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Tax Time

3/30/2012

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UGH!  Tax time again.  Already?  I met with my personal accountant the other day.  Our yearly gathering- where he feels obligated to ask if I paid my quarterly estimated taxes and I sheepishly admit that, yet again, I did not.  I am a very responsible person but just do not give my personal taxes much thought throughout the year.  I have this meeting and vow to change and pay my quarterly taxes this year, but then go about my life as usual, until this time next year.  Perhaps, you don’t give much thought to taxes either and this has worked as well for you as it has for me.

Well, now you are getting divorced.  That changes things and taxes need to be thought about carefully. When you are revamping your financial picture you need to know how taxes will impact your plans.  If you plan to split your spouse’s 401K money and you are taking your share as cash in a lump sum distribution you will have to pay taxes (but can avoid the 10% early withdrawal penalty by completing a QDRO).  The bottom line number you thought you had in hand to pay for your new expenses is not what you will receive from that 401K.  Uncle Sam takes his cut first and then you get the rest.  You will lose money to taxes now and the investing and earning power of that money for the future.  Would a different strategy make more sense?

There are tax consequences regarding your house. What if you decide that one of you keeps the house for now and will sell in five years, after your youngest graduates from high school?  The exclusion for the capital gains tax for a singleton is $250,000 but $500,000 for a married couple.  So you may end up “losing” $250,000 of tax-free money depending on the decisions you make. Another example of tax implications is that spousal support (alimony) is tax deductible to the person making the payments and considered as taxable income to the person receiving payment.  Child support is not tax deductible for the person paying it and not considered as income for the person receiving it.  This information may change how you originally wanted to structure your post-divorce finances. 

These are just a few examples to illustrate how important taxes effect what you think you are walking away with and what your bank account will reflect you actually have to live with when divorcing.  At Westfield Mediation, LLC, we always encourage our clients to consider the tax implications when making their decisions.  We also recommend that clients review their Memorandum of Understanding with their accountant to fully understand their choices and get suggestions on how to save money in taxes if they do things differently.  Knowledge is power and we want our clients to make decisions from a position of strength.  Once your new life is established you can go back to not worrying about taxes again, until this time each year.
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Divorce Mediator v. Divorce Lawyer

3/16/2012

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So what’s the difference between a divorce mediator and a divorce lawyer? And if you need one, why do you need the other?

These are common questions from the clients who call us at Westfield Mediation, LLC.  A divorce mediator has been trained to work with divorcing couples to help them come to an agreement on issues like parenting, child support and dividing up the assets and the debt.  A divorce lawyer also addresses parenting and financial issues, but her role is to be an advocate for one spouse against the other.  While mediation attempts to create a win-win scenario for both husband and wife, a divorce lawyer works with only one spouse, and wants only her client to win.  This difference in focus (and cost – since two lawyers is often more than 2x the amount of one mediator) is why mediation is considered to be better for the ongoing and future relationship of the former spouses and their family.

So if you decide to go with a mediator, why do we also suggest that you hire a lawyer?  Once the husband and wife have come to agreement on all the pressing issues, we suggest that you hire a lawyer to review the agreement, and to make sure that you understand the law and how it relates to your plan.  Also, even an uncontested divorce needs to go through the court system, and your lawyer can direct you through this process.  At Westfield Mediation, LLC, we provide our clients with a list of mediation-friendly attorneys who charge only to review the agreement and file it in court.  This combined approach of mediator at the beginning, and lawyer at the end, allows you to cover all your bases and save money while preserving your family relationships. 

For more information about divorce mediation contact Randi M. Albert, JD, or Michelle Weinberg, LMFT, at Westfield Mediation, LLC, at 908.913.0373.  View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com. 


-Randi M. Albert
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The Divorce Diet

3/15/2012

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In the past few years I have noticed some women, whom I see every now and then, have dropped significant amount of weight.  Each one is noticeably thinner and clearly several pant sizes smaller.  Unfortunately, I seem to be headed in the opposite direction, so I was intrigued by how they lost so much weight.  Then I heard that they were getting divorced and it all made sense.  They were on the divorce diet. 

This is not a diet I recommend for anyone.  As a divorce mediator, I see how the uncertainty of your life can stress you out and wear you down.  You don’t feel like eating because you are so worried about how your life will work out.  Am I making the right decision?  How should you tell the kids? What if you can’t pay your bills? etc.  Eating loses its priority and your appetite disappears.  Well, divorce does not happen in a day, so if you continually don’t eat because you are so stressed, you are on the divorce diet and will drop significant weight.

One way to combat the divorce diet is to make sure you have a strong support system during this stressful time.  Talk to your friends and family.  Go see a therapist.  Let the school teachers know what is going on with the kids.  Now is the time to reach out, not shut down.  In addition, try to keep the lines of communication open with your spouse.  Knowledge is power and the more you know, the more you can plan, and the better you will feel.  Sometimes it is better to communicate with a spouse with a third party in the room, a mediator, when planning your post-divorce life.  The mediator can keep the communication going whereas when you and your spouse are alone, it may just shut down.  It also seems like paying someone to help you move forward is good motivation for many couples to actually get something accomplished and make decisions.  You want some bang for your buck.  Finally, keep food in the house you like and make sure you eat some of it everyday, even when you don’t feel like it.  Your body needs the nourishment. 

So, while it would be nice to be able to drop a few pant sizes, the divorce diet is not the way to go.  Take a healthier approach to dieting—and your life.    
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    Authors

    Michelle Weinberg, M.Ed.,LMFT, is a Licensed Marriage and Family Therapist with many years of experience working with couples.

    Randi M. Albert, JD, is an attorney with experience in family law and public service.

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