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WHAT TO DO WITH THE MARITAL HOME?

8/6/2021

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A major asset most couples have is their marital home.  What to do with your home can be a point of contention during the divorce process.  There are some basic options that most couple land on:
  1. Sell the marital home and share the proceeds in some way
  2. One person remains living in the marital home and “buys out” the person who moves out
  3. Both of you remaining living in the marital home
  4. Both of you remain living in the marital home and “nest” to a shared alternate residence
  5. None of the above and you figure out a unique plan- like selling the house but not until x years from now when your youngest child graduates from high school

Options 1 and 2 tend to be the most popular.  Options 3 and 4 are usually less desirable and more short-term solutions rather than life-long lifestyles. Option 5 can be created in mediation to suit your unique needs.  But what if two people cannot agree on any option?

It is best to assess the reality of each scenario.  What is the value of your home and your mortgage?  What is the cost of running the household- mortgage, insurance, taxes, maintenance, repairs, utilities, etc. Can you afford to refinance the mortgage in your name only and buy out the other person? Can you tolerate living together?  Can you emotionally and financially handle sharing a nest?  Now you can rule in realistic plans and rule out unrealistic ones.

But what if more than one option is realistic and you disagree about what that option should be? This is where a mediator can be very helpful. At Westfield Mediation, LLC, all we do is divorce mediation and we address the issue of how to handle the house all the time.  Having a neutral mediator be a part of the conversation helps steer away from the emotional aspects tied to each option and look at the practicality of each scenario.  It helps you focus on the future and what will be best for you and your family. While a a judge will likely say you need to go with option 1, a mediator does not make this important decision for you, but works with both of you to reach a resolution. 
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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.  
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ACCOUNTANTS AND THE DIVORCE MEDIATION PROCESS

12/4/2020

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A divorce mediator is the primary member of your divorce support staff, but should not be the only one. The divorce mediator helps you reach decisions about a parenting plan, child support calculation, spousal support amounts and division of your assets and debts, all within the privacy of a relaxed atmosphere where you have control over the process. These decisions can be made relatively quickly while spending less money on the process. 

However, it is important to have additional members join in the process.  At Westfield Mediation, LLC, the divorce mediators always recommend that an accountant review your final divorce agreement before you sign it so that you are made aware of any tax consequences in your agreement.  For example, your retirement account that you are keeping is worth $100,000 and your spouse’s retirement account that s/he is keeping is also worth $100,000 and you each agree to keep the account that is in his/her name. But the accountant points out that one account is a 401(k), which is tax-deferred and the other account is a Roth IRA, which is tax-exempt.  In the 401(k) scenario you will pay taxes down the road and in the Roth IRA scenario the money is tax free once the money is deposited in the account. At the moment of your divorce the accounts have equal value but you will eventually have to take money out of your pocket to pay taxes on the 401(k) account.  You do not have to do this for the Roth IRA. 

During the divorce process on the paper balance sheet it looks like your divorce is going well and you think all is balanced financially.  You each have $100,000 in retirement funds, which you both worked hard to stash away each paycheck.  It is important to take the extra step of having an accountant or tax expert review your divorce agreement so that you fully understand the tax implications of your agreement. 

You are always going to pay taxes on these retirement accounts.  It is just a question of when you pay these taxes, before or after contribution.  These are important factors to consider when discussing assets during divorce mediation. 
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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. 

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

10/16/2020

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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. 
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DATE OF DIVIDING ASSETS AND DEBTS IN A DIVORCE

2/21/2020

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You have a date the divorce is finalized, which is when you are granted your divorce by the judge at court.  But there is a divorce process that precedes this date.  One of the very important decisions you and your spouse will make during this divorce process is the date you will use to divide your assets and your debt.  What is the value of the retirement accounts, credit card debt, investment accounts, etc. on this date?  And how do you decide what date to use?  If you have been separated for several years and you want to use the date you separated you will have to do some digging into your files to see what the amounts were in the accounts back when you split.

Another date decision that has to be made is when are you separating not just your big picture assets but your day to day finances.  Who is paying what bills and what accounts are staying open or closed? Are you closing the joint checking account or is one person keeping it and removing the other’s name and access to this account?  On what date is this happening?  When do you no longer have access to the joint credit card?  When are your getting separate car insurance and are no longer eligible for the multi-car discount?

At Westfield Mediation, LLC, we help couples come up with a realistic plan to address all of these issues.  While it is up to the couple to execute the divorce plan (the mediator does not accompany you to the bank to close out the accounts), the mediator helps both of the parties develop a practical plan about dividing up the marital assets and debt and when to do this.  When going through divorce mediation you have the flexibility to decide on a date that makes sense for your situation.  Some couples have never thought about it before and choose the date that it is discussed in divorce mediation.  More specific dates could be the date of separation, the date of filing the divorce complaint, the date the divorce is finalized or anything in between.  One time a couple picked their anniversary so they could say they made it to twenty years before splitting everything up. 
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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. 

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

12/14/2018

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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. 

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dividing assets in a divorce

10/13/2017

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One area that has to be addressed in a divorce is division of your assets and debts.  What is happening to your house, 401(k), IRA, pension, stocks, investments, bank accounts, credit card debt, mortgage, student loans, car loan, etc.  Anything and everything dealing with your finances is addressed.  It can seem overwhelming but the divorce mediators at Westfield Mediation, LLC, help you break it down in to smaller, more manageable steps.  Some people choose to look at all of their assets and debts and split each and every one in half.  That is very doable.  But this is not your only option.
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One of the great positives about divorce mediation is that you can develop a financial plan that works for you.  You don’t have to split every asset or debt down the middle.  One person may want to keep the house and one person wants to keep all of his/her pension (and the values are somewhat similar).  When you have multiple investment accounts you can each keep a whole of several accounts and divide only one of them to balance out the bottom line.  What can’t happen is that one person keeps all the assets and one person gets stuck with all the debt.  At the end of the day when looking at the big picture if the numbers of all of your assets and debt and all of the other person’s assets and debts are close to one another then you have a plan for your financial future.
 
But you also have to think about your cash flow.  In order to keep 100% of your pension for the future you may be giving up another asset that you could tap into for cash right now.  Will your post-divorce budget allow that? And you have to keep in mind the tax implication for the assets that you are keeping or giving up.  Or the interest rate on the debts that you are keeping or giving up.  There is a lot to consider and that is why some people choose to just divide everything down the middle.  But you don’t have to. 

For more information about 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
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Case information statement

10/14/2016

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A very important form when getting divorced is the Case Information Statement.  It is required by the court and gives a detailed picture of your finances.  The key part of the form that you complete in divorce mediation is Part D, which is a two-column side by side form that shows your monthly budget when you were married and living under one roof and your projected monthly budget post-divorce and living in separate households.  Almost every client has a difficult time with this form, either because they are already living apart and don’t remember what their under-one-roof expenses were like, or because they are still living together and don’t know what their expenses living apart will be.  Most couples have to do this form several times. 

At Westfield Mediation, LLC, we help couples with this difficult, but useful, step in the process.  It forces some couples to face the reality that divorce means they will be living apart with separate expenses.  It is also helpful to give a family a sense of lifestyle post-divorce.  It is very challenging to financially support two households on the same income that you are used to supporting one household.  While some overall expenses will double (two cable bills, two heating bills, etc.) some will stay the same (dry cleaning, haircuts, etc.) and some may have to go down (entertainment, vacations, etc.).  It is a valuable exercise so the client can prepare financially for his/her new post-divorce life.  It is also helpful for both clients to see how the other plans to live and to ensure that one person is not living the good life while the other is living in a tent on the side of the road. 

The court will use these budgets to make sure that this does not happen.  In reality, both parties usually have to scale back his/her lifestyle for a little while after the divorce.  But if there is an imbalance, then the alimony or child support amount between the parties may need to be adjusted.  It is not fair if one person soars and the other plummets.  Support amounts can help balance the economic scales. The CIS budget form is a difficult, but very necessary, form to help determine these factors. 

For more information about Case Information Statements or 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.
 
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Divorce and Social Security

2/10/2014

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An important area to learn about, that many people overlook during a divorce, is how divorce may effect your Social Security benefits. Most people who are going through a divorce have so much to think about, that retiring is the last thing on their minds.  They think they will have to work forever.  At Westfield Mediation, LLC, we are able to take the long view and help people plan for their future, including their retirement. 

Here is some helpful information to consider, especially if you are close to age 62 when you get divorced.  When you are divorced, if your marriage lasted 10 years or longer you can receive benefits based on your ex-spouse’s work history record (even if he/she has remarried) if you meet the following criteria:

  • you are 62 years old or above
  • -you are unmarried at the time (never remarried or remarried but currently divorced/annulled/widowed)
  • -your ex-spouse is entitled to Social Security
  • -your ex-spouse’s benefit is higher than your own
The amount of benefits you get has no effect on monies your ex-spouse or his/her current or ex-spouse may receive.  So, even if your ex-spouse remarries and that marriage lasts for more than 10 years, two spouses (one current and one ex or two exes) benefit will be based off of the same person.  If you have been divorced for at least two years and you reach age 62, you can elect to start receiving Social Security benefits based on your ex-spouse’s record, even if your ex-spouse is eligible for benefits but has not yet elected to receive them.  You can start collecting even if your ex-spouse has not. 

There can be a lot of “government speak” about the rules, so it is always a good idea to talk to someone at Social Security or check out their website http://www.ssa.gov/retire2/yourdivspouse.htm to make sure you understand all the ins and outs of this benefit.  Sometimes it makes more financial sense to not start collecting Social Security at age 62, even though you are eligible.  The amount you receive may be higher when you have a later start date. 

During a divorce you have to plan for your future, a future different than you had previously imagined.  It is important that you take into consideration all the financial factors, including Social Security.  At Westfield Mediation, LLC, we can help you do just that.

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

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What's Mine is Mine

8/17/2012

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When a couple is getting divorced, they sometimes change their thinking from “what’s mine is yours” to “what’s mine is mine!”  During this process, a common misperception is that if an asset (pension, 401K, car, etc.) is in only one person’s name, then it is not considered a marital asset and actually belongs only to the title holder and will not be up for grabs during a divorce.   Surprise!!!  For the purposes of divorce, the name on the title does not matter.  Everything you and your spouse accumulate during the marriage is marital property and on the table for discussion for equitable distribution.  

Of course, there are some specific circumstances in which an asset that was acquired during the marriage still may not be considered a marital asset and truly, entirely belongs to just one of the parties.  These assets would not be eligible for equitable distribution.  For example, an inheritance received by one party that was never comingled with marital monies or a settlement from an accident for your pain and suffering that was kept in a separate account. 

Generally, however, since New Jersey is an equitable distribution state- assets are divided fairly, but not every asset has to be divided 50-50.  It is possible for one party to get 100% of one asset and 0% of another.  New Jersey law directs the Court to consider fifteen factors in determining what is an equitable, fair and just division of assets. They are:

- The length of the marriage
- The age and health (mental and physical) of the parties
- The income or property brought to the marriage by each party
- The standard of living established during the marriage
- Any written agreement made by the parties before or during the marriage regarding a property settlement  agreement
- The economic circumstances of each party at the time of the division of property
- The income and earning capacity of each party
- The contribution by each party to the education, training or earning power of the other
- The contribution of each party to the acquisition, preservation, appreciation or depreciation of the marital property, as well as the contribution of one party as a homemaker
- The tax consequences of the proposed distribution to each party
- The present value of the property
- The need of a parent who has physical custody of a child to own or occupy the marital residence
- The debts and liabilities of the parties
- The need for a trust fund to cover expenses for reasonably foreseeable medical or educational costs for a spouse or children
- Any other factors which the court may deem relevant 

So, in most cases, all assets acquired during the marriage are owned by both parties, and the plan for dividing them can be complicated.  To make this process easier, couples often rely on a professional divorce mediator to help them with the task.  Using a trained impartial mediator helps couples divide assets fairly without getting stuck on emotional feelings about who deserves more.  
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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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