Divorce is a stressful situation, and the financial changes can be overwhelming. Take a deep breath and remember there are solutions and strategies to make sound decisions about your money.
This is YOUR financial journey. Time to take charge of your journey.
Talk with a financial professional to discuss your fears, goals, concerns. Your financial professional can guide you with an adjustable plan that works for you.
Learn and ask questions, be comfortable with making decisions and take your time.
Update your insurance policies, calculate your expenses, change account registrations on bank accounts, brokerage accounts, credit cards.
Work with an estate planning attorney to update your will and estate documents. And update beneficiaries on your accounts.
Work with a tax professional regarding filing your taxes.
Remember this journey is a process, not an event.
If you have questions, reach out to any member of CCDG!
Once a decision is made to divorce, the first question I hear is, “How quickly can we get it done?” But once you get to November, the question should be whether it makes sense to divorce in 2021 or wait until January, 2022.
If you decide to divorce in 2021, who is going to take the tax deductions for the house? Or the tax dependency (child care credit for the children)? And there are new child-related tax advantages for children in 2021 than in 2020 — some of which may only apply to 2021. And oh, yes, I hear there is pending legislation which, if passed, may extend some of these into 2022. And on top of that, if you are divorced on December 31 but had taxes withheld at the married rate, you are going to get an unpleasant surprise in April 2022 when you find out you owe thousands of dollars in additional taxes for the prior year.
Sound confusing? It absolutely is! Bottom line — there are numerous tax considerations that should be discussed before you decide which year to get divorced.
These are the discussions I am having with clients right now. At least two cases have decided to file taxes jointly in 2021 and get divorced in early January. But a key factor is what works best to minimize tax obligations. Make sure you are in a position to make an informed decision: Talk to your attorneys and financial professionals about the specific tax implications that can affect you!
CCDG Psychologists Wendy Habelow, Ph.D., and Elaine Ducharme, Ph.D., discuss the three components of a divorce: legal, financial & emotional — and how #CollaborativeDivorce addresses them.
Divorces for older couples are not uniform. Because each couple is different, age is sometimes not the most prominent factor. Many cases with older clients present issues related to retirement income. For example, pension elections and social security elections may have already been made based on being a couple. When assets are being divided, younger couples have more time to accumulate more assets before they retire, unlike couples who are older and who may be retired or nearing retirement. Couples who have retired may have done so based on a presumed budget, but once couples separate and divorce, they add new housing costs to their budgets that were not factored in at the time they decided to retire, which can create a strain on budgets. In the collaborative process, we can work with all of those issues and try to come up with options that can address the concerns for both clients.
Divorce doesn’t get any easier as people age. While there are usually more assets to divide, financial security is of greater concern as people get closer to retirement. Do they have enough assets to provide financial security in retirement? Do they need to change their portfolio to create that? Are social security benefits impacted? All
this and more – a lot of stress? Yes.
Are there steps you can take to reduce the stress? Absolutely! Consider collaborative divorce to reduce stress; get the answers you need to get divorced by negotiation – without litigation!
The collaborative process includes a team of professionals: an attorney for each party, a neutral financial professional and a mental health coach. Each professional offers a unique prospective and is extremely helpful.
The role of the attorney in a collaborative divorce is to:
Educate you about the law;
Help you navigate the legal process; and
Help you come up with workable options to resolve all of the parenting and financial issues.
The neutral financial professional is priceless, especially in the divorces of couples married a long time. Often these marriages have more complex financial circumstances. In part, the role of the financial professional is to:
Educate the parties about the financial intricacies of their case;
Avoid overlooking financial assets, i.e. identifying premarital and/or retirement vehicles;
Evaluate tax liabilities of assets;
Provide clarity and strategies for child-related issue, i.e. tax credits, educational issues; and
Empower parties to make educated decisions
Working with a Financial Professional (CDFA) provides you with a clearer view of a long-term marriage’s financial picture and an analysis with realistic expectations for the couple’s financial future.
In negotiated divorces, whether mediation or collaborative divorce, you can still make the decision as to which year you get divorced. But before you do, there are a number of tax-related issues to consider.
First, if you are thinking of a divorce in 2020, will the family unit (whether together or separate filings) pay more in taxes by filing joint by filing, married-separate. And if married-filing-separate, who takes the tax dependency (child care credit) for the children? Who takes the mortgage interest and real estate tax credit?
On the other hand, if you have been negotiating your divorce and are close to conclusion, does it makes economic sense to get divorced by December 31 OR do you wait and get divorced in January 2021?
By the way, if you are single on December 31 but had your employer withhold taxes if you were married all year, the IRS treats you as single for the entire year, and you may face a large tax obligation come April.
I have three cases ready to go to final judgment. Two have chosen to get divorced this year. The third will be divorced in January – all three based their decisions on minimizing tax obligations. If your divorce is ready to go, make sure you discuss the tax implications with your attorneys and financial professionals.
If this were a normal year, parents would be shouting with joy that their kids were going back to school. If this were a normal year, kids would just be shouting. But this is not a normal year. This is 2020, the year of Covid 19.
The world feels a bit topsy turvy. Parents, who have a primary responsibility to protect their children from harm, are worried that if they send their kids back to school their kids might get sick and die. Or their kids might become carriers of Covid 19 and infect someone else who could get sick and die.
Some schools are not even sure exactly what will happen this year. School districts in the state have had to make three plans: full time in-person learning; full time remote learning; and a hybrid model consisting of some in-school and some remote learning. For parents trying to navigate these uncertain waters, life is difficult and scary. The situation can be even more daunting for divorced or divorcing parents who may have very different ideas about what is best for their child or children.
Here are a few things for parents to keep in mind as they try to figure out what to do.
1. Remember that wearing masks, social distancing and hand washing are the keys to keeping everyone safe. So, check out your school and see what plans they have in place to make sure these rules are strictly followed. For example, find out if they decreasing class size, rotating hours for kids to be in class or walking through the halls.
2. Evaluate your own personal health situation, that of your child (children) and anyone living in your
household. If any of you are in a high-risk category, have conditions such as diabetes or any condition that would weaken the immune system, you might want to consider holding off on in-school learning for a few weeks until we see if the numbers of cases go way up once school starts.
3. If you are unsure about these health issues, check with your medical doctor or pediatrician for guidance.
4. If you are sending your child back to school, make sure the first day of school is not the first day your child has to wear a mask all day long. If you haven’t started practicing at home for extended periods, do so now. For example, have your child wear a mask whenever he or she is on electronics. And pack an extra mask in their backpack.
5. Take advantage of any videos that your school may have showing the set-up of the school and how things will be working this year.
6. Acknowledge your children’s feelings. Encourage them to talk about what they are thinking and worrying about.
8. If you are divorced or divorcing and you are having difficulty agreeing on what is best for your kids, consider talking to a divorce coach/mediator or parent coordinator. For families who utilized the process of Collaborative Divorce, they already have a divorce coach in place to help them resolve issues when they get stuck.
9. Consider forming small pods if your kids will be staying at home. Small groups of kids/families can help share child care, play activities and even teaching in order to maintain important social interaction.
10. And finally, we know that some families have little choice. Both parents may have to work out of the home and have no alternative care. Please remember to be kind to yourselves. Let go of judging yourself or others. In these uncertain times, we are all doing the best we can. And frankly, that is all we can ask of ourselves or each other.
I fondly remember the “good ole days.” You know, the days when we would have in person meetings in our conference room with clients without a care about social distancing and wearing masks.
When talking to a couple about the financial aspects of their divorce, specifically division of property, I would draw a large circle on the white board representing the “marital assets pie.” I would typically draw a line down the middle representing that the pie would be split in two pieces, one piece for each spouse. I would clarify that I was not intending to give the impression that the pie would be split into two equal parts, but that more or less, given certain leeway for the particular circumstances of their situation, the pie would be split essentially in two. But then I would carve out another slice – a small slice, but another slice. Yes, I would intone, your pie will actually be split into three slices: one for you (and I would indicate one spouse), one for you (and I would indicate the other spouse), and I would ask the question, “Do you know who gets this third slice?”
Invariably, the answer would come back, “the lawyers?”
Wishing not to blame that entire third slice on only the lawyers, I would say something like, “Well, yes, the lawyers, but also potential court costs, costs of other professionals if needed, like if there is a business interest to be valued or if there are some particularly thorny issues with the tax returns, and so on. But what is interesting is that the most variable of the three slices is actually that third slice. That third slice can be larger or smaller, and of course the larger it is, the less you two have to divide. But the good news is the size of the third slice is largely determined by you!”
So the question then posed to my conference room captives would simply be, “Would you rather that third slice be larger or smaller?”
The answer was always, “Smaller, of course.”
How can you – a future client of mine or of any of the other divorce professionals you might encounter on your journey from a married person to a single person – limit the size of that future slice of the marital assets pie?
So here’s a bit on how to can make that happen.
First, do some homework. While it’s tempting to call a familiar or referred lawyer, choosing that means you will have already made the decision, albeit perhaps unwittingly, about what kind of a divorce you will undergo. Did you know not all divorces have to go to court? Did you know you could mediate your divorce? Are you aware that there is such a type of divorce known as “collaborative,” in which, while you each have your own attorney, it is kept private, polite and out of court? There are also other professionals who work in the field, such as mental health professionals and specially trained financial professionals. Prior to calling the attorneys, you might want to consult with other professionals, particularly those who also work in the field.
Second, be prepared. Gather together the financial information you know that is going to be requested of you – tax returns, brokerage statements, bank statements, mortgage information, 401(k) statements, credit card statements, etc. Ultimately, you will need to fill out a financial affidavit, which requires you to know your expenses. As you pull your financial data together, this will further prepare you for the discussions that will invariably follow. The more you know in advance about your financial circumstances the more quickly and efficiently will the discussions proceed.
Third, build your team. There are a number of people that can support you as you go through this experience. You don’t want to do this by yourself. Those that could help you, lend a shoulder, just be supportive when you need it could be a sibling, a close friend or professionals such as a therapist, your lawyer or a financial professional.
Fourth, be fair. Temper your expectations. Be realistic. One of you will not walk away with the house, all the cash and all the investments. This is, above all, a negotiation. Whether it is a hostile or an amicable negotiation is up to you. But know this: The angrier the process, the more it will cost you. Remember that third slice of the pie? No matter the circumstances that have brought you to this point, it will not serve you well financially to carry your personal loathing of your soon-to-be-ex-partner to the negotiating table. If you need counseling to help you get through this trying time, by all means, seek it out. You need to be sensible as you go through this process.
Lastly, look to the future. This too shall pass. There is a light at the end of this sometimes-dark and troublesome tunnel. The troubles that have brought you to this point are behind you now. Today is indeed the first day of the rest of your new life. Again, look to your support team as you move forward. Consider working with a financial professional to assemble – perhaps for the very first time – your very own financial plan for the future. Most of all, maintain a positive attitude as you begin this next chapter.
Save Money, Stay Out of Court & Incorporate a Financial Professional to Plan for Future
HARTFORD, Conn; March 13, 2020 – Tax time is always a hassle, and some years can bring more challenges than others. Couples who have recently separated or divorced will face many new financial issues, often more complicated than anticipated. The best way to handle this is, of course, to plan accordingly in advance.
“The day your divorce is complete is the first day of the rest of your life. From a financial perspective, everything changes,” said Edward Goldberg, CFP®, ChFC, CDFA®, a financial planner with a specialty in divorce financial work (CDFA). “For many, it may be the first time to consult with a financial planner/advisor and build a comprehensive financial plan for the future.”
Goldberg is a financial advisor with the Connecticut Collaborative Divorce Group (CCDG), a Hartford-based group of professionals that aims to keep divorcing couples and their children out of court using a team approach to family conflict resolution called Collaborative Divorce. One advantage of the Collaborative Divorce process is the opportunity to work with a neutral financial professional who provides expertise in all financial areas and helps couples look at the financial big picture as they work toward an agreement.
“Couples want to know how to allocate the family finances in a way that can support two households. This requires making some important financial decisions as part of and during the divorce process,” he said. “Divorce is a life-changing event, and having a financial professional on the team serves to inform and empower someone going through this traumatic event.”
In addition to helping with the division of assets, Goldberg’s role is pivotal to navigating the complex financial landscape that includes regularly changing income tax laws. The financial professional also advises clients on best practices and recommendations to avoid penalties, explains the financial ramification of any proposed agreement, assists in the collection and organization of required financial statements and documents, and helps to develop a post-divorce budget.
One distinction of a Collaborative Divorce from a traditional litigated divorce is the role of neutral parties to reach a resolution that focuses on the needs of the couple, not the court process. In a Collaborative Divorce, couples work with a skilled and caring team that includes attorneys and mental health professionals and one specifically trained financial professional. The process allows couples more control over the outcome of their separation, takes the entire family into account, and is often less expensive than a litigated divorce.
“The collaborative process is one of the most productive ways to divorce,” Goldberg said. “Members of CCDG are uniquely qualified – through training, ongoing learning and, of course, practical experience – to conduct collaborative divorce cases by integrating mental health professionals as coaches and financial professionals as objective neutrals.”
To learn more about the collaborative divorce process, visit www.ctcollaborativedivorce.com. CCDG members are available for in-person and telephone interviews.
About CCDG: Connecticut Collaborative Divorce Group is a group of experienced divorce professionals, including divorce and family lawyers, financial and mental health professionals who have been specifically trained in the collaborative process. Each member of the group has made a commitment to the goals of collaborative practice in order to help people achieve fair and lasting settlements without using the court or even the threat of court. Additionally, each member attends regular meetings and training sessions designed to develop and enhance their collaborative divorce skills. For more information visit: www.ctcollabrorativedivorce.com
Financial Professional Edward Goldberg, CFP®, ChFC, CDFA®
–ALTERNATIVE APPROACH TO DIVORCE HELPS ALIGN PROFESSIONALS OF VARIOUS DISCIPLINES-
(HARTFORD, CT)- June 13, 2013- When many people think about the professionals managing divorce, they only envision attorneys. Presently though, some of the most amicable divorces are achieved through an approach known as collaborative divorce. It reduces stress for the individuals separating by surrounding them with a support system including attorneys, mental health and financial professionals.
“Traditional divorce is adversarial”, said Attorney Jule Crawford. “So often, this often leads to bitter court battles where each side wants to win no matter the cost.”
Attorney Crawford is a member of Connecticut Collaborative Divorce Group (CCDG). She says that collaborative divorce humanized her practice by taking the demon out of divorce. The collaborative approach sets up a method for the two divorcing people to start a dialogue, not about who did what wrong that killed the marriage, but to map out the changes that the divorce will necessitate.
Attorney Crawford’s collaborative group is multidisciplinary. Members are trained and experienced in finance, law or mental health. As a result, she can offer clients a team of neutrals professionally trained in their field to help them make good parenting and financial decisions, while she and the other lawyer can guide them through the legal process.
“I have been amazed over and over again that grown adults feel they lose all control over their own lives when they enter into a traditional divorce,” she said. “I think the collaborative process is all about giving people the tools and guidance they need to be active problem solvers to craft their agreement in a way that best suits themselves, each other, and their children.”
Dr. Abby Cole offers a mental health perspective. As a divorce coach, collaborative divorce has pretty much become a second career, eclipsing her psychotherapy practice. It allows Dr. Cole the pleasure of working more interactively with colleagues, and the satisfaction of offering what she considers to be preventative mental health interventions.
“Instead of spending years in psychotherapy cleaning up the detritus of messy divorces, I am able to educate and guide clients towards behaving in more decent and respectable ways,” she said. “They don’t have to spend years hating ex-spouses, but instead, are able to craft workable solutions for their families.”
Financial Advisor Jim Russell sees the same benefits. Originally when he started working in the divorce field, he was involved through the litigation model. He spent half his time preparing multiple requests for information, reviewing what information was missing, preparing and attending depositions and testifying in cases. Many times because the cases were so adversarial his participation would not be productive as it could be.
Parties choosing collaborative divorce avoid the need for depositions and going to court for contested hearings. In addition, the parties voluntarily exchange requested documents and avoid motions and court appearances to obtain those documents.
“In spending my time in the right areas and looking at various options that can be brainstormed in a group setting, we often get to a better answer that is satisfactory to the clients,” said Russell. “By focusing my time on working on the real issues with the clients it typically improves their understanding of the issues and a better resolution of the matters occurs for the clients.”
Regardless of their differing backgrounds, all of the professionals involved in collaborative divorce agree that the process yields the best results.
“I have had a number of collaborative clients compliment each other and say things like “she is a great mom”, “ he really was the driving force in building the company we now own together,” said Jim Russell.
“Last Christmas I had one recently divorced wife who hosted her former husband for the holiday festivities,” said Dr. Cole. “Other families are celebrating dance recitals and graduations together, focusing on the accomplishments of their children rather than reviving the resentments of their divorces.”
“Without doubt, resolving divorces collaboratively is hard work done in trying times with people at their most fragile. But there is nothing more rewarding in my eyes than to help a client end a marriage with dignity,” said Attorney Crawford.
CCDG is a group of experienced divorce professionals, including divorce and family lawyers, financial and mental health professionals who have been specifically trained in the collaborative process. Each member of the group has made a commitment to the goals of collaborative practice in order to help people achieve fair and lasting settlements without using the court or even the threat of court. Additionally, each member attends regular meetings and training sessions designed to develop and enhance their collaborative divorce skills. For more information visit: www.ctcollabrorativedivorce.com
