Divorce Finances

Protect Your Credit During a Divorce

Written November 13th, 2013
Categories: Divorce, Divorce Finances

ID-100156664Experienced divorce attorneys in Jupiter, Delray, Wellington and elsewhere in Palm Beach County understand that ending a marriage of any duration is stressful. While you, your spouse and the lawyers are trying to settle everything, take a few moments to remember how important your credit rating will be after you are single. Today we share some tips for protecting your credit in divorce from writer Lynnette Khalfani-Cox from an article at AARP.

  • Joint accounts should be closed immediately.
    Whatever happens from the “we are getting divorced” to the “we are divorced stage” can have an impact on your credit. This includes one spouse adding debt, missing payments, etc. Be careful to not allow this to happen by closing any joint accounts.
  • Inform creditors.
    According to Bill Hardekopf, a credit expert and CEO of LowCards.com, “Tell [creditors] that you do not intend to be held liable for any debt accumulated after the date of the written letter. Request that they put the account on inactive status so no new additional charges may be added, and stipulate that once the balance is paid in full, the account is to be closed completely.”
  • Request monthly statements.
    Request printed statements from all accounts left open with outstanding balances. Read them every month to make sure payments are continuing.
  • Consider the house.
    Taking the house in a settlement is not always the best idea. With the real estate market constantly in flux, it’s important to weigh the options of keeping the house and not. Keeping it can be a huge drain on cash flow and may not provide the liquidity needed if other emergency expenses arise.
  • Update contact information.
    Bills will continue to come no matter where or with whom you live. In order to stay on top of them, update your address at usps.com or the post office. This is another way of assuring you are on top of your bills and keeping your credit clean.
  • Use credit as a tool, not an escape.
    Using credit cards responsibly is a life time habit. Don’t take your frustrations with the divorce process out on your finances by binge spending. Khalfani-Cox says “Thirty percent of your FICO credit score is based on the amount of credit card debt you carry. The lower your credit card debt, the higher your credit score will be.”
  • Check credit report.
    Use Equifax, Experian, TransUnion or AnnualCreditReport.com to check your credit report and work to fix any problems that you find.
  • Paying the spouse’s debt.
    “If a spouse didn’t pay certain debts he or she was ordered to pay in a divorce proceeding, you may want to go ahead and pay those debts in order to maintain your credit rating.” Later, if needed, you can go to court to try to “get a judgment against your ex for not following the court order.”

Getting divorced may take all the emotional resources you have for a challenging season in your life, but it doesn’t have to waylay your entire financial future. Use these tips to help protect your credit rating and make the future a little easier to navigate.

 

 

Photo courtesy of Naypong/ FreeDigitalPhotos.net

How to Assure that Cash-based Business Income Is Included in Your Divorce

Written October 23rd, 2013
Categories: Divorce, Divorce Finances

ID-10081104Divorce is complicated. We know that. But in the end, when the case is finalized, things will work their way into a new normal and life can be better. The challenge comes in getting to that point. For the spouse who has supported the bread-winner, usually the wife, though caring for a household and children, there are ways to make sure that she gets her fair share.

In an article for Forbes.com, Jeff Landers suggests several avenues to explore to see if there might be hidden assets from a spouse’s business, namely cash.

Much of the service industry in the United States is conducted by cash transactions, even in Palm Beach County.  Lunch at the bistro, piano lessons for your daughter, a groom for Fido, are just a few of the occupations that see a great deal of cash for services. So, if your spouse has a business that might be in this arena, he or she may not always claim the cash as income. This will most likely affect how a judge awards spousal support.

Cash is easier to hide than transactions with a paper trail such as using checks or credit cards. So how can you find out if your spouse is hiding revenue from cash transactions?

Landers says, “Cash is often used to buy luxury items that can add significantly to a person’s net worth, without ever having been reported to the IRS as income.”

By understanding your spouse’s business and how it is transacted, it may show an unexplained increase in net worth. But to discern the truth, hire a forensic accountant to complete a thorough Lifestyle Analysis. He or she may show that the standard of living is disproportionately high compared  to the actual income shown on the books.

Besides understanding his business, simply paying attention to spending habits and other behaviors may help identify a problem. “During the marriage, there may have been a time when cash was paid for items in [your] presence. . . and the owner may have even bragged about this particular shortcut “saving” money on taxes,” says Landers.

If this happened during your marriage, it seems likely that your spouse may try to continue during divorce proceedings.

If you are concerned that he or she might be, consult a professional today.

 

 

Image courtesy of posterize/ FreeDigitalPhotos.net

She’s Over 50 and Divorcing, What About Her Retirement?

Written May 1st, 2013
Categories: Divorce, Divorce Finances, Divorce Property Law

Understanding retirement accounts, how they work, and how and when they pay you, as most divorce attorneys in West Palm Beach acknowledge, is a complicated endeavor. Then add the factors of  being over 50 and divorcing and it can be paralyzing. For women, this can mean a challenging road financially. Statistics show that women tend to take a larger financial hit than men during a divorce.

Traditionally, women have been the center of the home and many did not work until it was necessary. When it was imperative due to finances, a spouse’s death or divorce, they were not experienced and finding work was nearly impossible. Even when they acquired work, many found it difficult to attain the income that men had at the same stage in life, reducing their ability to accrue retirement funds. Even with the shift to more working and winning all levels of jobs, women still struggle for equal salaries. All this combines to make the post-divorce financial picture look bleak for women.

Jeff Landers, a contributing writer for Forbes.com, reminds us, “It’s only natural for you and your husband to plan for retirement together. Contributions to 401K are made via deductions from salary, pension plan benefits are a function of years on the job and salary earned, and it makes perfect sense that you start ‘counting on’ that money for when you and your husband reach your Golden Years.” (source) If you know the two of you won’t be sharing those Golden Years, it is time to consult a qualified attorney.

In regards to retirement, your team of divorce professionals can help you understand the difference between marital and separate property, what your state laws require and how it all applies to your retirement. In its simplest form, marital property is anything that either or both of you acquire during the marriage after the wedding. It all belongs to both spouses and must be divided in a divorce according to the law. Separate property is anything that belonged to one of the partners before the marriage and is generally not subject to division.

In order to have peace of mind for your retirement while going through a divorce, make sure your attorney will “clearly spell out how the assets are split and how those funds will be transferred.” (source)

Once you understand that, you are well on your way to making plans for the future.

How to Save More Money in a Collaborative Divorce

Written April 3rd, 2012
Categories: Divorce Collaborative Law, Divorce Finances

Separating the marital assets of a couple is often complicated and costly. Working towards that goal through a collaborative divorce may feel daunting but with the help of an attorney, it can reduce costs over traditional litigation. Want to cut costs even further? Take the advice of Richard Price, a collaborative law attorney from Texas.

By following any of these recommendations, you will cut down the amount of time needed from your attorney, thereby reducing your fees.

1) Organize your financials: Palm Beach County requirements for financial disclosure in a divorce originate from the state law. The documents needed include tax returns, bank and credit card statements, and personal property lists and may include more complicated items such as brokerage statements or property and estate documents. Be sure to present the copies in a timely and organized fashion when requested by your lawyer.

2) Have an agenda when meeting with your attorney: Make the most of every minute with your attorney by being prepared. Be ready with a list of issues that have occurred since your previous meeting and questions that you would like answered.

3) E-mail first and keep it on-point: Communicating by telephone adds time to communications. Social standards for civil behavior require that pleasantries be exchanged before business can be discussed, wasting valuable time. An e-mail allows you to get to the point quickly and keep your issues brief. Take some time to edit your communication to just the essentials before hitting send. There’s no need for fluff here.

4) Combine your questions: Instead of calling or e-mailing your attorney every time you think of a question or comment, communicate less frequently but with more content each time. Keeping a small notebook in your briefcase can help. When questions occur to you, write them down and then combine several into one time-saving e-mail.

Keep in mind, each of these items deals with clear and concise communication. Whether you reside in West Palm Beach or Wellington or elsewhere in Palm Beach County, practicing the skills will help your lawyer be more effective with your time. Saving you money.

Estate Planning During a Late Life Divorce

Written February 28th, 2012
Categories: Divorce Finances

Estate Planning for DivorcePlenty of mature residents from Stuart to Boca Raton enjoy life in a beautiful area of the country, have good friends, lovely homes and satisfying work. Growing a family takes years and plenty of energy but conscientious couples also find time to think about and prepare for retirement and end of life issues. Once children are on their own, couples tend to use their financial resources in new ways. Maybe it’s time for travel, to get that special car, or to downsize a home, who knows?

Sometimes, older couples decide to divorce and one or both spouses may feel confused regarding how to plan for their future. This is not a time to go it alone. The issues surrounding estate planning and divorce are quite technical, so hiring a qualified attorney is critical.

Once a decision about an attorney is made, plan to tackle two major issues with late life divorce:

Will: Discussing one’s will, can be intimidating but is critical when a divorce is occurring. An attorney can assure that the document combines what the law requires and what a client desires. “Many states have an ‘elective share statute’ which provides that your spouse (whether estranged or not) will automatically be entitled to a certain percentage of your estate.” (for source click here) Florida is among these states. A thorough review of your will provides an opportunity to make important changes.

Retirement Benefits: An attorney can help a divorcing spouse find the best manner for dividing various retirement moneys. Two possible options are: The employed spouse buys out the other or gives a portion of the benefits when he or she retires or is eligible to retire. (for source click here) Other issues to discuss can include, but are not limited to, how to deal with defined benefit plans. Remember, timing can be everything. Doing research on the plan will be critical to finding the best financial path.

There will be many more issues to discuss with an attorney if one is divorcing later in life, but having clarity with these two issues will provide a foundation for a more predictable future.

Daughter of Divorced Couple Sues Father for Tuition Costs

Written January 28th, 2011
Categories: Divorce Finances, Uncategorized

Daughter of Divorced Parents Sues Father for College TuitionWhile parents of recent college graduates in West Palm Beach and throughout Palm Beach County are ecstatic about their children’s educational achievements, families of graduates understand the high expenses of obtaining a college degree. From text books to tuition and all of the living expenses in between, higher education is not cheap. Experienced Florida family law attorneys recognize that divorced couples may stipulate in their divorce settlements regarding their payment of the higher education costs for their children. They may do so to avoid burdening their children with student debt or in exchange for some other concession during the negotiations of the divorce. But what happens when one parent reneges on their contractual promise to pay for their children’s education? In Connecticut, Dana Soderburg sued her father to recover the tuition costs he promised to pay in his 2004 divorce from her mother. Concerned that he may break his promise in the future, Dana required her father to sign a written contract explicitly stating that he agreed to cover tuition and other costs related to her education given that she diligently applied for scholarships and other loans. Unfortunately, her father stopped paying tuition during her senior year and she was forced to take out massive loans. In order to recover what she considered was rightfully hers, Dana filed a lawsuit for breach of contract. The judge awarded her $47,000 to cover the principal loan, additional interest fees, and attorney costs. Residents from Jupiter to Boca Raton have begun speculating on the precedence that this case may set for other students in similar situations across the country. Go here to read the full story on the college graduate that sued her father to pay tuition fees.