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533297511-stock-market-chart-gettyimagesThere was an interesting article in the New York Times regarding divorce statistics. It theorized many different reasons the divorce rate seems to be decreasing in the United States. Perhaps, the economic downturn has caused couples to stay married longer rather than incur divorce costs? People may be getting married less. The author suggested that perhaps certain states or counties skewed the national data, however, state-by-state and county-by-county analysis seems to imply that the divorce rate is dropping nation-wide. In reality, it does seem like the divorce rate is dropping Another divorce statistic that is often discussed is the rate of divorce in second and third marriages being significantly greater than first marriages. Like the drop in divorce rate overall, there is not necessarily an explanation for the statistics but rather a reporting of them. One potential reason for the increased divorce rate in subsequent marriages is that the later marriages are entered into without as much due diligence. People rush into later marriages for the companionship. Another theory suggests that subsequent divorces are “easier” and less daunting because the individual has already survived a divorce. Regardless the reason behind divorce statistics, the facts remain. If you are going through divorce, however, the statistics don’t mean much. Your personal experience is all that matters and knowing your options – collaborative divorce and other alternative dispute resolution processes – can help you survive and thrive through a divorce.
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155134777-sunrise-bursts-through-dense-fog-and-trees-gettyimagesPeace is possible though we are surrounded by conflict.  In the recent words of former Secretary of State Madeleine Albright, “The world is a mess.”  Messiness occurs when people are unable or unwilling to resolve differences without wars of words or weapons.  This occurs not only globally but also on a personal scale.  And for all the extraordinary human costs of violent conflict, the most deeply distressing is its impact on children.

The end of a marriage has some similarities to the breaking up of a country based on sectarian differences.  Is it possible to disconnect without civil war?  Yes, but one must be mindful of the path one is choosing, and deliberately opt to not do battle.  Though sometimes complicated, peaceful resolutions are possible if the focus remains the safety and well-being of children.

I do not believe conflict is inevitable, because for every cause of conflict there is an inverse possibility.   In our day-to-day lives, we can choose a path of peace.  We can elect to follow The Four Agreements as defined by Don Miguel Ruiz in his book by the same name, and use these principles to help us resolve our differences:

1.     I will be impeccable with my word.

2.     I will not personalize what the other person says, does, thinks or believes.

3.     I will make no assumptions.

4.     I will do my best every day with the energy I have been given.

In Collaborative Team Practice, parents who are getting unmarried can draw from sources of support for the emotional, financial, parenting and legal issues that are involved.  Parents remain in charge of their own outcomes, but are given tools to keep the process as respectful as possible, thereby setting the stage for child-centered co-parenting in the future.  And the world your children will inhabit is in the future.  Let it be a peaceful one.

     
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clockGetting unmarried and taxes can become a consideration in terms of whether to have a divorce final by year-end or final after January 1. I have worked on a number of divorce cases where this very topic deserved a thorough analysis to determine which tax filing year to have the divorce final. Here are a couple of important points to remember. If you are married for the entire year, the choices you have for tax filing are joint or married filing separately. If the courts deem the divorce final no later than December 31, you are considered divorced for the entire year and are not able to file jointly or married filing separately. An entry of divorce on December 31 requires filing as single or if qualified as head of household for the year ended December 31. How do you determine which year is best? Usually this requires completion of the various tax return scenarios by a qualified tax advisor normally a CPA or Enrolled Agent. They will run the numbers for a joint return as if the couple was married the entire year. Next, they will run the numbers as if they were divorced for the year with either a single or Head of Household filing status if qualified. Whatever method results in the lowest combined tax for the couple preserves more of the family assets and resources. Sometimes this can amount to thousands of dollars. I recently concluded a collaborative divorce case as a financial neutral for a couple where this very issue came up. My initial analysis revealed the couple could in-fact save thousands of dollars by having the divorce final by year-end vs. filing a joint return for 2014 and the divorce final in 2015. A thorough and complete analysis by a CPA confirmed the couple would save approximately $20,000 in income taxes by having the divorce final no later than December 31. Needless to say, this couple would much rather have the $20,000 in their pockets vs. having to forfeit that amount to the I.R.S. Although divorce documents are e-filed with the courts, there is no guarantee the divorce will be final by December 31. Once the documents are received by the courts, the file is assigned to a judicial officer for review. Files submitted in late November and December are not automatically reviewed and approved by year-end. Attorneys working on the case will often make requests to have the review and entry of divorce completed by December 31. I hope that in this most recent case it will be. It is always worth a try especially when you have $20,000 on the table. Do not overlook the tax strategies and any potential savings when divorcing near year-end. It could potentially save you and your family a bundle.
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171328306-college-planning-gettyimagesParents with children who attend college get to take part in the annual ritual of filling out the Free Application for Student Aid (FAFSA). The FAFSA can be nearly as difficult as Calculus 101, but unlike calculus this math, can have real implications to your life and financial situation. If you are divorced with a child heading off to college, below are some things that you should know about FAFSA and student financial aid. The custodial parent is responsible for filling out FAFSA and it is only their financial and household situation that are reported on the FAFSA. This can have important implications for determining eligibility for aid and for calculating the Expected Family Contribution (EFC) to the student’s college expenses. Determination of the custodial parent follows the criteria below, in descending order of importance:
  1. The Custodial parent is considered the parent with whom the child lived the majority of the time over the 12 months prior to completion of the FAFSA (not the previous calendar year).
  2. If custody time is equally split, the parent providing more financial support over the past 12 months.
  3. The parent that provides more than half of support now and will continue to do so in the future.
  4. The above are the primary criteria, but other criteria used to substantiate the above include who has legal custody, claimed the student on their tax return or has the higher income.
Legally separated parents are considered to be divorced. Never married biological parents are treated in the same manner. Many private colleges do consider the non-custodial parent as a potential source of support, and require a supplemental financial aid form from the non-custodial parent. This affects the awarding of the school’s own aid, but not federal and state aid. The federal government does not consider the income and assets of the non-custodial parent in determining a student’s financial need. However, it does consider child support and other support received by the custodial parent. If the custodial parent has remarried, the income and assets of the stepparent are to be reported as well. Any prenuptial agreement that absolves the stepparent of responsibility for college funding is ignored by the federal government. Potential Impact of the Divorce Process on Student Aid Eligibility A divorce that is still in process or recently completed can have a serious impact on student aid eligibility. The following are common divorce maneuvers that raise the reported income of a custodial parent:
  • Investment and property liquidations
  • Retirement plan divisions that include a distribution to the parent
  • College expense payments required by the divorce decree will be included in the student’s income.
If you are in the process of getting divorced and have a child in college or heading there soon, you will want to consider how your divorce will affect your child’s financial aid eligibility. A maneuver in the divorce process to financially equalize both parties may backfire if it negatively impacts financial aid eligibility.
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Most of my work as a lawyer involves representing clients in Collaborative divorces, and most of those cases involve the use of neutral experts to advise the couple on finances, child development, and communication/relationship dynamics. The idea is to provide them the best professional information in a non-adversarial setting so that they can make well-informed choices when resolving their divorce issues. Very often, the first of these professionals a couple visits will be their neutral coach/facilitator, whose responsibility, if hired, (among many others) will be to help couples appreciate where their communication styles get in the way of decision-making. I’m fortunate to have some wonderful professionals available to serve my clients in that role. In recent years, the coach I work with most often is Lee Eddison, someone who embodies the art of compassionate listening, but who doesn’t hesitate to call a spade a shovel after more nuanced attempts at guidance have been unavailing. One of the assessment tools she uses is to ask each member of the couple to say three positive things about their spouse’s parenting ability. “He doesn’t suck,” doesn’t count, either. She knows that if someone can appreciate a positive contribution to the family made by someone they dislike, there’s an excellent chance they can have an interest-based conversation en route to a resolution. That’s not to say there aren’t other bumps in the road, or good reasons to end the intimate partnership. But the ability to appreciate that duality in their partner at a time when it counts–when you’d least like to–gives that appreciation a power and a significance it won’t have later. It has proven to be a fair bellwether of success in a Collaborative process. Very few individuals who go through a divorce are all good or all bad. There’s a saying in the court system that “In criminal cases, we see bad people at their best, and in family cases we see good people at their worst.” It’s a sound bite, of course, but it’s often true. For divorcing couples who can appreciate the good things their partner has contributed, the chances of escaping the not-so-good parts without making it worse are much higher.
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collaborative divorce optionsThe longer I work as a neutral child specialist, the more important I realize it is to help divorcing parents have meaningful conversations about the possibility that one or both of them will enter into new significant relationships while their children are growing up.  New significant relationships usually generate a range of emotions and reactions in all family members, some of which are unanticipated.  It’s not uncommon for families to re-engage with me when a parent remarries or re-partners to help ensure that children’s best interests are kept at the center of a new family dynamic. New relationships introduce another element of change and uncertainty into co-parenting.  Parenting arrangements for the holidays that were working well may suddenly be called into question.  Boundaries may need new clarification, e.g. who is welcome to attend parent-teacher conferences or take children to their swim meets.  Advance planning and discussions that normalize potential co-parenting road bumps can help parents stay centered on what’s best for their children. Here are five basic considerations regarding new significant relationships:
  1. Give yourself sufficient time to heal.  Divorce is a major life crisis.  Entering into a new relationship too quickly increases the likelihood that you will not have had time to master the emotional and relational lessons to be learned from your marriage so that you can be truly ready for a new significant attachment.
  2. Give your children sufficient time to heal.  Children are deeply affected by a divorce.  Many children tell me the news felt like a bad dream, and what helps them adjust is getting used to the “new normal” over time.  Adding additional changes too quickly can negatively impact children’s energy, focus, emotional stability and resilience.
  3. Inform your co-parent before introducing a new significant other to your children.  This is not only a courtesy between parents, but it also helps keeps children out of the middle when they know the new relationship is not a secret.
  4. If you are co-parenting, any new partner or spouse will need to understand and honor the fact that you have a preexisting lifelong co-parenting relationship.  It can be a big red flag if a new person seems threatened by or not accepting of your co-parenting relationship.
  5. Children may experience insecurity, jealousy or other worries regarding new adults and children who are increasingly present during their time with a parent.  This can be especially challenging if step-children get to spend more actual time with this parent than do his or her own children.  Parents need to stay attuned to their children’s cues about needing attention, and plan dates and special time with them.
When co-parents are prepared to communicate effectively and work cooperatively on behalf of their children, the introduction of new mature significant others to children who are emotionally ready for this change can be a positive experience for all family members.
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157282282Divorce court should be your LAST resort. After all, do you want a complete stranger in a black robe deciding the fate of your future? You do not want a judge to decide where your children will live, how much time you get to spend with them, or deciding your financial future. Once you go to court you lose the control. There are ways to stay out of the courtroom. Sitting down with your ex to work out as many issues as possible will help facilitate a settlement. Sound too easy (or maybe too difficult, if coming to agreements with your ex seems to be a difficult feat), enlist in the help of a Collaborative attorney. As part of the Collaborative law method, both parties retain separate attorneys whose job it is to help them settle the dispute. In the Collaborative process most of the formal steps are waived or postponed so that you and your spouse can focus on your divorce issues. The collaborative attorneys, along with you and your spouse, sign a contract that commits you to reach a settlement with your spouse. No one may go to court. If that should occur, the collaborative law process terminates and both attorneys are disqualified from any further involvement in the case. Having a good attorney who is a problem solver, rather than someone who creates problems, is important. You want an attorney who works with and for you, and not someone who will create unnecessary battles. Another good approach to avoiding divorce court is mediation. Mediation is used as a means of resolving cases without the need to go to trial. Mediation allows for you, your soon-to-be-ex spouse and respective attorneys to resolve issues using a third party, the mediator. A good mediator will work with the parties to settle everything with input from you as well as your attorneys. A mediator can help work out agreements on distribution of property and assets, child custody, child Support/maintenance, retirement, and taxes. Sometimes agreements come easy, sometimes they take time and a lot of work. When agreements are hard to reach, that is when the mediator intervenes. As said previously, the last thing anyone wants is to go to trial, however sometimes going to trial is simply unavoidable. What if you still find yourself in a divorce trial? Be sure to read Daisy Camp’s next blog post on, “What it Means to go to Trial in a Divorce.” Also, a wonderful book to read on the subject is the book, “The Collaborative Way to Divorce: The Revolutionary Method that Results in Less Stress, Lower Costs, and Happier Kids – Without Having to go to Court.” by Collaborative Attorneys, Stuart Webb and Ron Ousky.
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186816463I am often asked what a “drafting” process for divorce entails. While a full process often has 3-5 professionals, a process for clients who have worked out most of the resolutions on their own, can be much more streamlined. Using an attorney for legal advice and drafting can be a cost-effective and quick way to proceed. Here is how the process typically works: 1. Client hires attorney. In a drafting process, the client should hire an attorney who is willing to take on a drafting role – drafting the agreement and advising the client of his/her legal rights. 2. Client and attorney meet to discuss the resolutions reached. In a drafting process, the clients have typically already reached agreement on property division and cash flow. They have disclosed everything to each other and made decisions about how to divide the property (assets and liabilities) and agreed upon child support and/or spousal maintenance if needed. In this initial meeting, the client provides the attorney all supporting documentation and discusses the agreements reached. The attorney advises the client of the legal implications of the agreements and either confirms the agreements or discusses potential revisions. Sometimes, the attorney brings up ideas or questions that the client has not yet contemplated. If so, the client can go back to their spouse and discuss these additional matters. 3. Once the final agreements are discussed, attorney can draft the documents. In Minnesota, the substantive divorce document is a Stipulated Judgment and Decree. There are other supporting documents needed, but this is the main document needed. This Judgment and Decree outlines all resolutions that have been agreed upon. 4. Client reviews the documentation. 5. Spouse reviews the documentation and has an attorney review and advise him/her of the legal implications. 6. The attorneys and clients can communicate and revise the documentation as needed. 7. Once finalized, the documents are signed by clients and attorneys and filed. While a drafting process can be efficient and cost-effective, it works best when clients have all agreements in place and do not waiver from their original positions. If the clients learn more about their legal rights and wants to further explore options, it is often best to enter into a collaborative process, where more options can be explored.
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450844547Almost all divorces end up in a negotiated settlement. (In most states, less than 5% of all divorces actually go to trial.) Therefore, the most important thing for couples to consider, before they start down the path toward divorce, is how to negotiate the best possible resolution to your divorce. When I ask most clients what they want from a divorce process, they almost always talk about two things: 1.) They want a divorce that is amicable. This makes sense. Most wise people would want an amicable divorce; either for the sake of their children, the protection of their finances, preserving their own mental health, or all three. No sane person would choose to have a messy divorce if they can avoid it. 2.) They want to feel protected. At the same time, almost everyone wants to feel some sense of protection. They are entering into important agreements that will impact their lives and, perhaps, the lives of the children for many years. They do not want to sign an agreement that they will resent or regret. These two negotiating goals do not need to conflict with each other. The biggest mistake that people can make is thinking that these two goals are in conflict with each other. They want an amicable divorce but they think the need to hire an aggressive lawyer to protect their needs. Or, alternatively, they think that all lawyers will be aggressive so they avoid getting legal counsel and end up with a settlement that they regret. Contrary to common belief, it is possible for divorcing clients to have the “best of both worlds”. This is the very reason that Collaborative Practice has grown all over the world. The best scenario, of course, would be to have an attorney who will protect your interests and yet preserve an amicable environment. Collaborative Attorneys are trained in non-adversarial negotiating strategies and they are retained for settlement purposes only. Because they focus on settlement only, they work to help your spouse to “say yes” by using interest based methods that help you get better outcomes, without creating the rancor and expense of using adversarial methods. To learn more about Collaborative Practice, and how it can be used to help you get your best outcomes, go to www.collaborativelaw.org or www.divorcechoice.com.
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144560286When contemplating the pros and cons of getting divorced, I doubt anyone ever puts in the pros column “easier to claim Social Security Spousal Benefits”. Some people may not even realize that they can get Social Security spousal benefits based on their ex-spouse’s work record. Below are some of the basics of claiming spousal benefits after divorce. Social Security spousal benefits, whether married or divorced, are calculated to be 50% of the spouse’s Primary Insurance Amount (PIA) at their Full Retirement Age (FRA). That is 50% of the benefit amount the ex-spouse would receive if they applied for benefits sometime after their 66th birthday (currently). In order to be eligible to claim spousal benefits on an ex-spouse’s work record, one has to be over age 62 and so does the ex-spouse. The marriage has to have lasted at least 10 years and one has to be divorced for 2 years. Finally, one cannot have remarried and it doesn’t matter if the ex-spouse has remarried. The advantage of being divorced and claiming spousal benefits is that the ex-spouse does not need to be receiving benefits. Married couples have to undertake some complicated paperwork machinations if one spouse wants to claim spousal benefits while the other spouse continues to work. A divorced person doesn’t even need to interact with their ex-spouse to claim benefits based on that person’s work record. One has to provide the ex-spouse’s social security number, a marriage certificate and a divorce decree to claim spousal benefits. The ramifications of claiming spousal benefits prior to your own FRA should be thoroughly understood before applying early. The same reductions in benefits that affect anyone applying for benefits before their FRA also apply to spousal benefits. For example, an ex-spouse claiming spousal benefits as early as possible – age 62, will have their benefit reduced by approximately 25%. Instead of receiving 50% of their ex-spouse’s PIA, they will receive approximately 35% of that benefit. Another important consequence of applying before one’s own FRA is that social security actually awards benefits based on one’s own work record. If the spousal benefit is greater than one’s own benefit, social security adds the difference to one’s own benefit instead of solely awarding spousal benefits. There is a misconception that one can claim spousal benefits prior to their FRA, let their own benefits continue to grow and switch to their own benefit later. Since social security is actually awarding one’s own benefit for a claim prior FRA, this strategy not possible. The good news is that one can do the switching strategy after their FRA. We have helped divorced working women who have reached full retirement age claim spousal benefits based their ex-husband’s work record. They can receive spousal benefits beginning at their FRA until age 70, while their own benefits continue to grow. By delaying claiming their own benefits until age 70, social security automatically increases their benefits 8% for each year they delay past their FRA. Continuing to work may increase their benefit even further. An additional advantage of waiting to claim benefits until after one’s FRA is that benefits will not be reduced if still working. Anyone claiming benefits prior to their FRA and earning over $15,000 in W-2 income from a job will likely see their benefits reduced. After one’s FRA, one can work without a reduction in benefit and as already mentioned may see their benefit increase. Social Security is a complex program, so whether divorced or married, it is best to meet with a financial advisor to discuss when to take social security before applying for benefits.