money smart divorce

10 Steps For a Money Smart Divorce

money smart divorce

 

When your marriage is ending, you have a lot on your mind including the past and the present. If you plan to make smart money decisions during your divorce, you will need to be focusing on your future as well.

Focusing on your future can really help when you are divorcing. Many couples learn the hard way and don’t examine their financial resources and assets to secure a financial future because they are too emotionally connected to the act of the divorce. Think of your divorce as a business deal and put the emotions aside so you can concentrate on the numbers.

10 Steps for a Money Smart Divorce

Get a Copy of Your Credit Report

The best idea to examine your credit is to get a copy of your credit report before the divorce so that anything in dispute on it can be resolved in advance of the finalization of your divorce. Contact the big three including Experian, TransUnion, and Equifax so you can get a copy of your report from each one.

This is the quickest manner to get all the information you need in one spot about outstanding loan balances, mortgage debt, and credit card debt that you and your spouse will need to divide in the divorce proceedings.

Open Individual Accounts in Your Name

This is another item on your to-do list before your divorce is official. It’s easier to get a credit card and a bank account solely in your name while you are still married because you share joint assets and debt on your credit cards, mortgages, and loans with your spouse.

This is of the utmost importance if you are a woman and have never established credit before. As people age and they don’t have credit, then it is almost impossible to get credit because they are seen as having no background with credit to be considered for a credit card and thus will be denied just because of no credit background.

Close all Your Joint Accounts

Divorces can be a long-drawn-out process that can take a lot of time. You want to close out all your joint accounts with your spouse to avoid acquiring more joint debt or losing shared bank assets during the process.

Cancel the accounts in writing and make certain to request that each creditor report the account as “closed by customer” to the credit bureaus so it does not reflect badly on your individual credit reports. Even though you close out all of the accounts, you will still be jointly responsible with your spouse to pay off the balance on each closed account.

Keep Property Separated

The assets that you acquired before the marriage and brought into the marriage, such as vehicles, real estate, an inheritance, gifts of any kind and money you had before the marriage are your separate property and they are yours after the divorce. You need to make sure and keep these separated in order to be awarded them.

For example, if you had a monetary inheritance and the money went into a joint bank account after you got married, then the court will consider this joint property and they can divide it according to the property laws of the state in which you reside. Keep in mind that your separate debt also travels with you. If you had a student loan and your spouse was jointly helping to pay the payments on it, you carry the balance out of the marriage with you.

Consider Selling the House

Women divorcees often want to keep the marital home at any cost because of emotional ties to it and the family. You should look at this issue and set aside your emotions. If you may not be able to afford the payments, then you can lose the home in the future.

You might consider selling the marital home and using the money to purchase a smaller home that you can easily afford with money left over as a financial cushion in the case that you would need it. This is especially important in an economy where we have no clue what the future will hold.

Change Your Beneficiaries

Most married couples name their spouse as their beneficiary on wills, trusts, IRAs, life insurance, and pension plans so that if one dies, the other will have the money to take care of the children. You really don’t want your ex to have a windfall of money in the case that you have an untimely demise. You can also examine each of these documents when you make changes to them and change your marital status on them at the same time.

Reclaim Your Maiden Name

Many women want to reclaim their maiden name to sever the ties of the relationship after a divorce. You will be required to have proof of the divorce decree in order to do this. You have a long list of to do’s here. You need to get a new driver’s license and report your name change to your employer, doctors, human resources department, your children’s teachers and schools, your landlord, mail person, health insurer and your pharmacist.

You will need to redo your W-4, other tax forms and report the name change to the Social Security Administration. You could lose valuable credits on your social security if there is a mix up with the names.

Check into Your Retirement

If you are pretty close to retirement age, you should check into your Social Security benefits. If you are 62 or older, were married for 10 years or more and have been divorced more than two years, without remarrying and you don’t qualify for an equal or higher Social Security benefits on your own, you can receive benefits that are based on your ex-spouse’s Social Security record even if your ex has not applied for benefits that they are eligible to receive. If you remarry, those benefits will end.

If you are raising a child that is under the age of 16 from the marriage you may be able to receive benefits on your ex-spouse’s record even if your marriage didn’t last 10 years. Usually, you can expect the same amount you would have gotten if you had remained married and sometimes all of it if your ex-spouse dies. The benefits you draw on your ex-spouse’s account do not affect amounts that are due to your ex-spouse’s current spouse.

Keep Your Health Coverage If at all Possible

If you are divorcing, try to keep health coverage if at all possible. One uncovered medical emergency can cripple you financially for the rest of your life. The COBRA program ensures that you are guaranteed 18 months of health coverage. It’s best to pay the much higher fees but remains with health coverage until you can find a lesser expensive alternative.

Get Up and Get Going

It’s recommended to get your credit report again about three months after your divorce is finalized. This will enable you to clean up any loose ends and to see all of your debts and assets in one area. If you received a lump sum payout in the divorce, you may want to consult a financial planner to ensure that it is well taken care of and don’t buy that fancy new sports car that you’ve always wanted.

Remember that you can live well no matter what your net worth is or what your marital status is.

These items on your to-do list will help you to remain financially sound after a divorce when you will need to handle all of your own finances. It’s a hard task, but the more you can put aside emotions, the better off you will be on your own.

The post 10 Steps For a Money Smart Divorce appeared first on Divorced Moms.

Read More –>

divorce and life insurance

Getting Divorced? Don’t Forget about Life Insurance

divorce and life insurance

 

If you’re a divorced woman, chances are you’ve got a lot on your plate right now. The chaotic and difficult process of getting divorced means you’ll spend lots of time weeding through the marital assets, separating finances, and sorting out vital things like custody of children. Getting financially stable after a divorce is no easy feat, and there are lots to manage.

One area many divorcing couples overlook is life insurance. As a divorced woman, the challenges addressed by securing life insurance are two-fold. First and foremost, any existing policies will need to be adjusted to change beneficiaries and ensure the protection of child support or alimony payments. Secondly, you’ll need to consider the best kind of life insurance policy for your situation and how much coverage you’ll need moving forward.

Here are a few items to add to your to-do list as a divorcee to ensure you and any dependents are financially protected, both in the short term and the foreseeable future.

Getting Divorced? Don’t Forget about Life Insurance

Changing Beneficiaries

When you were married, your spouse was probably listed as the primary beneficiary on your life insurance policy. After all, the entire point of life insurance is to shelter your family and loved ones if your income is lost through a tragic death. A life insurance policy is a crucial contingency plan for meeting financial obligations like mortgages, car payments, and putting food on the table.

After a divorce, much of that calculus changes. If you are divorced without children, chances are you’re not keen to see your spouse benefit on the event of your demise. No matter your marital status, life insurance companies don’t dispute who receives payouts on a policy. For the company, it’s a simple contract between the insurance carrier and the policyholder. The beneficiary is whomever you documented when you took out the policy, and that won’t change unless you file a specific request with the company.

Changing beneficiaries is usually a straightforward process of contacting your life insurance carrier. Unless you have a policy with irrevocable beneficiaries, you can specify someone new to receive the payout upon your death with minimal paperwork and fuss. Some insurance carriers provide ways to accomplish this online, while others require going through a broker or submitting notarized documentation.

And remember, life insurance isn’t the only thing you’ll need to update. Remember to switch over other insurance policies, including health, home, and auto insurance. It’s also essential to change the beneficiaries in any legal documentation that might survive you, like a will and a power of attorney.

Policies with Cash Value

Some permanent life insurance policies, such as whole life or universal life policies, accumulate cash value. As you pay premiums, a portion of the money goes into an investment fund that can expand as the stocks rise. If you’ve had such a policy and recently divorced, you probably discovered the balance in that fund is considered part of the marital assets. You’ll typically have two options—keep the policy and continue paying premiums or cash out and divide the spoils.

For typical term life insurance policies, no payout is made until death occurs or the policy period expires. However, for whole and universal life insurance policies, you can choose to decline any potential death benefit in lieu of taking the current cash value of the policy. Therefore, these kinds of permanent life insurance policies are considered part of your net worth as a couple and get divided as assets during the divorce settlement accordingly.

You may also want to speak to a financial advisor in addition to your divorce attorney before making any critical decisions about dissolving or dividing assets. Financial experts can give you advice about how to handle transitioning not only insurance policies but also other assets like 401(k) and retirement plans in a way that’s equitable for both spouses and avoids tax penalties.

Protect Your Income

When you get divorced, life insurance isn’t solely about covering your lost income for the dependents you leave behind. It’s also about replacing any potential child support or alimony payments if you or your former spouse should die. For the parent who retains primary custody after a divorce, a life insurance policy is a crucial safety net that can cover the costs associated with raising children, including future financial necessities like supporting them through college.

There are several ways to handle securing life insurance coverage on your former spouse. Some couples choose to make the stipulations about the policy and premiums part of the divorce decree. The court may even order the head of the household to take out a life insurance policy as part of the settlement. In cases where the court requires a spouse to maintain a life insurance policy after divorce, the coverage and duration mandated usually reflect the obligation. For example, if the life insurance is intended to cover a significant loss of income and child support for the custodial parent, the policy term will usually need to extend until the dependents are 18 or 21.

Financial Security for Children

If you carried a life insurance policy during the marriage to provide for your children in the event of a death, that need still exists. Plus, in an acrimonious divorce, things don’t always work out according to plan. If you have concerns about whether your former spouse will follow-through on making payments, take control of the life insurance policy yourself and pay the premiums to avoid any risk of coverage lapse. Even if the coverage was specified as part of your divorce decree, it may take time and significant hassle to get follow through on those stipulations enforced by the court. In the interim, you want the assurance that your policy is paid up and your coverage current.

When you’re raising children as a single parent, protecting your own income becomes doubly important after a divorce. In the event of your death, while arrangements may be made for someone you trust to care for your children, you’ll still want them to enjoy financial security through a generous life insurance benefit. The simplest way to calculate how much life insurance coverage you’ll need is to take the number of years until your child turns 18 or 21, then multiply it by your annual income. That amount is the bare minimum of insurance coverage you should be securing per child.

You can name your child as a beneficiary, but be aware that policies typically don’t pay out to a dependent under the age of majority. Instead, the court will appoint a custodian, usually the surviving parent, to supervise holding the funds in an account until your child is of age. If you don’t want your former spouse to be appointed by the court, specify a custodian as part of the policy.

A Word of Warning

If you’re still in the process of finalizing a divorce or in the beginning stages of filing for one, consult with your divorce attorney before taking any action. In most cases, assets are frozen during the process of a divorce and both parties are required to be fully transparent about any financial obligations, including insurance policies. Changing beneficiaries or coverage during divorce proceedings could raise red flags and unnecessarily prolong and complicate your settlement.

You should, however, do your research and be prepared to suggest any policy changes or premiums you want specified as part of the divorce decree. While divorce can be a painful process, it’s also an opportunity to take charge of your financial future and secure stability for both yourself and your dependents.

The post Getting Divorced? Don’t Forget about Life Insurance appeared first on Divorced Moms.

Read More –>

Complexities of a High Net Worth Divorce

The Complexities of a High Net Worth Divorce

Complexities of a High Net Worth Divorce

 

[The following excerpt comes from Jacqueline Newman’s book “Soon-to-Be Ex: A Woman’s Guide to Her Perfect Divorce and Relaunch.”]

When it comes to money issues in divorce, the laws are drafted to target those with simple financial lives and make it cost efficient so they do not have to spend tons of money litigating in Court. However, a high-net-worth divorce can present many issues that differ from divorces involving fewer financial assets.

The greater concern for those with significant incomes is that there are less “rules” for courts to follow. Therefore, judges have a huge amount of discretion in deciding how to interpret these laws to apply to high-net-worth cases.

It is like squeezing a square peg into a round hole. While it may seem like a high-net-worth divorce could be easier to settle because it is apparent that no one is going to go hungry, you must also remember that when there is more to divide there is more to fight about!

Complexities of a High Net Worth Divorce

At The Mercy Of A Judge

An example of how high-net-worth cases do not fit into the current statutory paradigm is as follows. In New York, the statute that governs child support is currently only set to consider the parties’ combined parental income up to $143,000 when applying the stated formula.

If the combined parental income exceeds $143,000, then the court looks to numerous subjective factors to determine the appropriate amount of child support. When a client earns income in the millions, I feel that the statute is of little use to a court.

The obvious thought was that most people in the whole state of New York probably do not earn much more than $143,000 per year so the formula should be easy to apply to those with lower incomes and thus the needs to spend money on litigation is less.

However, for those who live on the upper east side of New York City, those income levels speak to their part-time nannies, so these statutes are of little use.

If I am advising clients who fall in these income levels on what his or her child support obligation may be, it is very challenging because a judge has a lot of latitude in going above the cap.

Once a judge determines that the $143,000 is not appropriate, then the court will look to the child’s “needs” to determine child support, and that is when the games begin. Does that child “need” to keep the fourth vacation home in Aruba? Does the child “need” a private yacht? Maybe yes—maybe no.

Of course, there are some cases that have been previously decided by other judges that deal with high-net-worth cases.

Here, there are a few guidelines to follow. The problem with attempting to apply case law is that most high-net-worth divorces settle out of court and even those that are litigated to reach a decision often do not involve publicly-broadcast terms. Therefore, there are inadequate amounts of legal guidance and precedent for clients to consult.

The biggest child support awards I have heard of are Eddie Murphy, who had to pay almost $60,000 per month for one child, Russell Simmons who allegedly paid $40,000 per month for two children, Sean P. Diddy Combs paid almost $42,000 per month for two children, billionaire Francois-Henri Pinault paid $46,000 per month in child support for one child, and Charlie Sheen originally paid $55,000 per month in child support to each of his wives (but has since had it lowered to $25,000 per month per wife).

Most of these cases were ultimately settled, so this is based on tabloid reporting but when it comes to real courtroom decisions when dealing with significant incomes and extraordinary lifestyles, judges can basically do whatever they want.

Complexity Of Assets

The other possible challenge for high-net-worth cases has to do with the complexity of the assets that are being divided. There are some people who have millions of dollars in cash sitting in a bank account (or filling a mattress)—but those are very rare.

Typically, those that fall in the high-net-worth space hold complex assets, whether it be brokerage accounts, private equity investments, real estate, or business interests.

There could be an entirely separate book written dealing with the variances that exist when valuing and dividing complex assets, which we discussed a little bit in Chapter Eleven on Asset Distribution.

The problem with many high-net-worth cases is that many of the assets are typically illiquid (except for those with the fluffy mattresses), so some assets cannot be split and therefore there are numerous valuations involved, which are also subjective, and involve creative methods of pay-outs. Many of these assets are embedded with capital gains or have other cost consequences if they were to be liquidated.

It is not a simple “you take half of the checking account and I will take the other half” situation.

The other issue that comes into play in high-net-worth cases has to do with the way that these complex assets are divided. Many states (like New York) are equitable states, not equal states.

This means that you are not looking at an automatic 50/50 split of assets. Even in some of the cases that claim to do an equal division of assets, there may be different ways of valuing certain assets that do not make the split as easy as cutting it down the middle.

For example, in New York, business interests are rarely divided equally even if the rest of the assets are. The level of asset division can be different based on the nature of the asset.

Even issues such as who pays for counsel fees can be different in high-net-worth cases. Typically, the monied-spouse would be responsible for the majority of the counsel fees. However, when the non-monied spouse is receiving $20 million in assets, a court may very well say that the spouse can afford to pay his or her own legal fees.

In many high-net-worth cases, you need to also consider outside factors beyond the income and assets to be divided. Many people who fall into the high-net-worth space have great concerns about information being leaked about their businesses and also may be in the public eye with an image to protect.

When dealing with celebrity clients, this becomes a huge factor in a divorce negotiation. It is even worse when you have one person who is a household name and the other who is not, but who obviously wants to be and is willing to use the details of the parties’ divorce to get there.

If you are representing CEOs of public companies, it is often imperative that the public not know that his or her marriage is in trouble, the combination of a gossip-hungry public and a juicy divorce could cause the stock to plummet. That is when you need to factor in confidentiality agreements and manage how the media is provided its information. And if you need to file a gag order – be ready.

The Right Attorney

The abovementioned factors are why it imperative that the attorney selected in a high-net-worth divorce has knowledge of operating within the high-net-worth space so that their experience allows them to predict how a judge may rule and what pitfalls they need to avoid.

You need someone who is fully familiar with the variations of complex financial assets, compensation packages, knows the appropriate valuations that need to be done and has creativity when dividing up illiquid assets.

On a positive note, high incomes matter very little when it comes to child custody. The law is the same whether you earn $10,000 per year or $10,000,000 per year. Custody standards remain as the “best interest of the child”, which we discuss more in Chapter 15.

This dictates that the court will consider the same factors regardless of income levels or assets when determining who shall be awarded custody of the children.

Before going to court in a high-net-worth divorce, I always ask my client, “How much do you like to gamble?” Remember, anytime you enter a courtroom you are gambling on the actions of a judge.

There is an inherent risk (albeit an educated risk if you have a savvy attorney) and the outcomes can be as unpredictable as rolling the dice in a game of craps. You may get a judge who does not believe that having the fourth home in Aruba is a necessity for your daughter in an effort to retain her lifestyle.

On the other hand, you may encounter a judge who feels that if this is what the child is used to having, then it should be continued. I remind clients that litigation is often a luxury few can afford because no matter how wealthy you may be, you do not want to spend hundreds of thousands of dollars—sometimes even millions—on endless and uncertain litigation regarding your financial future.

The post The Complexities of a High Net Worth Divorce appeared first on Divorced Moms.

Read More –>

financial advice for new single mothers

9 Pieces of Important Financial Advice For New Single Mothers

financial advice for new single mothers

 

Life is different now. You have recently been through a divorce and are now the single head of a household, which is a huge personal – and financial – responsibility. While you may still be doing many of the same things as before, you now are 100 percent responsible. There is no one to share the myriad responsibilities and decision-making.

This may be all new to you. It is also likely that you are still riding an emotional rollercoaster. Now is a good time to step back and take a deep breath. While many financial challenges lie ahead, understand that you can do this.

Financial Advice For New Single Mothers

What do single mothers have to do differently financially? To achieve financial success, newly single mothers should heed the following advice.

Just say no to credit card debt

Don’t live beyond your means and rack up high-interest credit card debt. This is one of the worst debts to have due to high-interest rates. Credit card debt should be paid off first when prioritizing bills.

Prioritize what is most important.

Take a moment (or longer) to assess your new financial life. Your family needs you to clearly understand how you can make everything work, without sacrificing too many of “the good times.” Review your lifestyle and analyze what changes and/or adaptations need to be made. Prioritize and differentiate between your needs and wants, and those of your family. Make notes. Create lists. Write things down.

Ultimately, let this “prioritization” process guide your budget. Focus on just a few practical lifestyle/financial priorities and learn to make concessions with others.

Get real with what you can afford.

Create a realistic budget. Track your spending over a specific time to see where your money goes. The goal is not to set up an austerity program that is so severe that everyone is unhappy; rather you just need to accurately understand your spending habits so you can manage and track your flow of money in an honest manner. For example, if yoga makes you happy and less stressed overall, look a reasonably-priced studio in your area or do an at-home workout.

Not spending money on yourself (within reason) can be detrimental in the long run. It is fine to put some of the focus on you. Every mom has been told that she needs to take care of herself first, so she has the energy and resources to take care of others. This applies to finances too.

Don’t try to keep up with everyone else.

Even if your lifestyle had been different previously, now is not the time to try to keep up with your neighbors and friends. As we said earlier, your life is different now. The financial decisions you make going forward will be based on a different set of circumstances.

For example, prioritize making mortgage payments and saving for (or taking) one annual family vacation, rather than putting yourself into debt to drive a more expensive car.  Even if it seems that’s what everyone else is doing, prioritizing driving the Mercedes instead of keeping up with your everyday bills will only hurt you in the long run.

Manage risk smartly.

Having only one income means it is just that much more important to protect. Obtain life and disability insurance to protect you and your family in the event the unforeseen should happen … because it can. Unfortunately, I have worked with clients who depended exclusively on one income and that person became sick and was out of work for several months.

It was both unfortunate and sad. Purchasing a cost-effective disability policy is a prudent way to safeguard against a potential loss of income.

Develop a plan B.

Planning for the future is an important component of ongoing financial awareness. Many people have asked me what is necessary for an estate plan when you have young children. At the very least set up a will. Should something happen to you, you want to have a say in who will care for your kids and where your assets will go. You do not want to be in a situation where the state determines who the guardian of your children should be – what if that is not aligned with your intent? Get it in writing.

A full estate plan is recommended (including health care proxy and power of attorney), but creating a will is a good, productive first step.

Pay yourself first.

With only one income, it may seem harder to save for retirement, especially if you envision having college educations to pay for, but it is critical to do so. Children can receive financial aid, scholarships, and loans to help pay for school, but those alternatives do not exist for retirement. Put away as much as you can into your retirement savings on a pre-tax basis and make sure to contribute at least as much as your employer matches (it’s free money!).

Don’t try to do everything on your own.

Not having a knowledgeable team of resources on your side can be the biggest disservice possible to yourself. A smart parent – especially a single parent – is aware of what they don’t know and asks for help when she needs it. This includes seeking help with your finances. Work with an advisor who places your interests first to help you make sense of the various aspects of your financial life and empower you to become educated on these topics.

Get referrals for accountants, estate planners, etc., from trusted friends or colleagues who you know have been in a similar situation to what you are facing. Building a support system will make managing finances as a single parent much less overwhelming.

Proactive Approach

Taking a realistic, proactive financial approach as a single mother is essential to your well-being and that of your family. Following the advice in this article can help you avoid unnecessary anxiety and keep your financial options open as a single parent.

The post 9 Pieces of Important Financial Advice For New Single Mothers appeared first on Divorced Moms.

Read More –>

financially stable after divorce

How To Become Financially Stable After Divorce

financially stable after divorce

 

Understandably, many people fear the potential financial repercussions of getting a divorce. After ending a marriage, it’s not uncommon for a person to experience a significant loss of income and property. Fortunately, there are some ways to recover financially.

Becoming Financially Stable After Divorce

Live Within Your Means

A divorce may ultimately force you to temporarily adjust your budget. It’s definitely in your best interest to hold off on making any big purchases. Simple lifestyle changes, such as dining out less often, will help save a lot of extra money. Although the idea of cutting back might be an adjustment, but you will be able to get back on your feet soon.

Consider Getting a Roommate

Living alone has its benefits, but depending on where you are living, it might not be feasible. Try to find a roommate to help out with the bills. You’ll be surprised how much extra cash will be saved every month. If you don’t already own a home, consider renting an apartment with a responsible friend or family member. A one-year lease agreement should give you enough time to improve your financial status, though you should tailor any agreement to your unique situation.

Raise Spousal Support Payments You Receive

You can talk to an alimony lawyer to make a case if you feel you are not getting your fair share of spousal support. Doing so might help you receive more money from your ex. It just depends on the specific circumstances of your divorce.

Earn Extra Money

There are plenty of methods to earn extra money. For instance, you can start donating plasma every week. It’s an easy way to bring in an extra $400 per month. The process of giving plasma typically only takes around 45 minutes. In addition to the peace of mind that can come from cleaning out your stuff, you can earn a little bit of extra cash by selling items. Hosting a yard sale, selling items on Craigslist or eBay, or even just posting old clothes, books, or anything else on Instagram or Facebook Marketplace can be a good way of cleaning up and making some money while doing so.

Rebuild Your Confidence

In order to accomplish anything worthwhile in life, you must have a certain level of confidence. Doing some of the small things above can help you feel more in control. Thinking through everything you have to do is overwhelming; it can be helpful to write out each individual step and take things as they come. It can feel difficult to work through what life will be like alone. However, never stop believing in yourself. This is the perfect time for you to set new goals.

A large setback like a divorce can cause more than a few problems financially, but getting the support you need from family and friends, as well as working every day to cultivate confidence in yourself can push you through. Remember that you are a whole person, worth supporting and loving.

Overcoming a divorce is not a simple task. Nevertheless, continuing to push through the turmoil will help you to succeed. Financial loss is something you can survive. If you made it through a messy divorce, you can make it through the aftermath. Just take things one step at a time, believe in yourself, and take practical steps to ensure your financial stability.

The post How To Become Financially Stable After Divorce appeared first on Divorced Moms.

Read More –>

credit during divorce

10 Tips For Protecting Your Credit During Divorce

credit during divorce

 

Divorce isn’t pleasant for either party. While dealing with the emotions surrounding the divorce, the idea of entering the dating scene again, or starting a new life as a single person, financial issues can seem like an even larger problem to manage.

Don’t let finances be overlooked as you handle the relationship aspects of the divorce. When you separate or divorce your spouse, you need to protect your money and financial future as soon as possible. Here are actionable ways that you can keep your finances and credit intact during the divorce process.

Protecting Your Credit During Divorce

1. Close all joint accounts

If you and your spouse hold joint bank accounts, you’re equally responsible for them, especially any debts. Don’t risk your spouse accumulating more debt or making late payments. Because both of you are named on an account, both of your credit scores will be impacted by actions on the account itself.

2. Call your Creditors

Once your joint accounts have been closed, you should contact any remaining banks, lenders, or credit card companies about the divorce. Many institutions will require a certified letter. When you speak with the creditors, request a current account statement and let them know that you will not be liable for any debts after the date on the certified letter. You should also request the account be set as inactive. This will prevent any new charges from being made. Let them know that once any balances are paid in full that you would like the account to be closed entirely.

3. Request Monthly Statements

For any accounts that are currently outstanding, request that monthly statements be sent directly to you. You should also request this for accounts that are not able to be closed or accounts that will be remaining open. Keep an eye on the accounts and track that payments are being made on time.

4. Make a Decision about Owned Properties

Often after a divorce, women want to stay in the home especially if there are children in the picture. Depending on the housing market where you live, it may or may not be a great decision to keep the marital home. If the market where you live has consistently appreciating value, you may want to continue to build equity in the home. If you can afford to stay in the home and the market it good, you should consider doing so. However, if there is a large amount of debt in the home and you cannot afford it, it is more of a liability than an asset to you.

5. Keep Your Contact Information Up To Date

If you do move following the divorce, be sure that you submit a change of address request with the post office. You’ll want to ensure that your bills, financial statements, and any other important documents are being sent to your new residence. Missing payments on bills because you didn’t change your address is an overlooked way to damage your credit quickly.

6. Don’t Spend Money to Get Revenge

It’s common for people going through a divorce to try and “get revenge” on their ex-spouse by spending huge amounts of money on shopping sprees. This tactic will usually come back to haunt you financially or even in the divorce proceedings. Try to maintain your normal spending habits and get control of any debts that you have. A shopping spree during a divorce will likely be marked by a judge as marital debt and order the individual who did the shopping to be responsible for it.

7. Think before you use your credit cards

If you’re still using credit cards during your divorce, be wise about how you use them. Try to pay all of your credit cards on time, or at least make the minimum payments towards the balance. Don’t max out credit cards if you have large legal bills or other expenses that are divorce-related. A large portion of your credit score is based upon the credit card debt that you have. An individual with a high credit score will have low credit card debt. You’ll want to avoid any of your accounts from going to collections. For more information on removing collections from your credit report, read this blog post from Crediful.

8. Monitor Your Credit Reports

Once your divorce is completely finalized, you should continue to monitor your credit report. Check for any errors that might arise from the time you were married. There are many online options to request a free annual copy of your credit report.

If you believe you may be at risk for identity theft or your ex attempting to open joint accounts after the divorce is finalized, you should also consider utilizing a credit monitoring service, especially if your ex knows your social security number and other personal data.

9. Put a hold on any of your credit files

If you’re concerned about your ex going on his own revenge streak, you should put a hold on your credit accounts or a fraud alert. By doing so, any action that is made on your credit accounts will freeze your credit files and prevent your ex from opening new credit card accounts in your name or using your social security number.

10. Utilize civil court actions if necessary

Even if your ex was ordered to pay specific debts when your divorce was finalized, if they don’t pay you’ll want to pay off those debts or risk damaging your credit. While this doesn’t really seem like a fair situation, you can try and recoup the money by taking your ex to civil court for not following the court order.

After a divorce, both parties typically just want to move on personally and financially. If you can take action as soon as possible, you can mitigate potential credit and debt problems from adding more stress to an already stressful situation.

The post 10 Tips For Protecting Your Credit During Divorce appeared first on Divorced Moms.

Read More –>

financial house in order

How I Got My Financial House In Order After An Unwanted Divorce

financial house in order

 

Tax time. As I dropped by the post office to get the right postage for the thick packet of homework to send to my accountant, I smiled to myself, confident that I had my financial house in order. It brought back memories of all the effort it took to dig a new foundation years ago, after my divorce.

I no longer get weak-kneed and shaky thinking about those months leading to the divorce. The request for a divorce came as a surprise to me. So busy with family and career that I hadn’t been attending to the finer points of our family finances—that was something my trusted husband did.

Evidently, I wasn’t attending to the marriage either.

Rather, I was full throttle busy but confident that it wouldn’t be long before we would have an opportunity to do a reset as a couple once our last child left for college.  My husband was on another page. When the last child was launched, he would also start his new chapter. And, it didn’t include me.

The shock of divorce rattled me, and I don’t rattle easily. In fact, calm is my middle name. My career track steady and upward for the entirety of our marriage, I was now close to the top of my field, responsible for business lines that were valued at tens of millions of dollars. “On the rise” is what people would tell my husband about me at the rare work event of mine that we attended together.

I wonder now if that message didn’t send alarm bells to him—a signal that we were out of sync. After all, he had married a younger woman still in grad school with no prospects, and as he was older, his career was already launched. Perhaps neither of us took stock of what that would mean later.

Silly me, I thought we were happy and about to enter that golden time in a couple’s marriage when the burden of children is lifted, careers are set, and a second honeymoon is around the corner as empty nesters take the time to find one another again.

Some must find divorce a relief after years of strife, or abuse.

I found it confusing, embarrassing and disorienting. It took me months to feel myself again and to assure myself that the kids were ok—or as ok as they could be with their world shaken. But they had new worlds to explore, going off to college was a happy and understood rite of passage.

Divorce at middle-age is not. Although more “gray” adults are divorcing now, it still hurts me when I see a couple that is celebrating their 40 plus wedding anniversary. Surrounded by children and grand-children, toasting one another with loving looks, sometimes sharing a truth about having weathered a storm or two, but toughing it out. Good for them.

Life is hard. So, when you find someone to hang onto, it is a blessing. When you lose that person, it is difficult, regardless of the circumstances. After the initial shock wore off, and I adjusted to the fact that my husband of twenty years plus didn’t want to be married to me anymore, I wanted to get out of the marriage as quickly as possible. During that period of deep hurt, I realized how little I knew about our finances.

Pulling papers together, going through correspondence, talking to bankers, and finally, my own attorney, I was overwhelmed. I needed help. Someone to take charge of my funds—once I settled out— invest them, and work with me on managing them wisely. I also needed a CPA to help me with tax planning, short and long term.

I was startled by what I didn’t know. 

It’s not like I was a princess who had waited for her prince charming to come along and rescue her. I was a smart woman who had navigated to a high-profile career with a great future ahead of me. But I had not paid attention to the essentials of investing for my own future. Why would I? My future was intertwined with my husband’s, and he was looking out for both of us, right?

I felt powerless and knew I had to take control to conquer that fear. And, I did. But it took years, and a small village, to get me to a place that feels comfortable.

How I Got My Financial House In Order

Fortunately, through the referral from a trusted friend, I found a broker who was indispensable when it came time to receiving my settlement monies and guiding me through the decision making on where to make investments. Another friend referred me to her tax accountant who turned out to be heaven-sent. To this day, she has my back and has recently helped me through the intricacies of college savings for my grandchildren.

As I leave the post office, I realize that my comfort now is due to the fact that I educated myself, took advice from trusted friends, and brick by brick learned to build my financial house on solid ground.

My lesson was learned the hard way. Married couples are partners for financial planning and the tasks should not be delegated to one partner only.  Quarterly meetings to review your financials and make adjustments as needed, with both partners conversant and supportive of the financial plan is the best practice. Things happen, and when they do, the last thing you want is to be distracted about is your financial security.

The post How I Got My Financial House In Order After An Unwanted Divorce appeared first on Divorced Moms.

Read More –>

spouse voluntarily quits his job during divorce

How To Fight Back When Your Spouse Quits His Job During Divorce

spouse voluntarily quits his job during divorce

 

It is a scenario that plays out over and over again in divorce courts everywhere.

You took care of the home during your marriage while your spouse made the money.  When it became clear you were heading for divorce, you discussed your case with a lawyer, who told you that you had a “classic” alimony case.

Then out of the blue, your spouse lost his job.  Now, your spouse’s position is that alimony is not appropriate because the money is not there.

If this has happened to you then take action immediately.  While most State laws will put a burden on you to prove that your spouse is voluntarily unemployed, the divorce courts provide you with all the tools you need to succeed.

Below are the four steps you must take when your spouse quits his job during divorce.

Pull Your Spouse’s Tax Returns to See Total Income Earned When Working

If you and your spouse filed jointly, then you can pull your tax returns yourself in less than 15 minutes.

Simply go online to the IRS here: www.irs.gov/Individuals/Get-Transcript. . or simply google “Pull Tax Transcript”, and click on the IRS website.

You will be prompted to create a username and password on the IRS website, and you will be asked private questions to confirm your identity.

Once complete, you can simply download a PDF of your Record of Account transcript, which will provide all of the information you will need.

If your spouse filed separately, then your attorney will have two options to get the tax returns from your spouse.  Preferably, your spouse will simply comply and turn over a copy of the requested returns.  If your spouse is being difficult however then it will be easier to have the Court force the Husband to execute an IRS Form 4056-T and go directly to the IRS to pull the statement.

Gather Your Spouse’s Previous Employment Records with a Subpoena

Now that you know exactly what your spouses reported income, you want to dig further into the employment file.

You will be looking for additional income and benefits as well as nature and reasons that your spouse is currently unemployed.

Your attorney can get this information by sending a simple subpoena to your spouses’ former employer requesting his file.

Because unemployment compensation is a real issue for businesses big and small, employers usually thoroughly document the details surrounding an employee’s’ exit.

You are looking for records that show your spouse either left his or her job voluntarily or that the poor performance by your spouse that led to termination coincided with the divorce.

Frequently, the employment file provides slam dunk evidence when a spouse leaves a job to tactically help his or her divorce case.

Gather Your Spouse’s Medical Records

Is your spouse claiming an inability to work for health reasons?

While this is a common tactic in alimony and child support cases, you can swiftly and quickly debunk this claim by requesting authorization for release of medical records.

Simply, you will ask your spouse to sign a document allowing your attorney to pull any and all medical records related to his or her ability to work.

And if your spouse refuses to sign this document, your attorney can ask the Judge to force the signing of the release.

A common tactic to increase leverage is for a spouse to feign ill health and the inability to work.  By pulling health records immediately, you can disarm this tactic before you enter settlement negotiations.

Find Job Opportunities and Your Spouses Potential Income

Now that you have gathered your spouse’s’ employment and health records, you need to show the Court the jobs in the community and earning potential available to your spouse.

And while you can certainly gather this evidence yourself, when possible you should hire a vocational expert in your community to prepare an occupation report.

These reports typically do three things:

  • First, the expert takes the employment and health records that you and your attorney have gathered and delivers an opinion on your spouse’s ability to work and whether unemployment is voluntary. The best experts are qualified to discuss medical records when giving their opinion.  Judges tend to lean heavily on expert opinions in family law.
  • Second, the expert finds job openings for your spouse. The expert searches your town and neighboring towns for actual job leads, and then calls the job leads and verifies that your spouse is a fit.
  • Finally, the expert draws a conclusion as to the amount of money your spouse is capable of earning in a given year.

These expert reports can be very difficult for your spouse to defend.

Conclusion

A voluntarily unemployed spouse can seriously damage the value of your case unless you take action. While it will require work, you have the tools needed to cut through the gamesmanship and get a fair resolution in your case.

The post How To Fight Back When Your Spouse Quits His Job During Divorce appeared first on Divorced Moms.

Read More –>

529

A Divorced Mom’s Guide To Saving For Their Kid’s College

529

 

Are a you a single mom who puts the education of your children above your own retirement?

If so, you’re not alone. In a study referenced by Forbes, it was found that half of all single moms put their child’s education as their long-term financial priority, even above saving for their own retirement.

So, a lot of questions arise from the findings of single moms and their financial priorities. Why are divorced moms putting their kids’ college savings first when they are arguably a child’s priority?

Are there options for single moms that allow them to save for retirement and secure their children’s educational future?

What do most financial advisors recommend?

A Divorced Mom’s Guide To Saving For Their Kid’s College

Let’s dive in.

Divorced Moms Who Pay for Their Child’s Education Often Do So Out of Guilt

The above referenced study found that single parents are more likely to feel an obligation to help their adult children financially than traditional parents.

Often, single mom’s feel guilty about the divorce, not being able to spend as much time with their kids as they’d like (due to balancing careers), and because they want to give their child one less thing to think about in their future as they feel they have scarred them through the divorce.

So, what are the options for single moms to explore for a solid retirement and college savings balance?

Balancing Retirement and Your Kid’s College Fund

Most financial advisors would recommend that your retirement planning should come before that of your child. A couple of key reasons for this include the fact that retirement does not benefit from any federal loans whereas there are several ways to finance college. Further, tax breaks for investments are more generous than those for college savings, but there are ways to impactfully save for both.

What are the Best Options for College Savings?

Many single moms begin to consider their IRAs when thinking of ways to strategically pay for the education of their children. Turns out there is a much better way to save for both, and the college route generally involves what is called a 529 plan.

529 plans are qualified tuition plans and are tax-advantaged savings plans specifically designed for education-based saving. You have the option of two plans, depending on your ideal situation.

The first is prepaid tuition plans. These allow account holders to buy credits at participating educational institutions for the child’s future tuition.

The second college savings plan allows account holders to open an investment account that operates more like a traditional interest-bearing account, except directly aimed at educational savings.

Some of the benefits of a 529 plan include:

  • No dollar limit on contributions
  • You can use 529 plans to pay for elementary, middle, high school, or college
  • The ability to withdrawal the amount of any earned scholarships penalty-free
  • Protection from creditors in the event of a civil lawsuit, bankruptcy, etc.

Are there any negatives of a 529 for college savings?

There are some negatives to 529 plans. For starters, you can’t take income tax deductions for contributions, meaning you must pay federal taxes on the funds before adding them to the account. Another negative that is similar to many federal retirement plans is that you will be penalized if you withdrawal from the 529 account and don’t use the money for qualified education-based expenses.

What if My Child is Already College Age and I Don’t Have Savings?

While most financial planners would never recommend planning to use an IRA for college, there are some scenarios where it may be the only option. For example, if the divorced parent has not had time to contribute to a 529 plan, their sole option for helping their child may be to use their IRA.

The good news is that there are exceptions for IRA deductions specifically used for education expenses where no penalties will be incurred. This means you may be able to withdraw IRA earnings penalty-free, but not tax-free when you use the money for college.

This option, while not recommended, is ideal for single moms who have not planned on funding their retirement and saving for college.

In the perfect situation, a divorced mom will have multiple accounts set up to contribute to both their own retirement as well as the education of their children.

The post A Divorced Mom’s Guide To Saving For Their Kid’s College appeared first on Divorced Moms.

Read More –>

who will pay attorney

Who Will Pay Attorney’s Fees During Your Divorce?

who will pay attorney's fees during your divorce

 

The attorney’s fees in a divorce case can be paid in several different manners depending on all the circumstances in the case and trial. Learn the different manners of paying attorney fees for two spouses in a divorce.

Who Will Pay Attorney’s Fees During Your Divorce?

Can I Get My Ex to Pay My Legal Fees?

A contested divorce can escalate in costs rapidly to tens of thousands of dollars although a simple uncontested divorce may cost less than $1,000. Expenses can add up quickly when you have a contested divorce that requires many court appearances by your attorney and hours of preparation for the hearings.

Real estate appraisers and forensic accountants are additional costs in a divorce. A divorce judge will award your spouse with a portion or all of your attorney’s fees in some distinct cases. It is at the discretion of the court as to the amount and the court is considered to be an expert on all attorney’s fees.

A Level Playing Field

In most states, spouses are responsible for paying their own legal fees and costs incurred in a divorce proceeding. However, several exceptions can exist, especially when one spouse earns a considerably higher amount of wages than the other does.

It would be unfair for the higher paid spouse to pay a top-notch attorney and leave the other spouse without an attorney because they can’t afford one. At times, the state may order the wealthier spouse to pay all attorney fees and court costs of their spouse.

A judge can order the spouses to liquidate some of their marital assets so that your legal fees can be paid. Generally, this works by the court deducting what you received to pay your attorney from your share of the liquidated asset at the finalization of the divorce. Your lawyer was hired by you and worked for you to protect your best interests and therefore should be your costs.

Some Fault Based Issues

Judges generally do not order one spouse to pay the other spouse’s legal fees due to marital misconduct, which led to the divorce. For example, if your spouse commits adultery and the grounds upon which you file for divorce, your judge most likely won’t order your spouse to pay your legal fees as a punishment for their misbehavior. Now if your spouse was inflicting spousal abuse on you several times during the marriage and there is evidence of this fact, the court may tell your spouse to pay all your legal fees and costs.

If your spouse is dragging out the litigation process by filing motions that are unnecessary or if they are refusing to cooperate, then some courts will order them to pay your legal fees as a form of compensation for their actions during the case. It’s not usually the entire amount you owe for your divorce, but he may have to pay for the court costs for additional appearances that were brought about because of his bad behavior.

A Few More Options

You need to clear some other options with your attorney before you act on them. You may be able to cash in a retirement account, but if you contributed to the account during your marriage, it is most probably considered marital property, making it a shared asset between you and your spouse.

Ask your attorney also before liquidating any assets. If the court finds that it’s okay to do so and generate money for your fees and costs in the divorce, your spouse will likely put up a big fuss, but the court has the option to do so and then deduct the money from your share of marital property upon finalization of the divorce decree. You may also consider borrowing money from a family member, taking out a loan in your name solely and paying the loans back after the divorce.

Professional Funding May Be a Choice

If there is no way possible that you can pay your attorney’s fees and legal costs associated with your divorce, you can ask your divorce attorney about any private investors who may be willing to fund your divorce in exchange for a portion of the assets you will receive when the decree is finalized.

Some attorneys may occasionally be willing to take their fees after the case is over and after you get your share of assets—but this is definitely not the norm. You can also ask your lawyer about a payment plan for his fees on a monthly basis, but you will still need to pay the experts’ fees that are necessary to prepare your case for you.

All awards for attorney fees are final judgments from the court and being such, all are appealable. If you believe the awarded fees are too high or unjust, either party may appeal the judgment.

The court system wants to award attorney fees in the proper manner without bias to any person. Their job is to make the right choice that is not too little, not too much or simply unjust to either party. That being said, the awards are highly discretionary and the case law gives no exact lines to follow.

You should be able to be armed with the knowledge you need when getting a divorce about attorney’s fees, legal fees and court costs and who should pay them. Do keep in mind that you have a few alternatives to consider.

The post Who Will Pay Attorney’s Fees During Your Divorce? appeared first on Divorced Moms.

Read More –>