on jointly-held accounts.

Account “Users”

If you open an individual account, you may authorize another person to use it. If you name your spouse as the authorized user, a creditor who reports the credit history to a credit bureau must report it in your spouse’s name as well as in yours (if the account was opened after June 1, 1977).

Advantages/Disadvantages: User accounts often are opened for convenience. They benefit people who might not qualify for credit on their own, such as students or homemakers. While these people may use the account, you?not they?are contractually liable for paying the debt.

If You Divorce

If you’re considering divorce or separation, pay special attention to the status of your credit accounts. If you maintain joint accounts during this time, it’s important to make regular payments so your credit record won’t suffer. As long as there’s an outstanding balance on a joint account, you and your spouse are responsible for it.

If you divorce, you may want to close joint accounts or accounts in which your former spouse was an authorized user. Or ask the creditor to convert these accounts to individual accounts.

By law, a creditor cannot close a joint account because of a change in marital status, but can do so at the request of either spouse. A creditor, however, does not have to change joint accounts to individual accounts. The creditor can require you to reapply for credit on an individual basis and then, based on your new application, extend or deny you credit. In the case of a mortgage or home equity loan, a lender is likely to require refinancing to remove a spouse from the obligation.

For More Information

If you need additional help during this time of financial stress, please call Cindy Morus at 541-387-2995. She’s been through it, too.

Cindy S. Morus (http://www.dontdivorceyourmoney/) is a Certified Divorce Financial Analyst specializing in helping people get fair settlements in divorce. She is also a Certified Credit Report Reviewer, Certified Retirement Counselor, Certified Financial Recovery Counselor and Licensed Tax Preparer. Contact her at 541-387-2995.

Recently Divorced Finances

Question: What advice can you give recently divorced women on how to manage their finances now that they are facing life as a single mom on a limited income? What should be their first priority? Lisa A. Fredette ~ CTA Certified Life Coach ~ Passionate About Life Coaching ~ http://www.lisafredette.com

Answer: Hi Lisa, that’s a really great question and I’m sure most newly divorced single moms are wondering the same thing. I could write a book about that!

Seriously, there are several things you’ll need to do to manage your finances now – some “outer” and some “inner”.

Outer:

1. Live below your means. That means creating a spending plan that takes future expenses into consideration including car repairs, home repairs and medical expenses. I recommend www.INGDirect.com for keeping that money.
2. Take advantage of any government programs you are eligible for such as food stamps or free/reduced meals for your children. You may also be eligible for Earned Income Credit – check with your Tax Preparer (H&R Block doesn’t charge you to do estimates).
3. Review your employer’s benefit programs such as 401k (the match is free money and your contributions reduce your income taxes), health savings accounts (also reduce your taxes). Also check to see that you don’t have too much being taken out of your paycheck for taxes. It’s always nice to get a tax refund but it’s been your money all along and you lend it to the government interest free all year.

Inner:

1. Take time to play. Play with your kids, play with your friends and take time for yourself. Kids don’t need you to spend money on them, they would rather play make-believe or bake cookies with you. When my kids were little, we used to have “no silverware dinner” – ribs or chicken nuggets, oven fries, veggie sticks or artichokes (”Mom, who do you think invented artichokes,” they would ask). They’re teenagers now and they still get a kick out of seeing only plates and napkins on the table. Get together with other single moms for a potluck or picnic at the park or movie night – you don’t have to go out to have fun. Do a babysitting swap so you can have time for yourself – just to read, take a walk or a bubble bath.
2. Express Gratitude Daily. Even though times are tough, it will get better. Expressing gratitude can keep life bright for you. It’s a great tool to teach your children, too. Practice giving back – help them weed for an elderly neighbor or pick up a few groceries for someone who’s housebound. Work together at a food bank or a Habitat for Humanity project.
3. Talk to kids about money. Teach them how to figure out unit costs and sale prices. Teach them how to make choices. Teach them about saving for things they want in the near future and far away like college. When they ask for something, ask them “how can we make that happen?” rather than “we can’t afford that”. Offer to match money they’ve saved or help them make money. Give them an allowance appropriate to their age and transfer responsibility to them. For example, make the entertainment money you hand them out of pocket part of their allowance and the same for clothing. An allowance doesn’t have to mean that you are giving them any more money than you are already spending on them but that you let them decide how to spend it. They’ll stop “nickel and diming” you and you’ll be surprised at the choices them make when it’s their money rather than yours!

Cooperative Divorce – Four Ways to Avoid a Messy Divorce

As an experienced family law attorney, I have seen some very messy divorces and I have seen some “healthy” divorces. I define a healthy divorce in which the parties continue to have a relationship, albeit a different relationship, while they pursue their separate lives.

Child development specialists are unanimous that if there is a divorce, a healthy divorce is the best way to go for the sake of the children. We all know someone who has had a messy divorce and there are plenty of news stories regarding other people’s divorces.

Healthy divorces are rarely the focus of news reports. Yet they truly do exist and are worth pursuing instead of the alternative. How can you avoid a messy divorce?

1. Consider the consequences of a messy divorce

Have a conversation with your soon-to-be ex regarding your goal of avoiding a messy divorce and agree to a plan to avoid it. The major downsides to hotly contested divorce are:

• A major financial expenditure
• All information becomes public
• Very time consuming
• Emotional toll on both parties
• Emotional damage to the children
• Damage to career and business

2. Focus on the issues most important to you

My favorite analogy is that of dividing an orange. A couple fought over an orange and asked the assistance of a wise person. The wise person divided the orange in half. Easy answer – both sides should be happy, right? No, both sides were unhappy. One person really wanted the juice and one really wanted the peel for making potpourri. Therefore each had lost when it would have been possible for both to win.

Look at each important issue and determine what your greatest interest is. Can both of your needs be met in some way? Is there room for trade offs? If you are determined to fight every detail down to the pots and pans, you are not going to be able to have a healthy divorce.

Focus on those issues most important to you. For some, this is the parenting plan and how much time each spends with the children. Money can be a big issue but often there can be satisfactory alternatives that can meet each party’s needs with help from a Certified Divorce Financial Analyst. Get it down to the issues important to you and leave enough room for both parties to survive after the divorce. Often couples find that both of their needs can be met once they are able to determine what is most important.

3. Consider the best revenge

You are hurt and the other party is clearly wrong. Even if this is completely true it does not help solve the problem. If you go to court, Judges are not interested in who did what to whom.

One does not get more money or a better deal because the other person was “bad”. Divorce court is not the place to exact your revenge. Your revenge is living well. A healthy divorce gives you a head start toward that goal. You do not have to spend time in recovery from a messy divorce and, since the process is usually shorter, you get started on your new life even sooner.

4. Explore healthy divorce alternatives

There are many professional advocates to healthy divorce. Cooperative divorce, mediated divorce, and collaborative law are rapidly gaining proponents among lawyers, financial professionals, and mental health professionals. Search for these professionals in your area that specialize in the healthy divorce alternatives mentioned and use those terms in search engines to find information on the internet.

This is a guest post by Karin Quirk who is a family law attorney trained in divorce mediation and collaborative law and practices in Bellevue, WA. For more information go to http://www.karinquirk.com