Our Divorce Mediation Blog - Westfield Mediation, LLC

The American Rescue Plan Act and Child Support

3/19/2021

Even in the divorce mediation world, everyone is talking about the new law just passed by Congress – the American Rescue Plan Act of 2021 (ARP). It promises new and increased cash payments to many Americans. One part of the law includes more generous tax credits for children; and this new payment structure may have an impact on child support for divorced and divorcing parents.

Previously, depending on their income, parents received a tax credit of up to $2,000 per child. Under the ARP, this potential tax credit increases to $3,000 per child and $3,600 for children under 6 starting in 2021. In addition, the IRS plans to estimate the amount of the child tax credits for the year for families and pay them out in monthly portions in advance beginning in July 2021. These increased tax credits may impact child support calculations going forward.

Calculating child support is part of the divorce mediation process at Westfield Mediation, LLC. We calculate child support based on income and the number of nights each parent spends with the children, while also taking into account the payments parents make for health insurance premiums and/or child care. As part of the child support calculation, we determine which parent will be claiming the children as dependents for tax purposes. Sometimes, parents share these tax credits or alternate them over time. For our clients, we often run these numbers a few different ways to help them decide what is the best plan for them.

Divorced and divorcing parents may need to consult with their accountants to understand the impact of the new ARP laws on their taxes. In divorce mediation, we advise our clients to seek out the most up to date information available to help them make the best financial decisions for their family.

For more information on divorce mediation, parenting plans and child support, 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- NOT A DIY PROJECT

3/5/2021

Many people use TurboTax or a do-it-yourself approach to doing their yearly taxes. This works out fine and people are happy with the results and continue this method year after year. But this system does not always work as well the year of your divorce. There are unique tax circumstances you need to consider the actual year you are getting divorced and longer-term tax consequences as a result of your divorce agreement.

There are specific tax-related issues to consider about your divorce and you can address all of them during the divorce mediation process. Who is claiming the children for tax purposes? This may have an impact on your tax bill. Should the lower earner always claim the kids? Alternate years? It may also have a small effect on the monthly child support amounts. And the timing of your divorce can affect your tax bill. If it is close to the end of the calendar year then you may want to wait until the following year to actually get divorced. It may not matter to you much if your divorce is finalized in late December or early January, but it does to your state and federal government and the subsequent tax bill.

While the divorce mediators at Westfield Mediation, LLC, are not accountants or tax experts, they are knowledgeable enough to know that these professionals should be a part of your divorce team before signing a final divorce agreement. The mediators have a list of mediation friendly tax experts in the area to pass along to our clients and always recommend that you have a tax expert review your agreement. For example, when allocating various retirement accounts in a divorce settlement, it is important to distinguish the difference between one account that has pre-tax money and will have taxes taken out during distribution and another account that has post-tax money contribution and will not have taxes taken out when it is time for distribution. At the time of your divorce the accounts may have equivalent values so you think you are dividing things equally, like you intended. But when you retire, one of you has a lot less money because Uncle Sam takes a chunk and the other still has the full value of the account that you thought it had.

These are things that the turbo tax program will not tell you, but a mediator will. It is ultimately up to you, with input from your tax expert, to make these decisions. However, the mediator can help you figure out what these tax issues may be and work with you to reach educated, informed decisions about your taxes now and for the future.

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.

Learning More about Your Family Finances Before Divorce Saves Time and Money

10/16/2020

As divorce mediators, at Westfield Mediation, LLC, we have seen that in many families, married couples are reluctant to discuss money issues. Sometimes one person handles all the financial decisions, pays the taxes and the bills. In other homes, the spouses keep most of their expenses and accounts separate, and don’t really share information about their assets and liabilities.

Recently, the coronavirus has created shifts of income and expenses in many homes, inspiring articles about how both spouses need to learn more about their finances in case one partner gets sick and can’t work or pay the bills. We have found that these same concepts about the importance of shared financial knowledge apply to divorcing families as well. Moreover, for divorcing couples, sharing information eliminates any suspicion of hidden assets or debts which reduces stress and helps you work together to create a fair agreement.

In divorce mediation, we help divorcing couples make sense of their financial picture. As part of that process, we go through their financial statements together to create a workable equitable plan. In divorce mediation, we tell our clients that it’s important to know a few basic things about your financial situation before you get divorced.

First, where are the important documents? You should both have log-in information for all savings, investment, and retirement accounts. You will both need to know what is out there to make a fair division of your accounts and debts. Secondly, whose name is on the accounts, the mortgage, the car title, etc. Who is the beneficiary of all your investments and life insurance policies? In our experience, starting with some simple fact-gathering upfront makes the process much easier and productive for everyone, saving time and money, and minimizing arguments down the road.

For more information about financial plans in divorce mediation or post-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.

divorce and Unemployment

9/18/2020

Recently, a lot of the people who have been calling us at Westfield Mediation, LLC, to find out more about divorce mediation have found themselves newly unemployed, furloughed, laid off, or in-between jobs.

This is not surprising. First, the coronavirus virus has wreaked havoc on the economy, and many people have lost their jobs or had their hours cut substantially. In addition, dealing with financial hardships often make existing relationships much more tense and difficult, prompting couples to look into the possibility of divorce. Since divorce mediation provides a low-cost efficient alternative to expensive time-consuming divorce litigation, it’s no wonder that many married and divorced couples having financial stresses would seek us out.

In divorce mediation, we work with clients to create or revise a parenting and financial agreement that works for them. We are able to craft flexible plans for parenting schedules, child support and alimony that can be adjusted over time without returning to court.

Sometimes, our clients’ current financial situation is worse than usual and does not well represent their potential earnings, or their financial history together. In these cases, we can work with them to create economic terms that work for now, and that can be modified if and when their circumstances change, as the economy slowly improves. Having a workable plan in place is key to reducing everyone’s stress during the current hard times.

For more information about divorce mediation or post-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.

Paying for College

2/7/2020

When divorcing clients come to mediation to work out a parenting plan, they are often surprised that the agreement for paying for their children’s expenses extends all the way through college.

In New Jersey, the courts have long viewed post high school education as a necessity for which parents are at least partially responsible. Therefore, it needs to be part of every divorcing couple’s parenting plan. As tempting as it may be, ignoring this issue now will not make the obligation to contribute to your kids’ education go away. In fact, if you do not address college as part of your divorce agreement, the court may later impose its own plan based on your children’s needs and goals and both parents’ resources.

As part of the divorce mediation process, at Westfield Mediation, LLC, we help divorcing couples come up with a plan for paying for college for their kids regardless of how old their kids are now. We talk about all the relevant factors -- costs, decision-making, college savings plans and applying for financial aid. Of course, it is hard to predict your children’s future educational needs and wants. Still, we have found that having a basic framework in place helps avoid big arguments and litigation expenses down the road.

For more information about parenting plans 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.

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.