A divorce is one of the most emotional events a person will go through. It’s also one of the most costly. The average cost of a divorce ranges from $15,000 to $30,000.
Given that this such a huge number, it’s a good idea to prepare for a divorce ahead of time. If you think you might be ending your marriage soon, now’s a good time to start saving up.
Before you hire a lawyer, your first step should be to seek financial help. Many people—especially women—lack financial knowledge, and in a divorce, they end up with the short end of the stick.
Don’t let this happen to you. If divorce is on your mind, here’s how to proceed so you’re financially prepared.
A financial adviser offers invaluable advice to help you use your finances to your advantage. He or she can help you manage money so you can save up for your divorce. He or she can take a look at your assets and accounts and determine what needs to be done in terms of changing beneficiaries. Your adviser will help you open your own bank and credit card accounts and show you how to make a budget.
Hire an adviser early on—before starting the divorce proceedings. Your advisor can help you avoid mistakes and help you find opportunities so you can begin divorced life on the right financial foot.
Get your paperwork together now and you’ll speed up the divorce process. You will need bank statements, pay stubs, tax returns, property information and any investment accounts. Make copies of everything and keep them in a safe place until you can give them to your lawyer.
If you don’t already have a job, now’s the time to get one. You will be living on your own and you will need to support yourself. Alimony from your spouse will not be enough. Dust off your resume, brush up on job skills and start sending out resumes. Once you land a job, you’ll need to save up as much as you can.
During and after your divorce, you’ll need to start preparing for your new single life. This means cutting back on expenses. You will need to stick to a strict budget, so make a list of all of your expenses in the past month. Assess each expense and see where you can cut back. If you’re used to eating out several times a week or getting weekly manicures, you’ll need to eliminate these expenses for a while—at least until you can comfortably pay bills and accrue some savings.
Divorce can be costly, so if you’re considering such as change, start planning now. If you worked part-time or have never worked before, now’s the time to start earning money so you can support yourself.
At The Colwell Law Group, LLC, our divorce lawyers are focused on making your divorce fast, inexpensive and easy. If you’re ready to file for divorce, contact our team today at (518) 213-4204. Get started with a free phone consultation.
As Michael Corelone famously said in The Godfather, “It’s not personal, Sonny. It’s strictly business.” Divorce is both: It may be a very personal experience, but it, too, is about business. As Jeff Landers, author of Divorce: Think Financially, Not Emotionally, explained: “At the risk of sounding terribly unromantic, let me offer this reminder: At its core, marriage is a business contract…. When you’re married, you share things with your partner— things like your income, expenses, assets, liabilities, a stock portfolio… the list goes on and on.” In this three-part post, let’s begin by talking about the first steps you’ll want to take to protect your finances. Then we’ll turn to what financial documents you’ll need during the divorce. And then we’ll review a list of further resources for more information.
You’ll want to take steps to protect yourself—but don’t do it in such a way that you yourself become liable to your ex-spouse for damages. Remember: Right now, the money belongs to both of you. So the conceptual rule in divorce-related accounts is that finances should be basically frozen— neither spouse can empty the accounts or burden the other with new debt.
Therefore, to protect yourself, review all your plans with an attorney, before taking these steps.
Of course, if you and your spouse have an amicable relationship, then you should meet with your spouse to address finances. However, if you don’t feel able to do this, ask an attorney to help.
Make sure that, if you do directly communicate with your spouse, that you follow up the conversation in writing: Send a confirming email or letter noting what was discussed, agreed upon and the date of the meeting.
Prior to the start of the divorce action, you can withdraw half of the money if you are a signatory on the account. As a general rule, that’s what you’d be entitled to, in a court-split. (Although, if you’ll have an unequal share of debt or other assets, you might have to repay your ex, down the road.)
If you have more complicated accounts, another interim option would be to add a dual-signatory requirement (so you both need to agree to withdrawals above a certain amount). You can also call your bank to see how you can limit withdrawals, cancel overdraft lines, and lines of credit.
Have any direct deposits routed to a new bank account.
And before you cancel everything, make sure you what you need to cover existing bills. Consider both the amount and method of payment (e.g., automatic billing).
As soon as possible, get a credit card in your name, as an individual.
If at all possible, neither of you should use any joint card after you separate. You may want to contact all the credit card companies and ask that no new charges be allowed on the card. If finances require you to continue to use a card, document the dates and reasons for any subsequent purchases.
We’ll discuss the specifics in a future post, but for now, be aware that balance on a joint credit card is generally the responsibility of both you and your spouse.
It is essential that to pull together your financial paperwork as possible, but what are mission-critical financial documents? What do you do if can’t find them? And what should you do, once you have them?
What are mission-critical financial documents?
These would include:
Fortunately, today you can receive copies for the majority of documents if you’ve lost the original. If you are unable to find the documents, work with the originator of the document (banks, credit card companies, mortgage broker, etc.) to have a copy sent to you.
After that, look for other related documents that may support you. For example, a shipping invoice or email confirmation may have the costs of a purchase; an insurance policy probably has a date of acquisition and valuation.
Store any original documents in a secure place, such as a personal safe, lockbox, or safe deposit box.
Depending on the number of documents you have, you’re probably going to want to divide them into categories. Keep each category of documents in a separate file. Order the documents chronologically, with the oldest in the back, the newest on top. Then, any time you have subsequent additions to the file, separate them with a dividing paper or flag, with the date, time and any other note.
As soon as possible, make (at least) three sets of copies of these organized documents. While you’ve securely stored the originals, the first set of copies should be set aside; it, too, should be secured stored, as a back-up. The second set is your working copy; you should give the third set to your attorney.
These resources provide both insights and guidance on how you can protect your finances as you go through your divorce.
“Safeguarding Your Money If You Anticipate a Hostile Divorce,” The Dummies’ Guide suggestions if you’re concerned about financial disputes
“Divorce and Your Money”: Kiplinger’s brief overview of divorce and finance
Fidelity’s Guide to Getting Divorced: Information and checklists to help you get organized
“How Loved Ones Can Destroy Your Finances”: Los Angeles Times explores how relationships can harm financial arrangements
“Financial Advice for Divorce”: Miami Herald offers tips on post-divorce finances.
Colwell Law Group is ready to work with you to help achieve financial success post-divorce. Contact us today to discuss your case; we’re ready to help, from separating your accounts to reviewing the necessary documents for a financial settlement that will best provide for you and your family.
In the wake of the Fourth of July, many New York residents are still reeling from the beautiful fireworks they got to see on Independence Day. However, if you’re planning to get divorced, you might be on the verge of experiencing a far more unpleasant kind of fireworks presentation that could drain your pocket book. Fortunately, with a little bit of planning, soon-to-be divorcees can navigate their divorce proceedings in a way that saves money and reduces stress. Just say no to the “fireworks” of divorce by doing the following before you speak with your significant other about your divorce plans.
Following this advice will help you a lot during your divorce. Also, speaking in depth with a divorce planning financial expert and family law attorney is a great place to start getting ready for the process of separating from your spouse.
Source: Nerd Wallet, “6 Critical Steps to Prepare Your Finances for Divorce,” Shawn Leamon, accessed July 06, 2016.
No getting around it: Divorce is expensive. Couples may anticipate between $15,000-$30,000 for a divorce in America, but according to some number-crunching by Divorce Magazine, the cost of a hotly contested litigated divorce today can easily skyrocket to over $132,000!
But even those numbers don’t take into account the indirect and lasting financial impact of a divorce. You need to consider the costs of maintaining separate households, alimony and/or child support, changes in insurance costs, tax implications—the list goes on. And you’re taking on all these extra expenses with potentially with access to less income than you were married.
Sadly and ironically, women tend to bear the financial brunt of divorce even more acutely than men do. As Atlantic Monthly points out, women who divorce generally see their income drop by as much as 20 percent; women are three times more likely than men to fall below the poverty line after divorce. Meanwhile, men’s income frequently increases, post-divorce.
All this bad news does not mean you can’t afford a divorce. It simply means that, regardless of your financial standing now, you need to budget for divorce, because your finances will change—at least temporarily, and possibly for the long term. Therefore, let’s examine some steps you can take, as well as some resources to help make a workable financial plan.
You’re likely to experience an immediate seismic shift in your income and expenses during the divorce process. Here are some practical ways to blunt the blow during these first critical few weeks.
Take a realistic look at all the money your bringing in, whether it’s from your job, investment income, royalties, temporary support from your ex, help from parents, etc.
Then make an exhaustive list of all your current expenses, such as rent/mortgage, bills, debt payments, insurance, food costs, leisure costs, etc. And make sure to include costs directly associated with the divorce itself.
Try to include everything (right down to your daily trip to Starbucks), so you have a realistic view of what’s coming in and going out. If you discover a deficit, you’ll obviously have to make some changes.
Chances are things may be a bit tight financially, at least until you and your ex hammer out a financial settlement.
To complicate things further, you can’t liquidate any assets until the divorce is final.
Therefore, cut costs wherever you can. You might do better to skip Starbucks for now and have coffee at home. If you’ve tightened your belt as far as you can and still face a deficit, you may want to ask your attorney about petitioning for temporary spousal support.
You might think the best medicine for your pain right now is some retail therapy, but trust us—a shopping spree may cause you only more pain. In lean times, even temporary, the last thing you need is to add to your financial burdens.
Financial expert Dave Ramsey offers this advice for keeping priorities straight: “To protect yourself from crisis-mode spending, focus on maintaining your Four Walls: food, shelter/utilities, clothing and transportation. With these essentials covered, you can breathe.”
Obviously, there are things you won’t know about your financial situation until after the divorce becomes final. However, you may be able to make a few educated guesses and set up a preliminary plan of action—and once the settlement is final, you can revisit your budget in a more permanent way.
You’ve already done this at least once—now you’ll have a better idea about your ongoing income and expenses, along with assets you decide to sell. Be as meticulous with this budget as you were with the last one.
Don’t be surprised if your debt goes up post-divorce, especially if you had to take out loans for the divorce itself. However, don’t be dismayed by the debt, either; just make it a priority to reduce your debt as quickly as possible. Every dollar you don’t have to spend on debt is one you can use to build your wealth. Consider talking with a financial advisor, if necessary.
If your current job isn’t generating enough income to keep you and your family comfortable, take a look at your options for new income streams.
Try to think beyond just getting a second job that makes you work more hours and may reduce your quality of life. Instead, consider ways to generate more “passive” income or opportunities to increase your earning potential.
For example, if you received a decent divorce settlement, you might invest that money to help it grow. If you are thinking about a new career or starting a business, perhaps you should use some of your settlement toward advanced training or as startup capital. A financial advisor can help you think in the right direction. (More on that topic in a future post.)
The key is to establish goals for your financial future, just as you work out the rest of your post-divorce plans.
The legal team at the Colwell Law Group has been helping people like you for over 10 years. If it’s time to end one chapter in your life and begin a new one, contact us today!
Additional Resources for Further Study
The Financially Smart Divorce: Three Steps to Your Ideal Settlement and Financial Security in Your New Life by J.A. Licciardello.
Divorce and Your Money with Shawn C.H. Leamon, MBA (Podcast)
BalancePro.com free downloadable divorce budget worksheet
Up to now, we’ve addressed the ins and outs of divorce as it pertains to the average couple, and we’ve begun with the assumption of limited finances because that’s the experience for most divorcing couples. But what if the opposite is true? What are the particular issues in divorces where one or both spouses has a high net worth? How do you take steps to ensure a fair and equitable distribution? How do you know if you’re receiving all you’re entitled to—or conversely, you’re not giving up more than you should?
As Investopedia points out, there is no precise definition of what constitutes high net worth—however, the term is most commonly associated with individuals who have at least $1 million in liquid assets (i.e., not tied up in homes, property, etc.). People who have more than $5 million generally classify as having very high net worth, and those with more than $30 million, ultra-high net worth.
Whatever benchmark you use, the more affluent a person is at the time of divorce, the more complicated the divorce negotiations can become.
Although New York law doesn’t have a different set of rules for divorce settlements above a certain threshold of wealth, distributing $5 million may be more difficult than settling one in the thousands. Even amicable splits can become hostile when evaluating all the assets, business valuations, etc. to determine equitable distribution.
Having a high net worth doesn’t automatically mean a long, expensive divorce process; however, the more you understand the special issues that should be addressed, the easier the process may become. Here’s what we need to consider in divorce cases involving more affluent clients.
Negotiating a fair divorce settlement for high net worth individuals can be challenging, but certainly not impossible. However, given the added complexity of such cases, it is even more important to obtain skilled legal help.
Before moving forward in our discussion, let’s make sure we’ve covered an important base: If you don’t yet have a financial advisor, separate from your ex, choose one as soon as possible. Don’t wait until after the divorce; get an advisor now, while the divorce is ongoing.
Why not just keep the same financial advisor you had as a couple, at least while you’re splitting assets and separating responsibilities? We can list several reasons:
If you’ve never vetted a financial planner before, the process of screening and hiring one can be daunting. Almost anyone can hang out a shingle claiming to offer financial advice and management strategies, and there’s a confusing variety of pay structures and licensing credentials (e.g., CFA, CPA, CFP, ChFC and so on). Therefore, it can feel impossible to know whether you’re getting the right person until after you fail to see good results.
For our purposes, let’s focus on a general-purpose advisor. Most experts agree that’s a good choice for the uninitiated. If your needs expand beyond these basics, feel free to research other options.
Of all the 3- and 4-letter credentials you might find after someone’s name, the Wall Street Journal and other financial-related publications suggests the best combination to look for is a “CFP”—Certified Financial Planner. CFPs must go through the most stringent studies and pass rigorous exams to get that designation, and, once certified, they must agree to operate by a strict code of ethics. If you don’t know any CFPs, you can search for one in your area using the CFP website. Another place to search is the National Association of Personal Financial Planners (NAPFA) website.
Financial advisors’ pay is usually either commission-based (according to financial products they sell you) or fee-based (charging a flat fee, hourly rate or 1 percent of your assets).
Good planners may be paid either way, but both the Wall Street Journal and Forbes warn consumers to be wary of commission-based pay structures, because of the possible conflict of interest. An advisor paid on commission is more likely to steer you toward investment or insurance products because they pay him a higher commission, rather than be the right product for you.
As an alternative, Forbes recommends working with a fee-based advisor: “Fee-only advisors have a fiduciary duty to act in the best interest of their clients…. They don’t receive commissions or fees based on product sales, and usually provide more comprehensive advice.”
These days, the Internet serves as a fantastic tool to vet any prospective financial advisor. You can usually find out in minutes whether the person has any negative marks or disciplinary actions on their record. You can verify a CFP’s credentials directly on the CFP website mentioned above; you can also check for disciplinary marks on sites like BrokerCheck. Finally, feel free to run a background check on a financial advisor to see if there’s any red flags that these sites didn’t reveal.
Ideally, you don’t just want a financial advisor who is going to manage investments or give you tax advice. You want someone who takes a big-picture approach to your finances while evaluating where you are now. The right person will help you create a comprehensive budget and planning strategy—to get you through the divorce and find your footing for the future. The sooner this person is on your team, the easier it is to see the light at the end of the tunnel.
In the wake of any divorce, financial stability can be one of the toughest things to navigate. This is especially true if you have been financially dependent during the relationship—but it still can be challenging if you’re now responsible for alimony and child support.
What does it look like to reset your money and your financial plan for life as a single person—or a single parent, for that matter? Simply having to ask that question can be daunting, especially if you’ve never done it before.
Fortunately, resources are available to help you move forward with confidence. We’ve compiled the following list of some of these, to help you do just that.
The State of New York offers a wealth of resources and programs for its citizens across the board. The following sites offer an excellent starting point to find information and assistance for which you may qualify:
While divorce’s financial impact may be intimidating, knowledge is power. When you become more financially literate using these resources, you’ll find yourself move forward with confidence. For effective legal representation from a compassionate family law attorney, call our offices today.
As if ironing out any financial settlement in a divorce was not difficult enough, for business owners, the process can be exponentially more complicated: Your company is an asset to be considered in the settlement, and there’s the added challenges of keeping your business functional amidst stresses of your divorce, and so on. How do you navigate these tricky waters without sinking the ship?
To start, take courage in the fact but you’re not the first person to have this problem. Many thousands of businesses have survived divorce, even particularly nasty divorces. The process might not be easy, but with a bit of foresight and planning, you can steer your business through this difficult time with a minimum amount of damage. Let’s explore a few issues you’ll need to address.
Let’s start with the good news: You’re probably not going to have to sell off your company to settle your divorce. The reason? Your business is an asset and a source of income, one that provides a potential means of support for your ex and children of the marriage. The courts aren’t eager to force you to liquidate your company, if it would cut you off at the knees financially.
That being said, the first issue to address is ownership of the business, at all time points—prior, during and after marriage. If you began the business prior to the marriage, and kept all of your assets and debts separate from the rest of your marriage’s finances, or if the agreement is subject to a pre-nuptial agreement, then it’s possible that you may claim this as “separate property,” meaning you own it outright. On the other hand, if you started the business during the marriage, or if you and your spouse both contributed time and money to the company’s success, then it’s more likely that at least a percentage of the company will be considered as jointly-owned, marital property.
Typically, this results in three options for the ownership of the business:
Given the strong possibility that one of you will walk away with sole ownership of the business—and you hope it’s you—the question becomes what it will cost you to “buy out” your partner.
This dollar amount is determined by: a) the valuation of your business; and b) the percentage of the company to which your ex has a claim. Unless you started the business together as 50-50 partners, don’t assume it will be a 50-50 split (equitable distribution does not automatically mean equal distribution and many factors play into that determination):
According to an article in Inc., “A spouse who lacks involvement has a reduced claim to the business value…. It is best if your spouse is not an employee, does not contribute to the business’s management, and does not provide ideas or business innovation advice. If you are still in the pre-divorce stage, start to document your spouse’s lack of involvement in your business.” If you can demonstrate that your ex has minimal involvement in the company, you may be able to minimize your ex’s ownership claim.
While there are no guarantees in a joint-ownership situation, additional steps may strengthen your chances of keeping the business in a divorce. Entrepreneur.com offers a few interesting strategies to do that, including the following:
Aside from the ownership issues, keeping a business operating smoothly during a divorce can also be difficult—especially if it’s a small business or a one-person operation. Emotional stresses, financial stresses, demands on time and attention, these can all create a perfect storm of non-productivity.
It’s easier said than done, but the more you can keep your family drama away from the business, the better. Venting to your employees doesn’t help productivity; neither does having a knock-down, drag-out fight with your ex while your team members are trying to talk to clients. Resist getting any employees or customers involved in the divorce.
Keep the workplace atmosphere as professional and positive as much as possible.
You may have to take money out of the company to pay for the divorce, but that doesn’t mean you have to bankrupt your business. While you’re going through the process, be willing to tighten your personal belt a little. Avoid large purchases for now; reduce waste and improve efficiency.
Realize that a divorce is actually a lawsuit, and plan accordingly. Meaning that you will have to spend time away from work, in meetings with your lawyers, perhaps at court or in other proceedings. Beyond that, realize that this is an emotional time: There will be days when your head just isn’t in the game. Therefore, plan on bringing in some temporary help, or outsourcing a few tasks so you don’t have to think about them. And it’s better to be proactive on this, then end up shorthanded and overwhelmed.
Sheryl Nance-Nash of Quickbooks agrees: “Yes, it’s a highly charged time, but keep an open mind about what’s best for the business. Perhaps it would be prudent to have an outside manager or receiver to come in and make day-to-day decisions while you’re handling personal matters.”
You’ll fare much better by keeping your customers happy, even if you have to increase your overhead temporarily.
Navigating a divorce with a small business at stake definitely comes with an added level of stress and concern, but it can be done, and quite frequently with both parties in agreement with the result. Try to stay calm, remember that you have options, and work with your attorney and your ex’s attorney to hammer out an arrangement that works for both of you.
Among the thousands of details divorcing couples must deal with, insurance seems to be one detail they forget about, more often than not. Perhaps the reason is that insurance is something that sort of runs in the background—we pay the premiums to keep it active, but we don’t really think about it until we need it.
However, divorce qualifies as a “significant life change” for most insurance policies. If you don’t address this change with your current policies, you could find the coverage is not there when you need it; your divorce has disqualified one or the other of you. To sidestep this catastrophe, let’s look at what you need to know to make the proper changes to your insurance.
Basically, auto insurers base coverage on where the vehicle is kept, who owns it and who drives it. Once you and your ex have different residences, your auto insurance must reflect that change—specifically, one of you needs to be removed from the other’s policy and obtain separate insurance.
The biggest change you may feel is in the rates: Once you separate, you will likely lose any multiple-driver discounts you once had. However, you may recover some of this discount by bundling other types of insurance with it.
Emily Delbridge of The Balance has written a helpful article to remember details of making this change. Among the most important points she makes are:
One other detail to consider: If you have children of driving age, they need to be covered under one of your policies—usually under the insurance of the custodial parent.
Health insurance can be one of the most painful details to address, especially if you’ve got great health coverage because of your spouse’s job. Here in New York, employers aren’t required to cover ex-spouses following a divorce, so you’ll each eventually need individual health coverage. However, you do have options:
Finally, if you have children, getting them covered under one of your two health plans is a relatively easy proposition—or in some cases, they may qualify for coverage under Child Health Plus coverage. You’ll likely share costs of covering the children, and that can be negotiated in your divorce agreement.
If you move out of the house and rent a place while the divorce is in progress, arrange for renter’s insurance for your new place.
As for homeowner’s insurance, you should notify the insurer if one of you leaves the residence, but you probably won’t need a new homeowner’s policy until the divorce is final. At that point, the insurer will write a new policy to cover whomever received the home as part of the divorce settlement.
Life insurance perhaps ensnares divorcing couples more than any other insurance—and ironically, it’s the ones you leave behind who must deal with the fallout if you made a mistake.
Life insurance doesn’t base its payout on marital status, but on whoever is named as a beneficiary on the policy. If you’ve named your spouse as a beneficiary on life insurance, but you forget to change that after you divorce, your ex-spouse could get the death benefit, even if you remarried and have children from the new marriage.
Of course, you might want to keep your ex-spouse as a beneficiary, as well as any children you had from that marriage. That’s perfectly acceptable. Just make sure you do it on purpose and not by accident. Review your life insurance policies with a financial advisor to make sure they reflect your actual wishes as to who gets the money when you die.
Making changes to insurance (or getting new insurance) in a divorce isn’t usually difficult—mostly it just amounts to details. However, to make sure you all stay properly covered, they are details you don’t want to forget.
The legal team at the Colwell Law Group possesses the skills and knowledge to answer your questions and get the most favorable result out of your family law case in the easiest way possible. Give us a call today to get started!
MarketWatch tells the cautionary tale of a man who died just two months after his divorce was final. His two children from a previous marriage got a rude awakening (and a stack of unpaid legal bills) when the courts surprisingly awarded their father’s life insurance and pension benefits to his ex-spouse instead of the kids. The reason? Despite living in a state that supposedly automatically disinherits ex-spouses after a divorce, the man had failed to revise his estate plan when the divorce became final. Since his ex was still the named beneficiary, in the end, the court decided that his beneficiary designation superseded the state’s default rule. The ex got everything, and the kids got nothing—all due to a small but significant oversight.
We wish we could tell you this story is an isolated incident, but the truth is it happens more often than you think. Anyone going through a divorce is obviously neck-deep in details, but overlooking this—revisiting the question of what your ex-spouse will or will not inherit when you die—can be potentially devastating. If you created an estate plan with your spouse, you need to revisit that plan when you divorce. And if you haven’t made an estate plan yet, becoming newly single presents an opportune time to do so. As the story above shows us, doing nothing can lead to disaster.
How do you make sure you’ve got all your bases covered when revising your estate plan? The following checklist should help.
If you’re like most people who have created a Last Will and Testament, you named your spouse as a primary or sole beneficiary. Here in New York, as in other states, the law automatically revokes divorced couples’ inheritance rights—unless the will specifically states otherwise. Moreover, the law doesn’t necessarily address what happens if you also named your spouse as the Executor for your will. (Chances are you don’t want your ex-spouse overseeing the distribution of your assets after you’re gone.)
The best way to prevent any unintended consequences is to revoke your old will and create a new one that reflects your current wishes, naming new beneficiaries and detailing who gets what. You may want your ex-spouse to be included in the will, and there’s nothing wrong with that—just make sure you make your intentions clear.
Many people assume changing their will automatically revises other beneficiary designations. However, as this article in Forbes reminds us, specific beneficiary designations always override the will. For example, if your will says your son should get your life insurance death benefit, but your life insurance policy itself names your ex-husband as the beneficiary, guess who will get the payout?
“Should you die without naming new beneficiaries, your ex-husband could stand to receive assets you would never in a million years have intended for him to inherit,” the article points out. “More importantly, your children, or whomever else you would really want to receive those benefits, could be left out in the cold.”
To prevent unwanted redistribution of your wealth, make sure you revisit every account, policy and title in your name to see whom you’ve named as a beneficiary. If your ex’s name is on it, and you don’t want him to have it—change it.
If you or your spouse created a trust, your divorce will likely upend most of the provisions, in part because of the change of family status and in part because assets are changing hands. If you don’t revise this document to reflect these changes, you could open the door to all sorts of confusion and unintended consequences that could affect your ex-spouse, your new spouse (if you remarry), your children and other beneficiaries.
The solutions will depend mainly on how your estate plan is structured. If you had an existing trust in place at the time you married, updating it may be a relatively simple matter of removing your ex from the picture. If you created the trust together, you may find it easier just to replace the old trust with a new one independent of your ex, one that reflects your current holdings. However, you should consult an attorney or tax specialist before you do so, to make sure that your changes don’t upend your tax liability.
Last, but not least, if you named your spouse on an advance healthcare directive or power of attorney document to make medical or financial decisions for you in case you become incapacitated, you’ll want to revisit this issue. If you still trust your ex with those types of decisions, by all means leave these documents as they are. However, most people do want some sort of change. Create new powers of attorney and healthcare directives to reflect your desires, naming someone you trust to make these choices on your behalf.
Some of this information may seem confusing, but it doesn’t have to be! The legal team at the Colwell Law Group can help you navigate the legal waters of both your estate plan and your divorce. Contact us today and we’ll be glad to answer all of your questions.
Divorce is a complex process as you work through issues related to minor children, spousal support, and property division. Plus, there’s the emotional toll as you cope with your marriage ending. It can be easy to overlook one essential – yet complicated – task that you must attend to during the year you’re going through divorce: Income taxes. A mistake in filing your return has a considerable impact on your future, and even remedying a simple error can cost you dearly. Though you should discuss your circumstances with an experienced New York divorce lawyer, some information can help you understand what’s involved if your divorce is being finalized during tax season.
Until your final divorce decree is filed in court and you’ve entirely completed the divorce process by December 31, you’re still married in the eyes of the IRS for the relevant tax year. As a married person, you have options to file your income taxes, but the key is choosing the route that results in the lowest possible tax liability:
There are additional factors you must consider when filing taxes during the divorce process:
Taxes may not be at the top of your mind during divorce proceedings, but they require your attention just as all other elements of the process. Failure to consider your options and file according to your best financial interests can be expensive, and mistakes may lead to serious consequences. The New York divorce lawyers at The Colwell Law Group, LLC have the in-depth knowledge of the law and tax regulations to assist you in handling all types of financial matters. We serve families throughout the Capital District, including in Albany, Schenectady, Saratoga and Troy, so please call us today at (518) 213-4204. We can answer your questions or set up a fully confidential initial legal consultation to discuss your situation.
You and your spouse will work out many financial issues through the New York divorce process, either by agreement or through court determination. Alimony and division of marital property are two of the key areas that the proceedings are intended to resolve. However, it is still critical to consider your future and budget for your new lifestyle. Divorce is a major life transition, no matter how long you were married or level of income. Your lawyer may have some specific suggestions on budgeting and financial issues after a New York divorce, and you might also find it useful to review some general factors.
When you are used to earning two incomes and sharing household expenditures, your new economic situation can come as a shock. New York law requires an equitable distribution of property in a divorce case and reasonable spousal support, so you cannot expect a windfall. Take a responsible approach to your budget by:
If a court awards you spousal support once proceedings conclude, make sure you know the differences between different types of post-divorce alimony. Durational means that your support will continue for a fixed period, under the assumption that you will become self-sufficient. Non-durational alimony may extend further into the future, but it is still critical to spend wisely. After paying all monthly bills and accounting for regular expenses, make sure you set aside some money for savings.
Child support is designated by law and order of court, so it is really not in the same category as income or a monthly expense. Still, regardless of whether you are the recipient or payor, you do have a duty to your child to ensure proper spending of funds. Under New York law, child support is intended to provide for the child in the same lifestyle he or she would have enjoyed had the parents remained married. The funds should go toward:
Instead of waiting until you are behind on bills or having credit troubles, it is wise to figure out a post-divorce budget that works for you and ensures a bright financial future. For assistance with budgeting after divorce and related matters, please contact The Colwell Law Group to schedule a consultation with our New York child support lawyers. You can reach us by calling 518.864.0564 or visiting our website.
If your circumstances are such that you need to address both bankruptcy and divorce, you are probably feeling a little overwhelmed by your situation. Neither process is easy, so it is tough to be forced into these two types of proceedings at the same time. Federal bankruptcy laws are complex and the New York divorce statute is extremely detailed. Plus, emotional issues are part of any New York divorce, which can further complicate the financial dire straits you face. Your best strategy to take on these matters is to retain an experienced Fulton County divorce lawyer to help guide you through the process. Some background information may also be useful.
As you can see, divorce and bankruptcy are even more complex when you must face them at the same time. A lawyer with experience in both is a valuable asset in explaining your options and advising you on the pros and cons. For more information or to schedule a consultation with a member of our team, please contact Colwell Law Group, LLC at 518-864-0564 or visit us online.
Readers may be familiar with a documentary called “Divorce Corps.” The film explored the divorce industry, which reportedly earns around 50 billion dollars every year.
As a law firm that has helped many clients going through a divorce, we know that litigation costs resulting from prolonged court time can quickly rack up costs. For that reason, we are committed to helping our clients reach agreement on as many issues as possible outside of court. At the same time, we understand where certain costs are a worthy investment in a client’s future financial stability, such as utilizing a forensic accountant to obtain an accurate inventory of marital assets and debt obligations.
Our experience is another benefit to our clients, often helping them avoid certain pitfalls in the first place. One example is pension and retirement benefits, which might be considered marital property under certain circumstances, such as if the accounts were acquired during the marriage. We can draft a qualified domestic relations order, or QDRO, to legalize any arrangements for the division of those accounts.
For clients concerned making ends meet during the divorce, we can request temporary relief from the court in the form of child and/or spousal maintenance. New York law provides a formula for that calculation of temporary spousal maintenance, but our experience also helps us to present persuasive assertions to the court on a client’s behalf.
Finally, we can also help clients look to the future, projecting their financial health after the divorce. In addition to spousal maintenance and an equitable distribution of the marital estate, we can review our clients’ estate plans and update them to reflect their newly single status.
Source: Huffington Post, “New Documentary Sheds Light On $50-Billion Divorce Industry,” Jan. 6, 2014
Whether college is a few months away or several years down the road for your child, the time is now to address secondary education issues if you and your spouse are divorcing. Even when couples have a general agreement on post-high school plans for their children, the exact details should be part of the final divorce decree. If you fail to provide for college, university, or trade school – such as the critical point of how to pay for it – the end result may be far from what you intended for your children. As you’re working through various financial issues, discuss with your New York divorce attorney the different factors regarding how to allocate secondary education costs.
There are no laws that cover how divorced parents should split college costs; in fact, there is no legal obligation for either parent to pay. In New York, a parent must pay child support until the child turns 21 years old – likely after he or she will be moving on to secondary education. Therefore, the most appropriate option for would be to include language in the divorce decree.
Items you should specifically reference in the divorce decree include:
As a practical matter, the parent with a lower income should have primary custody of the child for at least one year before he or she will start applying. The student will be eligible for more financial aid because it’s based upon need.
Don’t sacrifice your child’s future by failing to address the issue of secondary education with your spouse as you’re going through divorce proceedings. For parents, it’s especially important to discuss how you’ll handle financing, whether for university, trade school, vocational college – or any other type of programs. At The Colwell Law Group, LLC, our New York divorce attorneys have represented many clients throughout the Capital District, including in Albany, Schenectady, Saratoga and Troy. We have the experience and in-depth legal knowledge necessary to help you navigate difficult divorce proceedings, so please contact us today at (518) 213-4204 to schedule your fully confidential initial legal consultation.
According to McAfee’s online security expert Robert Sicilano, “Sharing passwords is seen as a sign of love and devotion, a sign of commitment.” Handing over the digital keys to your life may have been as significant in the relationship as making a set of house keys. But just as you may change the locks on the front door, “When the relationship goes south, change those passwords right away,” warned Sicilano. When you are getting a divorce, securing personal information and data should be a priority—not an afterthought—even if you are in the process of an amicable separation and divorce.
In a 2014 study by the Pew Foundation, 67% of committed couples share email passwords, while 27% actually have a shared email account; those together for more than 10 years are “especially likely” to share an account. Eleven percent have shared social media accounts or online calendars. And stunningly, McAfee found in 2017 that more than 20% of couples even share access to work-specific devices and accounts.
Even during a relationship, the trust with electronic information seems to be misplaced: 48% have secretly read partners’ emails, while 56% of romantic partners have spied on their partners’ social media pages and bank accounts.
As CNN reported,
“Scorned lovers are nothing new, nor are regrets, in the harsh light of a dissolving relationship, about exposing too much of yourself to someone. But in the mobile age, it’s easier to share intimate pieces of information like photos and videos, as well as equally sensitive information such as e-mail passwords, banking logins, health insurance identification and Social Security numbers.”
So here are a few steps to secure your information.
Start by making sure that there are no existing viruses, tracking software or other malware on any of your devices. (If you do find any, before removing them—contact the police or consult with your attorney, on a non-trackable device. This is especially important if there are any domestic violence issues in your case.)
Once your devices are clean, set password locks for all of your mobile devices and computers. Siciliano also recommends installing antivirus software on your personal devices, especially Android phones and tablets, to better protect any sensitive information saved on there. In addition, you should install software, such as Apple’s Find My iPhone, that allows you to remotely wipe information from a device if it’s lost or stolen.
Next, make a list of all of your online accounts. Include everything. If you’re only thinking about email and Facebook, think again. In the US, the average email address has 130 online accounts registered to it—newsletter subscriptions, store bills, club memberships and so much more.
Unless you have a very specific reason to do otherwise, skip the custody argument over a shared email address and create new addresses. You might find this inconvenient but think of it from the perspective of a confused sender, who doesn’t know which person is receiving or responding to the email. That’s difficult for friends and family, but it’s going to be unacceptable for your attorney, financial advisors or prospective employers. It’s much cleaner if you start with an independent identity.
For existing accounts, even those you hold on your own, change all your passwords. (If you need help minding all your passwords, there are apps to both create and maintain passwords for you.)
There’s an important note here—do this for your personal information and accounts. But be careful if you’re going to stop your ex’s access to business or financial accounts. It’s best to check with an attorney before doing so.
According to McAfee, one in 10 exes has threatened to post a revealing photo of a former partner online, and 60% of those people have followed through with it.
From the legal perspective, if you send an email or text, write a love letter, take a photo, you own the copyright, and that means that someone can’t use or distribute it, without your permission. However, you really only have recourse after someone has violated your copyright. In other words, you can sue after the ex reposts that the sexy selfie you took, but there’s not much you can do beforehand. And of course, by then, the damage is already done. Also, copyright laws do nothing to protect you if someone else is the creator—if it was your ex who took that intimate photo.
If your ex has compromising photos, documents or other information, you can ask that the files be deleted. If you’re concerned, you might even consider including control, use or destruction of such photos, etc. in the terms of the divorce settlement.
And in the worst case scenario, know that many states have laws to protect victims of “revenge porn.”
For more information, the Federal Trade Commission provides an excellent “how to” on keeping your personal information secure.
At the Colwell Law Group, we understand the challenges that can occur in the divorce process. Let our experience work for you.
At the Colwell Law Group, our number one priority is always our clients. The members of our team have decades of combined experience in negotiating and trying family law cases. We are able to use our experience and our knowledge of the courts and New York family law to act as advocates for our clients. Our lawyers are dedicated to serving our clients’ best interests while also allowing them to feel heard and understood. We want to ensure that they trust us and understand why we do what we do. Colwell Law has numerous attorneys who are experienced in Family Law that can help put you at ease.
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