Our Divorce Mediation Blog - Westfield Mediation, LLC

What to do about the house When getting divorced

11/1/2019

When couples are considering getting divorced, one question that often causes great stress, is “where are they going to live after the divorce?” Generally, people are emotionally attached to their home, and worried about the impact of moving on both themselves and their children. In addition, for most people their house is both their biggest asset and their biggest expense, so coming up with a plan for selling it or keeping it has to factor into any future financial plan.

At Westfield Mediation, LLC, we always ask our divorce mediation clients to get a market valuation of their home from a realtor to determine how much equity they have in their house. We go over together how much they pay for their mortgage, property taxes, home owners’ insurance and other house maintenance. Then, we consider what would make the most sense financially, and for the emotional needs of the family.

Some options include selling the house, refinancing it in one spouse’s name or continuing to own the house together for a set period of time. Sometimes, divorcing couples are in a hurry to sell so that they have the cash they need to move forward. Other times, the couple wants to wait before selling so that they can fix up the house for maximum profits or just to adjust more slowly to the change in their circumstances. For some clients, rather than sell the house right away, the divorcing couple decides that one parent will remain in the home with the children until they finish high school or college. Such an approach may minimize the stress on the kids, by allowing them to stay in one familiar place.

In any case, the divorcing couple must decide how they will continue to pay for the house expenses, including the mortgage, taxes, home insurance, and potential repairs, until the house is sold or refinanced in one person’s name. The family also will need to allocate enough funds so that the parent who moves out can maintain his/her own separate household. Finally, the couple has to decide how they will divide the proceeds from the house once it is sold. At Westfield Mediation, LLC, we know that each family has its own specific financial and emotional needs, and through divorce mediation, we can help create a plan to fit them.

For more information about dividing assets in divorce mediation or divorce mediation in general, 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

Explaining Child Support

7/26/2019

During divorce mediation, divorcing parents are often confused by child support. How is it calculated? What is included? Can it change over time? Dealing with the uncertainty of how much each parent is going to pay to support their kids makes people anxious. By explaining child support to our divorce mediation clients at Westfield Mediation, LLC., we try to take some of the stress out of the divorce process.

Generally speaking, the state has a formula for calculating child support based on the parents’ incomes and the amount of time each parent spends with the children. Child support is designed to cover children’s day to day expenses of food, shelter, transportation, entertainment, clothing, etc. Additional costs like child care and health insurance are also factored into the equation.

Some special expenses are not included in the state’s formula and have to be addressed separately. These special expenses include things such as private school, college education, some extra-curricular activities’ expenses, and big celebrations like bar/bat mitzvahs, confirmations and Sweet Sixteens. Moreover, higher earners may find that the state child support guidelines cannot be applied to them. In those cases, parents determine their child support responsibilities based on a budget of their children’s actual expenses.

The Courts require divorced parents to pay child support until their children are emancipated – usually once the kid graduates from college, joins the military, gets married or begins working full-time. Child support can and should be recalculated on a regular basis. So, if one or both of the parents’ incomes goes down, they can seek to reduce their financial responsibility. The opposite is also true -- if the divorced parents’ incomes go up, or the children’s needs increase, the amount can be revised upward to account for these changes. Once our divorce mediation clients understand how child support works, they often feel more comfortable moving forward.

For more information on child 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 DETAILS OF ALIMONY

6/7/2019

Spousal support, more commonly known as alimony, is not an automatic given in a divorce. The details need to be worked out. In New Jersey there are four categories of spousal support: open durational, limited duration, rehabilitative and reimbursement. Open durational and limited duration are the more common types of alimony. You can receive a combination of types of alimony, such as limited duration and rehabilitative, depending on your set of circumstances.

Open durational is for marriages longer than 20 years and generally can last until the person paying it reaches full retirement age. Limited duration is for a set amount of time. Rehabilitative and reimbursement spousal support are less common. Rehabilitative is to help pay for the recipient spouse’s schooling that needs to be completed to help him/her get on his/her feet after the divorce. For example, paying for a certificate program or to finish a college degree so that you can effectively enter or re-enter the workforce and start fully supporting yourself. Reimbursement occurs when one spouse helped pay for the other spouse’s advanced education during the course of the marriage but now will not be married to that person to reap the rewards of the education. For example, if you paid for your spouse’s law school while you were married and then get divorced upon his/her graduation, reimbursement spousal support is to pay you back for your outlay.

At Westfield Mediation, LLC, the professional divorce mediators can help you address all the terms of spousal support. No matter what type of alimony applies to your situation, you need to determine the terms of payment- how much and how long. Will you pay by check, direct deposit, once a month, per paycheck, once a year? Will you pay for 3, 5, 7, 18 years? Are you paying the same amount each year or is there a step-down process? Each divorce is unique and the mediators can help you figure out what works best for your new future.

To learn more about spousal support and 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.

More About Divorce and Taxes

4/26/2019

While tax filing day has passed for this year, taxes are still an important issue for couples going through divorce. There have been some changes to the tax code this year that specifically affect divorcing couples. During divorce mediation at Westfield Mediation, LLC, we always talk about the tax implications of any financial agreement, and we encourage our clients to speak to their accountants as well.

The big change this year affected alimony (spousal support). Until 2019, the paying spouse got a tax deduction for alimony payments and the receiving spouse was taxed on the income. Starting this year, the rule reversed so the paying spouse is taxed on the income and the receiving spouse is not. As a result, a new calculation is needed to get to the same amount of alimony paid and received. Another tax change that impacts divorcing couples is the new cap on the deductions for mortgage interest. This policy change has made home ownership more expensive in New Jersey which also has to be considered when creating a financial plan for the future. Finally, the rules regarding tax exemptions for children was eliminated and replaced with a tax credit based on income, which may affect how much each spouse pays the IRS.

While each of the changes needs to be factored into a divorce agreement, in divorce mediation, we break the process down into small steps so it is not overwhelming to our clients. We recognize that getting divorced is an emotional process, and we help explain the money issues so that couples can create an agreement that works for their financial future.

For more information on 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.

TAXES AND DIVORCE

4/12/2019

April 15 is either the best of times or the worst of times, depending on if you owe or get a refund. One of the main reasons there is no such thing as a legal separation in New Jersey is due to taxes. The government cares if you are married or not and which box you check on your tax return so they know how to process your tax return paperwork. A legal separation would muddy the tax waters too much. One main tax issue to consider when you are getting divorced is who is claiming the children for tax purposes. You do not have to be the parent of primary residence to claim a child as a dependent. You can fill out an additional form when doing your taxes that allows you to claim a child as a dependent even if they lived with you for less than half the year.

Your divorce agreement should also address how to handle a future audit that addresses the time you were married. What if you get audited three years from now for 2018 and you were divorced in 2019? Additionally, how are you handling your current tax refund/tax bill that addressed the time you were married even though you are now divorced. For example, if you finalized your divorced in January but are due a refund/bill this April for the previous tax year, a tax year in which you were still married.

There are so many issues to consider when getting divorced. At Westfield Mediation, LLC, our divorce mediators help couples address them all, including the tax issues. A mediator knows all the issues to address and does not let any slip through the cracks, like the taxes. What you don’t want is to get divorced in January and then have to go back to court in April because your divorce agreement does not address your tax bill/refund and you do not agree on how to resolve it.

For more information on divorce and 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.

Things to Think about if Getting Divorced

2/1/2019

Getting divorced can feel overwhelming.

In divorce mediation, at Westfield Mediation, LLC, we break the process down into small steps for our clients. That makes it more manageable and less stressful. While no prior preparation is needed to start the process, there are some basic questions you can ask yourself before going down this path, so that you feel more ready and in control.

First, if you have children, consider what would be the best plan for the kids. The standard for any parenting plan is “the best interest of the children”, so that mantra should guide your thinking. You can ask yourself, would the kids do best if the parents shared parenting time 50/50 or would they thrive with a different plan that took into account the parents’ work schedules? Do you need to stay in town or a certain part of town, so that they can continue at their schools? Or do you have a better network of family and friend support in a different location? You should try to keep your children’s lives as normal as possible during this process by limiting any conflict in your home. Most children can adjust to a new routine, as long as you provide consistency and support throughout the transition.

When you consider the financial part of the situation, you need to know how much money each of you earns now, as well as your earning potential, especially if one of you is currently working part-time or not at all because of family responsibilities. It is also useful to think about what assets and debts you have acquired over the marriage, and how much you spend on a monthly basis for housing and other basic expenses as well as the extras. Each of these factors will provide the basis for your financial plan going forward.

In divorce mediation, we guide our clients through the process to reach an agreement that works for their particular family. We help them ask and answer the questions that will get them to the right place for them.

For more information on parenting or 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.

when to get divorced

1/4/2019

There is no perfect time to get divorced. Still, a lot of our clients begin the divorce mediation process in the beginning of the year. And, in addition to the emotional reasons – following up on New Year’s resolutions for a new year, new plan -- there are some practical benefits to starting the process now.

If you are going to need a parenting plan as part of your divorce, the beginning of the year is a good time to start because the school year is in full swing and there are no major holidays to figure out for a while.

Financially speaking, the early months of the year are a good time to begin divorce mediation as well. For one thing, it is traditionally the best time to list your home for sale to maximize the market value. Most major holiday shopping is done, so you can evaluate your debt, and create a plan to address it. And, all of the end-of-year financial reports are in, so you know how much you earned/spent last year which gives you a good snapshot of your assets/debts and expenses going forward.

At Westfield Mediation, LLC, we work with our divorce mediation clients to create a fair plan for parenting and financial issues all year long. We break down the process into small manageable steps to reduce stress and make it affordable for you. So, if you are considering when to begin the mediation process -- now is a good time to start.

For more information on parenting or 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.

THE VALUE OF A PENSION AND A 401(k) IN A DIVORCE

12/14/2018

A pension and a 401(k) are two different ways to save for retirement. A pension gives you a set income amount distributed each and every month no matter how long you live. A 401(k) has a certain amount of money in the fund and when all of the money is eventually distributed that income stream is gone. Most people today no longer have the option of a pension and the comfort of a never-ending monthly income and must budget their retirement with 401(k) funds. However, most teachers, police officers, and fire fighters can still rely on a pension for funding their retirement.

When you are getting a divorce, it is important to have your pension evaluated by an actuary. An actuary is a math whiz that uses statistics to determine insurance risks and premiums. An actuary can also use those math whiz skills to determine the marital value of your pension. Most people with a pension receive a personal benefit statement which shows how much the employee has contributed to the pension. This is not the value of the pension. The value of the pension has to be calculated using a formula which will show the current value of that future stream of income. Your future stream of income might be worth hundreds of thousands of dollars even though you have contributed $35,000 at this time. If you retire at 60 and then live to be 100, that’s 40 years of pension money. If you get $3,000/month from your pension then you get $1,440,000 from the pension. But what if you live until 70? Then you get a total of $360,000. The actuary can help predict how long you will live and come up with an estimated current value of that future money (which also gets adjusted for inflation). Sometimes some of the money for your retirement may be earned before or after your marriage. That money does not count as a marital asset. It is not a straightforward calculation- which is why you need the skills of an actuary.

A 401(k) and a pension are not always an even swap during a divorce. It is important to have your pension evaluated so you can fully understand the value of the asset you are keeping or giving up. At Westfield Mediation, LLC, our divorce mediators help our clients understand this often-misunderstood situation. We help clients look at their entire financial situation as a whole and fully understand each piece of it. We help both clients have a realistic view of their new financial futures and their retirement funds are a key piece of that picture.

For more information on pensions 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.

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.