The Complete Guide to Protecting Your Financial Security When Getting a Divorce

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The Complete Guide to Protecting Your Financial Security When Getting a Divorce

The Complete Guide to Protecting Your Financial Security When Getting a Divorce

Authors: Alan Feigenbaum and Heather Linton

Published: April 2004

eISBN: 9780071762779 0071762779 | ISBN: 9780071410328

Title Page

Copyright Page

Contents

Acknowledgments

Introduction

Part I: Preparing for Divorce

Chapter 1: Divorce: So Money Things to Think About

Think Twice and Then Again

The “Soft” Opportunity and Emotional Costs of Divorce

Spending on Saving (Your Marriage)

When It’s Time to Fold ‘Em

Indecision? Breaking the Tie on Breaking the Ties

The Divorce Battlefield: The Opening Salvos

Counter Counterproductive Reactions

Deal with Dirty Fighting

Line Up Your Financial and Legal Divorce Ducks

Divorce Plans Are Need-to-Know Classified Info

Your Divorce Need-to-Know Portfolio

Your Divorce Financial Status

Knowing What Constitutes a Fair Settlement

Factors in a Fair Settlement

A Fair Settlement Scenario

Other Fair Settlement Scenarios

The Unsettling Truth about Divorce Settlements

Chapter 2: Setting the Legal Course for Financially Surviving Divorce

The Many Paths to an Executed Divorce

Mediation

Mediators’ Legal Limitations

Mediators’ Financial Limitations

Mediators Who Are Overcoming Their Shortcomings

The Track Record for Mediation

Choosing Mediation

Arbitration

Collaborative Family Law and Collaborative Divorce

The Collaborative Contract

The Collaborative Catch

The Caveat Emptor for Collaborative Divorce

Litigated Divorce

Take the Vengeful Fight Outside

Indoor Fighting Rules

When a Prenuptial Is Not Enough

Do-It-Yourself Divorce (Almost Anyway)

Divorcing a Missing or Nonresponding Spouse

Comparing Your Divorce Options

Divorce Differences among States

Divorce Grounds, Residency Requirements, and Timing

Titling and Ownership of Property

Treatment of Debt

Spousal Support Guidelines

Child Support Guidelines

Child Custody and Visitation

State versus Couple Differences

Part II: A Strategic Course for Financially Successful Divorce

Chapter 3: (Round 1): Prepare for Prosperity: Your Head, Heart, and Money

Take Your Spouse’s Viewpoint into Account

Whose Fault?

Who Gets Custody?

Financial (Un)Fairness

Other Divorce Financial Grievances

Spouses’ Viewpoints: Should Right Make Fight?

Take Your Own Viewpoint and Feelings into Account

Common Financially Destructive Divorce Behaviors

Filtering Out Destructive Emotionally Triggered Behavior

Keep Your Eye on the Prize

Children

Living Accommodations

Social Life

From Strategic Preparation to Strategy Formulation

Chapter 4: (Round 2): Prepare Your Financial Fight Strategically

Strategic Divorce Analysis

Family Composition and Financial Condition

Postdivorce Parenting

Spouses’ Personalities and Relationship

Breadth and Depth of Divorce Issues

Understand Your Spouse’s Strategic Analysis

Divorce Financial Strategy Decisions

Make Immediate Financial Arrangements

Financial Resources Snapshot

Until-Divorce Budget

Tax Filing during Divorce

Insurance Changes for Separation

Access to Funds and Credit

Expenditure Tracking, Temporary Support, and Bill Payment Responsibility

Prepare to Propose or Evaluate a Financial Settlement Offer

Dividing Property and Debt

Spousal and Child Support

Share of Spousal Social Security and Pension

Taxes and Other Considerations in Structuring the Settlement

Immediate and Postdivorce Custody and Domicile

Line Up Your Logistical Divorce Ducks

Sum Up Your Strategy

Chapter 5: (Round 3): Initiate Divorce and Negotiate a Moneywise Marital Settlement

Prepare to File or Respond, and Separate

Pay Current Bills and Make Needed Marital Expenditures

Get a Job and Establish Your Own Credit

Get More Involved in Family Life

Compile a Marital History

Start a Divorce Ledger

Witness Divorce Suffering Firsthand

Report for Dirty-Trick Guard Duty

Engage and Consult Divorce Professionals

Legal and Related Professionals

Consulting Attorneys

Traditional (Adversarial) Retained Attorneys

Collaborative Divorce Attorneys

Divorce-Closing Attorneys

Divorce Paralegals

Bankruptcy Attorneys

Mediators

Arbitrators

Private Investigators

Custody Evaluators and Other Mental Health Professionals

Financial Advisors and Specialists

Financial Advisors

Other Financial Specialists

Practice Money-Conscious Management of Your Divorce Professionals

Gather Family and Financial Information and Records

File or Respond (Including Court Orders)

Protect Yourself Financially and Secure a Source of Funds

Joint Accounts for Shared Expenses

Separate Accounts for Separate Expenses

Personal Property Protection

Joint-Title Assets

Separate versus Marital Property

Prevent the Use of Credit by One Spouse in the Name of the Other Spouse

Separate from Your Spouse

Informal Spousal Separation

Formal Separation

Separation Date

Negotiate an Agreement

Cashing Out of Your Marriage

Chapter 6: (Round 4): Prepare for Postdivorce Financial Life

Establishing Your New Financial Identity

Name, Marital Status, and Address Changes

Names

Social Security

Employer Notification

Financial Accounts and Credit

Home, Automobiles, and Other Titled Personal Property

Tax Filing

New Filing Status and Withholding

Claiming Exemptions, Deductions, and Credits

Claiming the Earned Income Credit

Home Sale Taxation

Deducting Divorce Professional Fees

Legal Tax Matters

Insurance Changes and Estate Planning

Health Insurance

Automobile Insurance

Homeowner’s Insurance

Umbrella Insurance

Life Insurance and Estate Planning

Life and Disability Insurance to Back the Settlement

Estate Planning

Tying Up Loose Ends

Finalizing the Divorce

Benefit Plan Paperwork

Divorce Fees

Filing Bankruptcy

Single-Life Financial Planning

Budgeting

Gearing Savings and Investments to Yourself (New Risk Tolerance)

Funding Your Child(ren)’s College Education and Wedding

Considering Remarriage

Getting on Your Financial Feet

Full Exploration and Disclosure

Prenuptial Agreements

Separate and Joint Property and Accounts

Supporting Your Own and Partner’s Kids

Support Modifications and Enforcement

Overall Modification

Specific Modifications

Child Support Modification

Divorce Decree Enforcement

Failure to Pay Child Support

Child Support Enforcement (Extract from OSCE Web Site)

From Planning the Fight to Fighting It

Part III: Dealing with Divorce Financial Issues

Chapter 7: Basic Divorce Financial Issues

Property

A Primer on Property Division Principles

Who Owns What before Divorce

Splitting When All Things Are Equal

Splitting When All Things Are Equitable

Splitting Hairs in Difficult Divisions

Specific Property Division Issues

Marital Residence

Employer and Other Retirement Plans

Pensions

Defined-Contribution Plans and IRA Plans

Nonemployer IRAs

Personal Property

Dividing Debt

Putting Property and Debt in Proper Perspective

Spousal Support

Conditions for Spousal Support Award and Termination

Rehabilitative Spousal Support

Long-Term Spousal Support

Lifetime Support Not Ideal for Either Spouse

Support and Court

Finite Support Creates a Future

Spousal Support Rules

Spousal Support versus Child Support

Spousal Support versus Property Division

Formalized Payments

Payment Period

Revising the Support Agreement or Ruling

Child Support

Definition of Child Support

Formula-Based Child Support Determination

Percentage of Income Model

Income Shares and Melson Models

Child Support Formula Limitations

Paying for College

Child Support State-Specific Guidelines and Formulas

Postdivorce Child Support Adjustments

Enforcing Child Support Payment

Health Insurance

Social Security

More Complex Divorce Issues

Chapter 8: Complex Divorce Financial Issues

Property

Apportioning Separate, Marital, and/or Community Property

Problem Property

Transmutation of Property

Hidden, Overlooked, Protected, and Dissipated Property

Protected Assets

Transmutation of Property

Hidden, Overlooked, Protected, and Dissipated Property

Protected Assets

Hidden Assets

Dissipated Assets

Finding Assets

Complex Property Division Valuation

Intangible, Intellectual, and Artistic Property

Creative Property and Future-Service Contracts

Trust Assets and Income

Spouse’s or Family Business

Traditional (Defined-Benefit) Pensions

Pension Calculation

Money Now, or Later?

Salary and Economic Assumptions

Pension Formula Differences

Pensions Grow Faster, Later

Company Changing Retirement Plans

Early Retirement, Job Termination, and Partial Vesting

Life-Expectancy Assumptions

Cost-of-Living Adjustments (COLAs)

Survivor Benefits

Tying the Pension Knot When Untying the Marital Knot

QDRO Basics

Common QDRO Mistakes

More QDRO Information

Other Complex Employee Benefits

Salary-Supplement Benefits

Taxable Salary-Supplement Benefits

Nontaxable Salary-Supplement Benefits

Divisible Property in Other Forms of Compensation

Divorce-Related Financial Planning Issues

Considering Your Invested Interests

Trading Time for Money

Budging Your Budgets

Getting the Max-Tax Benefits

Divorce-Related Estate Planning Issues

Wills and Trusts

Life Insurance

Retirement Accounts

Power of Attorney

Parental Estate Planning Changes

Health Care Surrogates and Living Wills

Property, Liberty, and Complexity

Part IV: Reaching a Financially Fair and Feasible Divorce Settlement

Chapter 9: Negotiating Financially Sound Settlements for Postdivorce Prosperity

The Divorce “Problem”

Divorce Dreams versus Reality

Typical “Fair” Divorce Settlement

Why Fair Isn’t Fair

An Alternative Approach to Equitable Settlement

Where Do You Need to Be in N Years?

What Kind of Settlement Will Get You Where You Need to Be?

Charting a Settlement’s Net Worth

Charting a Better Net Worth Course

Why It’s a Win-Win for Both Sides

Win-Win Scenarios

Chapter 10: Financial Self-Defense in Action: Specific Settlement Scenarios and Solutions

The Stein Case

Stein Base Case Scenario

Stein Scenario 1: Keep House

Stein Scenario 2: Keep House 8 Years

Stein Scenario 3: Give Rachel More Property

Stein Case Comments

The Byrnes Case

Byrnes Base Case Scenario

Byrnes Scenario 1: Even Split of Nonbusiness Assets, Limited Spousal Support

Byrnes Scenario 2: Business Buys out Ted

Byrnes Scenario 3: Trade Partial IRA for Buyout

Byrnes Case Comments

Additional Cases

Resource Appendix

General Information Sources

General Divorce Web Sites

Divorce Sections of Web Sites

Books and Other Print Publications

Supplementary Material Specifically Referred to in Chapters

Web Links to Useful Documents and Additional Supplementary Material

Online Federal, State, and Local Divorce Information

Directories and Web Sites of Divorce Professionals Organizations

Divorce Support Groups and Services

Commercial Divorce Products and Services

Divorce Software; Online Calculators and Worksheets

How-to Books, Handbooks, and Divorce Kits

Organizers and Related Materials

Online Divorce Forms and Other Related Services

Index

About the Authors