Our Divorce Mediation Blog

ASSESSING ALL OF THE ASSETS IN A DIVORCE

11/16/2018

One of the goals of divorce is to separate financially from one another. Sometimes you remain financially connected due to child support, expenses for the kids, college tuition, alimony, etc. But when going through a divorce you want to try to separate your financial entanglements as much as possible. You open up separate and individual bank accounts, you get individual instead of joint credit cards, you get your own car insurance. Sometimes in a divorce you divide joint assets, such as shares of stock or a pension, into separate accounts or you keep control entirely of one asset, such as a business.

You agree that once you are divorced and separate your assets into these individual accounts you have sole control over them. You manage when to sell your shares of stock and have no say over what your ex-spouse does with his/her shares after the divorce. If you kept all your investments with Bernie Madoff and your ex-spouse pulled all of his/her investments, then post-divorce you are bummed and poor and your ex-spouse is not. The same is said for a small business. If your spouse got 100% of the business in the divorce because you thought the business was not worth much, and then the business takes off, you cannot claim you are entitled to some of that success. Once you give up your claim to something, no backsies.

During divorce mediation at Westfield Mediation, LLC, we recommend that couples get all of their assets valued by outside, objective sources. You want to understand with hard facts what you are giving up and what you are keeping. Many times, people don’t want to go through the effort and expense of getting pensions or businesses evaluated. Instead they often ballpark what they think it is worth and then trade one asset for another. I’ll keep my pension and you keep your 401(k). However, if they got their pension evaluated, they would see that this is not an even swap. Or you may think your business is worth x but really it is worth y. You keep the business worth $100,000 (so you think) but really it would be valued at $25,000 by a forensic accountant doing a business valuation. So, in the divorce settlement you end up giving up too much of your entitlement to your spouse’s retirement funds so you can keep your business. In order for you to truly swap one asset for another you need to know the actual value of it all.

For more information on divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com.

Affordable divorce

10/5/2018

“Can I afford to get divorced?” A lot of people ask us that, and the answer is generally “Yes.” In divorce mediation, at Westfield Mediation, LLC, we show our clients how they can afford to go through the divorce process, set up separate homes, and move on to a happier, less stressful place.

First, the process. While going through a divorce is never free, if you use divorce mediation, instead of costly lawyers for adversarial litigation, you end up paying about 10-20% of the price for a better, quicker process.

Second, establishing two homes. In most cases, creating two households from one costs money, but it does not have to be overwhelming. In divorce mediation, we guide our clients through the steps to ensure that they each have a new place to live that they can afford. We help divorcing couples lay out their assets, debts and budgets, so that they know what they have, and what they can reasonably spend in the short run. The fear of separating some expenses like health insurance, car insurance, credit card payments, etc., sometimes keeps couples in an unhappy marriage. However, separating expenses does not have to mean doubling them. There are ways to deal with these expenses that make them more affordable.

Third, moving forward. Focusing on the expenses of the divorce process sometimes blinds couples to the costs of staying in an uncomfortable, dissatisfying home situation. Living with conflict contributes to stress and has a negative effect on emotional and physical health. Going through a divorce to move forward with your life can easily outweigh some of the financial costs of the process.
For more information about divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com.

Parenting pLans and 529 accounts

8/10/2018

There has been a lot of buzz lately about the changing tax laws and the impact on alimony. (Essentially, after 2019, the paying party no longer has a tax deduction and will be taxed on the alimony he/she pays, while the receiving party is not taxed on this income.)

Another change in the new tax law -- getting less attention, but also important -- involves private school. Parents can now use funds in their 529 accounts to pay for private school tuition and books from elementary school through high school. This money used to be set aside for college or post-high school education only.

For our divorce mediation clients at Westfield Mediation, LLC, we create a plan for all the parenting expenses, including education expenses. For some families, that includes private school. So, now this change in the tax code has to be factored in. Being able to pay for private school with tax free dollars may help some families. In addition, families with existing 529 accounts may benefit from being able to access this money earlier.

But there are potential problems as well. For example, divorcing parents who want to use their 529 accounts for private school will have to consider whether there is going to be enough money in these accounts for both private school and college for their children or whether they need to rethink their long-term savings plans. In divorce mediation, we work together with our clients to create agreements that are comprehensive enough to address their children’s needs through college, yet flexible enough to account for the changing financial situation of the family.

For more information about parenting plans or divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com.

dividing the money

7/13/2018

In a lot of marriages, one spouse is in charge of handling the money – investing, paying bills, taxes, etc. And, in some cases, the other person is completely in the dark about the family finances. Sometimes, this is a conscious choice – one spouse has skills or interests in money management, and the other does not. And sometimes, it just happens with the natural division of labor that occurs when you create a family – you bring the kids to soccer, I will pay the bills; I will make dinner, while you call the accountant.

And this arrangement may work for many couples. Yet, if circumstances change, and the couple starts to think about getting divorced, the spouse without any money knowledge may feel that he or she is at a disadvantage. At Westfield Mediation, LLC, we recognize that this is a common scenario for divorce mediation clients, and we make sure everyone understands the post-divorce financial plan and that both parties’ financial interests are being met.

During divorce mediation, we help couples create a financial plan for moving forward. As part of this process, we have clients lay out all of their assets, debts and expenses so we can all see the whole picture. For some divorcing spouses, this is the first time he/she is seeing all this information, and it may seem overwhelming. In divorce mediation, we help reduce some of the stress by breaking the process into manageable steps. We also recommend accountants and financial planners – these professionals can be especially helpful for divorcing spouses who have never taken on any financial role before.

Being out of the loop on the financial side can seem like a problem for some spouses, but it is not an insurmountable one. In divorce mediation, we make sure everyone has all the facts before the divorcing couple commits to a financial plan for their futures.

For more information about financial plans or divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com.

Retirement Accounts Are A Marital Asset

5/4/2018

Many people are upset/elated to find out that retirement monies accrued during the marriage are considered a marital asset, regardless of which person’s name is on the account. If you had $100,000 in your 401(k) or IRA on the day you got married and $400,000 when getting divorced, $300,000 is considered the marital asset, even if only one person funded all $400,000 from his/her contributions from his/her paycheck into the account. The $100,000 is a pre-marital asset and not part of the marital assets. It belongs solely to the owner of the account.

Pensions can be a little trickier. When looking at a pension you first have to determine how much of your pension is considered to be a marital asset and if you are dividing it now or later. If some of your pension was earned before you were married you will probably need an actuary to do some complicated math to determine what dollar amount of your pension is considered to be a marital asset. There are some complex formulas that are used. It is not as simple as looking at a statement, like you can do with a 401(k) or IRA.

There are two methods to distribute the monies in a pension- Immediate Offset Method and Deferred Distribution Method. Both are well-named. The Immediate Offset Method means you find out the present marital value of the pension (let’s say $300,000 just like in the example above) and offset the value with another equivalent holding from the big pot of marital assets. So instead of getting $150,000 of the pension, you get $150,000 more than your spouse from the sale of the house (which sold for $500,000) and your spouse keeps full ownership rights to the pension. Person A gets $400,000 from the sale of the house and none of the pension. Person B gets $100,000 from the sale of the house and all $300,000 of the pension.

The Deferred Distribution Method means you are waiting to get money from the pension. You determine that one spouse will get x percentage or dollar amount from the pension and the other spouse will get the rest. However, this does not happen until the pension holder is eligible to receive the retirement benefits. You are deferring or waiting for some point in the future to get your marital share of this asset.

Neither method is better than the other. You have to determine which works better for your situation. At Westfield Mediation, LLC we help you figure out what your post-divorce economic life will be. This can help your work out how best to divide your retirement funds.

For more information on dividing retirement funds in a divorce or divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com.

Changing the routines after divorce

2/19/2018

Getting divorced changes the family routines, and both spouses will often need to take on new roles and responsibilities that are different from how it used to be.

These changes in lifestyle can be difficult at first. For example, in some families one parent does most of the child care from arranging child activities and playdates, to helping with homework, to buying presents for birthday parties. After divorce, both parents may have to share these jobs; and it can take some adjustment on the part of the whole family to get comfortable with the new normal. Similarly, a divorced parent may want to take a vacation with their kids. The traveling parent may have to deal with the difficulty of going away without another adult, while the other parent needs to get used to the idea that the rest of the family went on a trip without him or her.

Significant changes also occur on the financial front. For example, one spouse may have taken on the financial planning, money management, bill-paying pre-divorce. Now, that there are two households instead of one, these financial responsibilities need to be taken on by each ex-spouse.

At Westfield Mediation, LLC, we help prepare our divorce mediation clients for these lifestyle changes. We explain that taking on these new roles and responsibilities may feel overwhelming at first. This is a normal and reasonable response. We encourage divorcing couples to seek outside help from friends and family and other support networks, especially during the transition time. We also suggest that our clients think of these changes as opportunities to develop new skills that will help them moving forward.

For more information on divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com.

Big Changes may be coming for alimony

12/22/2017

The proposed tax bill that Congress is working on includes a big change to alimony/spousal support. According to the latest version of the bill, beginning with divorce agreements executed in 2019, alimony will no longer be a deductible expense for the ex-spouse who pays. And the recipient will not have to pay tax on the alimony he or she receives.

This change could be a big deal for divorcing couples. While it could save some money for the person who gets alimony, it may make the higher-earning spouse less inclined to pay spousal support – and have less money available to distribute -- if there is no tax benefit to the payment.

In New Jersey, determining the amount and time period of spousal support or alimony requires a balancing of factors – the length of the marriage, the parties’ age, health, income and ability to earn, etc. Currently, the alimony payments are taxable income for the person who receives them, and a tax deduction for the payer.

In divorce mediation, we work with our clients to develop a fair spousal support plan that also takes into account the divorcing couples’ assets and debts. In our experience at Westfield Mediation, LLC, the current tax rule generally encourages divorcing couples to include spousal support in their agreements, because both the payer and the payee benefit. It will be interesting to see how this proposed change plays out in the real world of divorce.

For more information on spousal support or divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com.

The Hot-Button issue of Alimony

10/27/2017

Alimony is often a hot-button issue in divorce mediation, and the discussion can get very emotional. In many cases, one spouse feels that he or she deserves more money for a longer period while the other wants to pay less money for a shorter time. Also, while the goal is to even things out for some period of time to reflect the lifestyle of the marriage, the couple may also disagree on what kind of lifestyle they had. For example, if this past year was particularly good or bad, how should that factor into the calculation. Luckily, in divorce mediation, we are used to difficult discussions. And we can guide divorcing couples with somewhat competing interests to reach an agreement.

Determining the amount and time period of spousal support or alimony requires a balancing of factors – the length of the marriage, the parties’ age, health, income and ability to earn, etc. Because there is no one set formula, divorce mediators can help couples come up with creative solutions. For example, for our clients at Westfield Mediation, LLC, we sometimes create a plan where the amount of spousal support changes over time, giving the receiving person some opportunity to establish himself/herself financially. Also, in our financial plans, we balance spousal support with the distribution of assets and debts to come up a fair allocation for both people. Alimony has tax consequences and also impacts child support, so it’s important to have a financial agreement that works for the whole family.

Coming up with a plan for alimony that makes everyone feel comfortable can be tricky, but it is doable. For more information on spousal support or divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com.

Child support for grown children

9/1/2017

Most states have a legal limit for “emancipation” – the date when parents are no longer legally required to support their children. It can be based on an age or on an event like getting married, joining the military or graduating from college.

But, in reality, not all kids are magically able to support themselves once they hit that date. So how do you create a divorce agreement to cover the expenses for that time period when your kids age out of child support, but are still not financially self-sufficient?

At Westfield Mediation, LLC, we have many divorce mediation clients who continue to support their children in some way after the legal age of emancipation. Sometimes, the divorcing parents still pay for some bills – like those for cell phones, car insurance, health insurance. In other cases, the kids still live with one parent or the other, rent-free, so the parent is covering both housing and food.

In each of these scenarios, we help the divorcing parents come to an agreement about how to deal with these ongoing expenses. In some cases, we may divide the costs between the parties, or put limits on time frames or amounts. Our goal is to create a parenting plan that is fair to both sides and that is financially practical for the family.

For more information about parenting plans or divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com.

Post-divorce Mediation

8/4/2017

Sometimes the divorce decree is not the final stop for divorcing spouses, and clients need Post-Divorce Mediation. While this may feel like a setback, it is actually pretty common. So, what are the reasons that already-divorced couples go to mediation?

In some cases, one or both of the exes are having trouble following the agreement, and they return to mediation in the hopes of working through their issues with a divorce mediator instead of returning to court. Indeed, the court prefers mediation to continuing litigation. In many settlement agreements, divorced couples are required to try to resolve their differences through mediation before the court will allow them to return.

Another reason for post-divorce mediation is that the needs of children have changed, and the parents want to modify the schedule, the parenting plan and/or child support. Obviously, it is not always possible to predict how your children’s interests will change over time, and sometimes the original plan for them must be modified. Moreover, if clients move to a new location or change jobs, parenting plans may need to be adjusted. In addition, major changes to income from either employment or inheritance also lead divorce mediation clients back to the drawing board to re-work spousal support, child support or both.

At Westfield Mediation, LLC, we work with clients to make their post-divorce mediation sessions as painless and productive as possible. We recognize that many clients are frustrated to find themselves still working on their divorce, and we help guide them through this bump in the road. By using mediation rather than litigation to resolve post-divorce issues, clients can reduce their stress, and save time and money.

For more information about parenting plans or divorce mediation contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com.