Articles and Tips

When It Comes To Collaborative Divorce – Selecting the Right Professionals Does Matter!

Readers of this blog know that I am a strong proponent of collaborative divorce.  Settling divorces collaboratively typically result in agreements that consider the goals, objectives and concerns of both parties, and their children. However, if you do choose the collaborative model, you need to make sure that you choose the right professionals. The collaborative divorce model brings together professionals form three separate disciplines to form the collaborative team.  They typically include an attorney for each party, a “coach” for each party, a child specialist (if there are minor children) are and a neutral divorce financial specialist.  Each professional has a specific role in the process and it is important for each professional to be trained, experienced and thoroughly knowledgeable regarding the collaborative model. You should look for professionals who are experts in their field and have Collaborative Divorce training and experience. Divorce is not a practice specialty in which all professionals are experienced.  For example, attorneys are considered experts in legal issues; however, if their experience is in the field of medical malpractice, they may not be qualified to represent you in your collaborative divorce.   Additionally, CPAs are considered experts in accounting and tax issues. However, if their expertise is corporate taxation they will not necessarily be knowledgeable on California community property rules or how alimony / spousal support and child support are calculated. I have found that there are many financial professionals who represent themselves as divorce financial specialists who do not have the training and experience necessary to address the unique financial needs of those facing divorce. Look for divorce financial professionals who specialize in divorce... read more

Divorce and Estate Planning Issues (Part two)

When should you make changes to wills, trusts and beneficiary designations? Ideally you should consider changing all of your estate planning documents before filing for divorce.  This includes updating your living will and financial power of attorney so someone else has the ability to make financial or medical decisions on your behalf if you are incapacitated.   You may also want to name new beneficiaries on your life insurance policies, retirement accounts, annuities and other investments where applicable.  During your divorce proceedings, the ability to revoke your trust or name new beneficiaries on certain accounts might be prohibited.   What’s known as an Automatic Temporary Restraining Order (ATRO) is in place to ensure that your assets and ownership interests stay the same until a valid legal division of property and ownership interests takes place. Changing Your Documents After the Divorce After the divorce is final you are free to update, revoke and amend your estate planning documents and beneficiary designations as you wish.  It is important to know that the divorce proceeding itself does not change the provisions set forth in your estate planning documents or any beneficiary designations.  Before making any changes, you should consult with a family law attorney and an estate planning attorney to prepare the required documents and to coordinate the timing and recording of the changes. This is just one of the financial issues that should be considered during a divorce.  There are many other critical financial issues that should be addressed.  Working with a divorce financial planner at the very beginning of the divorce process will ensure that the financial decisions you make during your... read more

How Divorce Impacts Your Estate Planning

Important estate planning issues are commonly overlooked during the divorce process.  Failure to address these issues before the divorce is final, can negatively impact the lives of each party and their family for many years to come. Divorce financial specialists are trained to identify these issues and work with you to find options that meet your needs. During a divorce there are so many financial, child related and other important issues to address that your estate planning needs may just be simply overlooked? Once the divorce is final each party typically receives their portion of what was community property and will be their separate property going forward.   In most every situation there are changes that must be made to all of the beneficiary designations related to life insurance policies, retirement accounts, pensions, wills, trusts and annuities. Similarly, you should review and update power of attorney and living will documents. The timing of any changes to your estate plan, beneficiaries, wills, trusts and any other estate planning documents involve income tax and legal issues.  You should consult with an estate planning attorney, during the divorce process before making any... read more

Who Gets To File as Head of Household after a California Divorce

Filing your tax returns as “Head of Household” typically results in a lower tax rate compared to filing as married filing separate or single. It is in your best interest to determine each party’s filing status during the settlement process. Couples sometimes mistakenly believe that claiming a child as a dependent entitles them to file as Head of Household.  This is not necessarily true.  To qualify you must meet the following requirements: You must be unmarried (divorced or legally separated) at the end of the year, or live apart from your spouse during the last six months of the year You must file a separate tax return You must qualify to be able to claim an exemption for your child You must maintain a household for your child (even if you do not claim them as a dependent) Your home must also be the home of your child You must provide more than half the cost of maintaining the household You must be a U.S. citizen or resident alien for the entire tax year Your child must have been in the custody of one or both parents for more than one-half the year Your child must have received over one-half of their support from their parents You do not need to claim a dependent to file as Head of Household.  This means that even if you allow your ex-spouse to claim your child as a dependent, you may still qualify to file as Head of Household. IRS tax form 8332, a signed declaration and copies of certain pages from your divorce decree or settlement agreement may have to be... read more

Your Money Fears Could Be Costing You Big Time During Your Divorce

Sometimes fears about money become a self-fulfilling prophecy during divorce.  These fears hold us back from moving forward and  can result in a drawn out settlement process that in the end can cost you more of your time and money on legal fees.  And worse, can result in a divorce settlement that is not in your best interest. Some of the fears we have are actually a result of stories we have created in our minds after hearing other’s horrifying divorce  experiences.  Other fears are based in reality.  Here are a few of the most common money fears: Not having enough money to meet your ongoing expenses Running out of money at an early age Not being available for your children because you have to work more hours or take a second  job Not knowing how to manage your finances Not getting your fair share of the settlement It is possible to work through your money fears.  I have worked with many people who, just like you, were stuck in midst of these fears and were causing themselves more harm than good.  However, when we worked through these fears and addressed them one-by-one they were able to take control of how they think about money and take positive steps to move  toward a more fair and balanced... read more

Discover a New Resource for Dealing with the Financial Challenges That Divorce Brings

No matter if your divorce is amicable or embittered, the reality is that divorce changes your financial life and alters the financial future you’ve come to expect. As a Certified Divorce Financial Analyst™, I work with couples and individuals on a daily basis who are concerned about the financial outcome of their divorce.   In my role as the financial specialist in a mediation or collaborative divorce process, I provide education and an objective viewpoint to thoroughly address each party’s financial issues and concerns which sets a much more positive tone for other issues of divorce that may need to be addressed. Based on years of experience, I have created a guide titled, “Take Control of Your Financial Future – Before, During and After Your Divorce.” Along with psychotherapist Diana Lynn Barnes, Psy.D, we identify the key financial as well as emotional issues that can disrupt the dissolution process. This guide is available on our website, at no cost, to help those who are dealing with these challenging issues no matter where they are in the divorce process. Here are a few of the topics covered: How to address fears about money issues around divorce How to gain  control over your financial life How to plan for your financial future including your retirement Money Management 101 – learning to live within your new financial reality How to teach your children good financial management skills Detailed worksheets to help you create a realistic budget This guide was created to change the way you think about money and help you take more positive steps to change your current... read more

Divorce and Social Security Benefits

If you are considering divorce, you may be wondering about how divorce will impact your social security benefits.  This is an excellent question because knowing what benefits you are entitled to could have a significant impact on your post-retirement lifestyle. You should consult with a divorce financial specialist to get specific advice about your individual case, however, here are some general provisions to keep in mind. The most important provision is that if your  marriage lasted 10 years or more, you are entitled to collect  a social security benefit based on the amount of your ex spouses earnings record. In addition, there are four key qualifications you must meet to collect a divorced spouse’s  benefit: You are currently not married You must be 62 or older The benefit you would collect is higher than what you would have collected based on your own earnings history Your ex-spouse must be eligible or is currently receiving social security benefits It is important to note that the benefits you might collect based on your ex-spouse’s earnings does not reduce the benefits that your ex-spouse will receive. If you remarry, you cannot collect on your ex-spouses earnings unless your second marriage ends by death, divorce or annulment. Another provision to keep in mind – if you ex-spouse is not yet receiving their retirement benefits but they do qualify, you must have been divorced from them for at least two years before you can begin collecting on his earnings. If your ex-spouse is deceased you are still able to receive benefits based on their earnings.  This is important to keep in mind if you... read more

Divorce and Paying for Your Children’s College Education

Many people going through the divorce settlement process wonder if they can require their soon-to-be ex-spouse to pay for their children’s college education.   In California there is no obligation for a parent to pay for college.  However, it is possible for divorcing couples to work through this issue and come to an agreement. In the collaborative divorce process I have helped many couples reach mutually agreeable terms regarding the funding or partial funding of their children’s college education.  Some of the issues that we address include: Each parent’s financial resources The children’s financial resources Each parent’s expectations for their children’s education The child’s aptitude, ability, goals and interests Once both parties agree on these basic issues, we begin working on an agreement that will ultimately be included in the divorce settlement.  In the agreement I typically recommend addressing the following: Whether the child will attend a public or private institution Maximum number of consecutive semesters each parent will  pay for Whether the parents  will contribute to the child’s living expenses.  If so, how much? Whether the parents will pay for medical or dental expenses while the child is a student Specifics about how any scholarships, grants, or loans taken out by the child will impact each parent’s contributions In some cases, parents agree to set up a pre-paid tuition plan, a separate savings or investment account, such as a 529 plan, and identify how much each parent will contribute. So you can see that there are alternative ways to plan for your children’s college education costs.   Keep in mind that this approach does require cooperation between the parties.  I... read more

How to Make Sure That You Receive Your Child Support or Alimony Payments – No Matter What!

One of the issues that is often overlooked during divorce is securing your divorce settlement payments, such as, alimony/spousal support and child support.  The death of an ex-spouse, and subsequent loss of that income, can be financially devastating. Life insurance proceeds can be set up so that the party who was receiving the support can receive a tax-free, lump-sum payment of what they would have received over time from child support and alimony/spousal support. It is crucial that the life insurance is applied for before the divorce has been finalized.  This is because the insured spouse could refuse to cooperate in getting the required medical exam, or, may not be insurable.  Either way, you need to know this before the divorce is final so that you can find alternate ways of securing your divorce settlement payments. Ownership of the life insurance policy is another issue that is often set up incorrectly.  It is important that the party receiving the support is the owner of the policy. The  owner of the policy has the right to change beneficiaries, cancel the policy and take distributions of cash value. If the owner of the policy is not the party receivng the support and the owner makes changes, there may not be any benefits avlailble to be paid to the intended party.  Another reason for the party receiving the support to be the one who owns the policy is that in the event the party paying the premium stops making payments, the owner of the policy would be notified. Upon notification they could take action before the policy is cancelled. Determining how much... read more

Who Qualifies for the Child Exemption and Tax Credits after Divorce?

I am sure that it will come to no surprise with our complicated tax code, the answer to this question isn’t easy.  Sometimes, but not always, it depends on which parent is considered to be the custodial parent. Of the many issues that arise during divorce, sorting through child related tax issues can be some of the trickiest.  That is because only one parent may claim a child as a dependent for tax purposes and be entitled to the valuable tax credits and deductions which can really help to lower your tax liability. For tax purposes, the custodial parent is the parent with whom the child lives for most of the year.  The other parent is the non-custodial parent. Typically, the custodial parent can claim the dependent exemption deduction for the child.  However, it is possible for the custodial parent to release the right to claim the child as a dependent to the non-custodial parent.  While releasing this right provides no financial benefit to the custodial parent, they may choose to do this as a part of the divorce settlement agreement.  It is possible to release the right permanently or on alternate years which means that the couple “shares” the right to claim the child related exemption and related credits. In order for the non-custodial parent to qualify for the exemption, certain requirements must be met. The custodial parent must sign a written declaration releasing to the non-custodial parent the rights to claim the child as a dependent for the year. The parents must be divorced or legally separated under a decree  of divorce or separate maintenance order at... read more

What is Collaborative Law?

Simply put, collaborative law is a method of settling disputes during divorce in a respectful manner.  Collaborative Law was conceived in 1989 by Stu Webb who was a family law attorney in Minneapolis.  The concept grew out of Webb’s belief that court trials in divorce were inflicting greater injury to the couple and their families than the divorce itself. Collaborative Law is based on a set of principles that change the dynamics between divorcing couples from adversarial to collaborative.  The collaborative process is client-centered and helps the couple make significant shifts in thinking about divorce from “win-lose” to “win-win”, for the benefit of both parties. The central principle in collaborative law is that the parties must agree at the very beginning of the process to use a negotiation structure that requires they will not use litigation and will engage in an open exchange of information. Other principles include: An agreement that if either client seeks court intervention the attorneys, financial specialists and all other collaborative professionals must withdraw from case. A promise by all parties to negotiate in good faith. An agreement that all communications during the collaborative process and any documents prepared are inadmissible in any future proceeding without the express written consent of all parties. In most collaborative law cases a neutral divorce financial specialist is included in the process to help the couple identify and work through both short-term and long-term financial issues.  It is important that the divorce financial specialist be unbiased so that they are able to present options that consider the needs of both parties. To learn more about collaborative law I recommend... read more

What Am I Entitled To In A Divorce In California?

One of the most common questions from new clients is, “What am I entitled to in my divorce?”  The answer, of course, requires full disclosure of all assets, debts, income and expenses and takes a bit of work to fully answer.  But the short answer is, “One –half of most of the property acquired during the marriage.” California is what is known as a “community property” state. This means that most property acquired during the marriage, with the exceptions of gifts or inheritances, is equally owned by both spouses.  It also means that each party is entitled to one-half of all community property. While this may lead one to believe that division of property in divorce is relatively easy. Typically that is not the case. There are many grey areas.  For example, if a newly married couple moves into a home that was previously owned by one party prior to the marriage, and during the marriage they both make principal payments on the mortgage, the home may no longer be considered 100% separate property. Another complication could occur if one of the parties participated in a retirement plan prior to marriage and made additional contributions during the marriage.  In this case, both community property and separate property values would have to be determined. These issues can be challenging to resolve and it is wise to consult with a knowledgeable divorce financial specialist who has the training and experience in working with divorcing... read more

Collaborative Divorce Works – Here’s the Proof!

I write a lot about collaborative divorce on my blog with the hope that I can help divorcing couples learn more about the process.  But, what has been missing so far is the experience from the client side.  So I found a very poignant account of the collaborative divorce that I would like to share with you. In this article about collaborative divorce, writer Martha Roberts shares with us her journey in a way that allows us to experience the practical and emotional sides which can only be felt by going through the... read more

Can I Take Money Out Of My 401(k) During My Divorce?

As a Certified Divorce Financial Analyst™, I am frequently asked, “Can I take money out of my 401(k) during my divorce?” Or sometimes, I am asked, “Can my spouse take money out of his or her 401(k) during our divorce?” The short answer is, “Yes, but it may not be in your best interest”. Typically, the amount in a 401(K) plan that is accumulated during a marriage is considered community property. You should not take distributions from a community property account, during the divorce process, unless you understand the potential legal, tax and other financial consequences. I am also asked about  borrowing  from a 401(k) during divorce, to purchase a home, pay an ex-spouse for  their share of equity in a community asset, or paying for a child’s or their own education. Before deciding whether or not to take a distribution or borrow from a 401K, you should consult with a family law attorney and a divorce financial... read more

Important Reasons That You Should Consider Divorce Financial Solutions

If you are facing a divorce, you are most likely experiencing lots of stress and finding it is difficult to know what tomorrow will look like – much less your financial future.  Getting through the financial issues can be the toughest part of a divorce. You face challenging questions: Should we sell the house? What’s the most efficient way to divide our property? What are the potential tax liabilities? How will our decisions affect our children? Working with a divorce financial analyst can save you time, professional fees and make your divorce process go smoother. A divorce financial analyst can help you sort through the unknown, analyze your financial data and prepare reports to help you understand and choose your best options. A divorce financial analyst can provide valuable information in language you can understand on a variety of financial issues related to divorce, including: •Tax issues                                                         •Budgeting •Dividing property                                          •Debt pay-off •insurance                                                          •Employee benefit plans •Retirement plans                                          •Spousal and child support •Social Security benefits                               •Separate and community property •Cash flow                                                          •Children’s education funding and special... read more

What Financial Records Should We bring to our first Divorce Mediation Session?

Once a couple schedules an appointment with a divorce financial mediator, the first question is generally, “What financial records should I bring to mediation?” That is an important question, because having complete and accurate financial data to work with will  result in a settlement that is focused on the financial needs, goals and concerns of both parties.  When a couple makes an appointment with California Divorce Financial Planning, we provide  comprehensive data gathering forms to help them identify all of the data and documents that are needed., Here is an overview of some of the information that you should begin organizing if you are considering divorce mediation. Income sources –  current pay stubs, Monthly Expenses – list of all household, personal and child related expenses Investment Accounts – current statements for: checking/savings, money market, certificates of deposit, mutual funds, all other accounts Education expenses –  for children and the parents if appropriate List of personal property – furniture, appliances, electronic equipment, jewelry, etc. Vehicles –  include boats, aircrafts, and motorcycles Health care expenses –all costs  not covered by your health insurance plan Charitable contributions – contributions made to your place of worship or other organizations you support Tax information – Income tax returns for past 3 years Business Ownership – financial statements and tax returns IRA/401(k), Pension, other retirement plans –  current statements Estate Planning information – wills, trusts, durable power of attorney, etc. Debts – current statements for: student loans, credit card, car, home, etc Insurance – statements for medical, home, renter, vehicles and umbrella policies If you are contemplating divorce mediation and you don’t have easy access... read more

Jerry Cohen Accepts Post for the Association of Divorce Financial Planners

Jerry Cohen, owner of California Divorce Financial Planning, has accepted the position of chair of the 9th annual conference for the Association of Divorce Financial Planners (ADFP). The Association of Divorce Financial Planners is an interdisciplinary association open to Divorce Financial Planners, Attorneys, Mediators, Accountants, Mental Health Professionals, Actuaries and other allied divorce professionals. Divorce Financial Planning members, which include, Certified Divorce Financial Analysts™ (CDFA™), Certified Financial Divorce Practitioners (CFDP), Financial Divorce Specialists (FDS) and collaborative divorce financial specialists, research and analyze personal, business and tax issues related to divorce. They help individuals, couples, matrimonial attorneys and divorce mediators achieve fair and workable... read more

Divorce Mediation – How Does It Work?

If you are currently contemplating divorce, you may want to consider divorce mediation.  You also may be asking yourself, “How does it work and is it right for my situation?” Divorce mediation is a process where divorcing couples work with a neutral third party (the mediator) to help them reach an agreement that is acceptable to both parties.   The mediator’s role is to work with the divorcing couple to help them identify alternative solutions that lead to a workable agreement. It is important to work with a divorce mediator who has training and experience with divorcing couples.  The divorce mediator must maintain their neutral role and understand legal and financial issues related to divorce. The mediator’s role is not to make decisions for the couple.  A qualified divorce mediator will help each party communicate their needs and objectives and make all of their own decisions. One alternative to a mediated divorce is the more traditional litigated divorce.  A litigated divorce is where each party hires their own attorney who will aggressively advocate for their client’s best interest.   This process typically takes much longer and can be significantly more expensive and emotionally draining.  Additionally, in most litigated divorces, the decisions are made by a third party (the judge) who must make decisions based on the law, which may not always be what is best for the couple and their family. The divorce mediation process is more focused on the needs of both parties and their family, rather than a win-lose outcome.    In divorce mediation, couples can safely work out the terms of their divorce, which can make it easier to... read more

Divorce Financial Mediation and the Role of the Divorce Financial Planner

The use of divorce financial planners in the divorce process is relatively new, but is a rapidly growing trend.  Despite a lack of formal training in personal finance, family law attorneys and divorce mediators have historically been thrust into 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 the couple’s long-term financial condition. Divorce Financial planners are recognized experts in personal finance.  Because they have traditionally helped individuals focus on long-term financial needs and 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 able to 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.  The parties’ frequently feel more secure about the choices they make, are able to reach workable divorce settlements more quickly, and are less likely to be forced to revisit support and other financial issues in the future. The divorce financial planner typically acts as a “neutral” advisor.  There is no need for the couple to hire more than one... read more

If You Are Contemplating Divorce You Should Fully Understand the Role of a Divorce Financial Analyst

There is a growing trend that is reshaping the way people divorce.  Collaborative divorce is a method by which divorcing couples agree in advance to reach a divorce settlement without litigation.  While divorce is never easy, it can be made much less traumatic for couples and families if they work through their concerns and issues within a more “cooperative” process. Another positive trend in divorce is the role of a divorce financial analyst.  A divorce financial analyst can address the tax and financial issues that arise during the divorce.  In the collaborative divorce model the divorce financial analyst acts as a “neutral” advisor.  This means that the divorcing couple works with one divorce financial advisor to address their financial needs, concerns and objectives. More and more financial professionals are trying to move into the role of a divorce financial analyst. Before hiring a neutral divorce financial advisor it is important to do your homework to understand the education, training and experience of the divorce financial professional. In order to maintain their neutral role, the divorce financial analyst must not provide unrelated ongoing services to either party, after the divorce that would compromise their neutrality.  What this means is that your divorce financial analyst must agree in advance not to provide any new services to either you or your ex-spouse, after the divorce is final. Additionally, the divorce financial analyst should not offer to sell any products, such as investments or insurance to either party. Of course, the divorce financial analyst can address any issues related to their divorce advisor role that may require follow-up in the future. At this... read more

More Resources

Websites:

We recommend that you learn as much as you can about the financial as well as other issues related to your divorce. These resources provide financial education, divorce information and divorce advice on a wide range of topics, including children of divorce, divorce costs, divorce laws, the divorce process and divorce support.

www.divorcehq.com
www.divorcesource.com
www.divorcenet.com
www.lasuperiorcourt.org
www.nolo.com
www.divorce360.com
International Academy of Collaborative Professionals
Los Angeles Collaborative Family Law Association
Institute for Divorce Financial Analysts
DivorceMagazine.com
Association of Divorce Financial Planners
www.uptoparents.org
www.divorceonline.com
www.childcentereddivorce.com

Articles:

The Role of the Financial Planner in the Divorce Process
Top Five Reasons for Hiring a Certified Divorce Financial Analyst During Divorce
Key Issues to Consider in Divorce

Books About General Divorce Topics:

The Complete Guide to Protecting Your Financial Security When Getting a Divorce
By: Alan Feigenbaum and Heather Linton
Publisher: McGraw Hill

The Collaborative Way to Divorce
By: Stu Webb and Ron Ousky
Publisher: Harper Collins

Divorce: A Problem to Be Solved, Not a Battle to Be Fought
By: Karen Fagerstrom, Milton Kalish, A. Rodney Nurse and Nancy J. Ross
Publisher: Brookwood Publishing

Divorce Without Court: A Guide to Mediation & Collaborative Divorce
By: Katherine E. Stoner
Publisher: Nolo

Collaborative Divorce: The Revolutionary New Way to Restructure Your Family, Resolve Legal Issues, and Move on with Your Life
By: Pauline H. Tesler and Peggy Thompson
Publisher: Harper Collins

Books About Child-Related Divorce Issues:

Cooperative parenting and divorce: A parent guide to effective co-parenting
By: Susan Blythe Boyan; Ann Marie Termini (February 1999)

Everything Parent’s Guide To Children And Divorce: Reassuring Advice to Help Your Family Adjust<
By: Carl Pickhardt (December 2005)

Ex-Etiquette for Parents: Good Behavior After a Divorce or Separation
By: Jann Blackstone-Ford, Sharyl Jupe (October 2004)

Helping Your Kids Cope with Divorce the Sandcastles Way
By: M. Gary Neuman (July 1999)

Mom’s House, Dad’s House: Making Two Homes for Your Child
By: Isolina Ricci (November 1997)

Parenting After Divorce: A Guide to Resolving Conflicts and Meeting Your Children’s Needs
by Philip Stahl (October 2000)

The Co-Parenting Survival Guide: Letting Go of Conflict after a Difficult Divorce
By: Elizabeth Thayer; Jeffrey Zimmerman (July 2001)

The Truth About Children and Divorce: Dealing with the Emotions So You and Your Children Can Thrive
By: Robert Emery (August 2004)

What About the Kids?: Raising Your Children Before, During, and After Divorce
By: Judith Wallerstein and Sandra Blakeslee (March 2004)

Why Did You Have to Get a Divorce? And When Can I Get a Hamster?: A Guide to Parenting Through Divorce
By: Anthony Wolf (August 1998)

Child-Friendly Divorce: A Divorce(d) Therapist’s Guide to Helping Your Children Thrive
By: Diana M. Berry
Publisher: Blue Waters Publications (2004)

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